RYB Education Resilient Despite Scandal

A guard closes the gate at RYB Education in Beijing (brown building)

We understand everyone needs to make money, but should a company that owns 209 kindergartens and more than 900 franchised play-and-learn centres be listed on the New York Stock Exchange?

It turns out RYB Education is one of the largest providers of early childhood in China and it was hit by a scandal last month when there were allegations and complaints of child abuse.

Parents alleged that some children had been found to have needle marks on their bodies, they were drugged and sexually abused.

Allegations of bodily harm and sex abuse plagued RYB

After an initial investigation, Beijing police said one teacher at the kindergarten had pricked children with a sewing needle as a disciplinary measure, while claims of children being drugged and sexually molested were fabricated by parents.

Nevertheless, RYB's shares plunged 38 percent to US$16.45 last Friday, down from its initial public offering of US$18.50 in September. It had hit a high of US$31.14 on October 2, three days after its first day of trading.

Analysts believe RYB stocks are resilient and will emerge unscathed from the scandal -- its shares closed at US$20.33 on Wednesday, rebounding 24 percent from last Friday's sharp fall.

"Even though RYB may have to bear a heavy moral burden after the child abuse accusations, its future performance in the market is unlikely to be affected because its fundamentals are still good," said Shen Meng, a director with investment bank Chanson & Co. "When new social events emerge to divert people's attention from the scandal, RYB will do even better."

RYB shares on the NYSE seem resilient despite the scandal

Should schools, particularly early education ones, be run like corporations? Sounds contradictory but perhaps the company's sheer size makes it able to invest in lots of resources, though it makes effective management of all of them very difficult.

Perhaps the good thing in all of this is that because RYB is a public company, it has no choice but to allow greater scrutiny. If it is smart, RYB will set up the necessary mechanisms in place to prevent further abuse and manage its branches and franchises more closely to ensure quality. After all, early childhood education is not something that should be messed around with.

A Tale of Two Leaders

Leung Chun-ying's speech was read out like a laundry list for two hours...

This morning our time, the President of the United States, Barack Obama gave his last State of the Union address. While he noted the differences between the Democrats and the Republicans is more divisive than ever, he also praised the country for its diversity, and how the rest of the world looks to America for leadership.

He also talked about the country's future: how to ensure equal opportunities for everyone, how to harness technological change, how to keep the country safe, and how to bridge the political divide.

...while Barack Obama talked big ideas in his speech

This is Obama's vision for the country in his last year in office, and the way he spoke instilled pride and inspiration in the audience.

Contrast this to Hong Kong Chief Executive Leung Chun-ying's policy address this morning, his last one before the election next year.

He spoke at the Legislative Council for two hours -- even taking a 10-minute break in between --  to read out a laundry list of initiatives his administration has done or will do, from free kindergarten for some families (details to be ironed out), give HK$2 billion to startups, double the number of wifi hotspots to 34,000 in three years, make the city more accessible for the elderly, and free admission to permanent exhibitions in museums.

Whoohoo.

More interesting were the four times Leung was interrupted by lawmakers who complained the chief executive was not fulfilling election promises, how the government would destroy the environment when developing Lantau, and demanding to know where missing bookseller Lee Bo and his four associates are.

Leung's speech hardly contained any vision. While he is concerned about the growing aging population, with nearly one-third of the population will be seniors within 20 years, Leung only proposes making public areas more accessible and extra hospital beds for them.

Lawmaker Lee Cheuk-yan demands to know where Lee Bo is

Why not look far into the future and propose more preventive health measures, like encouraging seniors to exercise more, give them more money so they can eat better, and build more assisted living facilities.

And for kindergartens, it is only free for those who attend half day, and even then, the scheme looks to be more complicated with various conditions. As a result some families will be shut out. If 70 to 80 percent of kindergartens are supposed to be free under this scheme, why not just make all of them free of charge?

While throwing HK$2 billion to startups is generous, will that actually lead to something Hong Kong will be famous for globally? What startups have been successful here so far? Seems like a long shot bet that may not result in much except for an easy grab for startups desperate for funds. Is this the most effective way to spend our taxpayer dollars?

Perhaps the only bold initiative on Leung's part is banning the ivory trade "as quickly as possible" he said in the press conference afterwards. Again details need to be worked out, but at least the government is taking a strong stand on this issue.

Other than that, as Leung's critics have pointed out -- including Regina Ip Lau Suk-yee -- the speech only talked about piecemeal items that don't show any sign of looking at Hong Kong's long term future. There are no big ideas, only small initiatives to try to win quick points.

We don't want a government that only picks the low-hanging fruit. We want a vision of the city's future. And today was far from inspiring...

Hong Kong's Teething Problems

Hong Kong children need to learn more about the importance of healthy teeth

For the most part Hong Kong people are very conscious about their appearance, washing their hands a lot and bathing. They use 220 litres of water per capita per day -- way above the global average of 130 litres per capita per day.

But you'd think that hygiene ritual would include dental care, but apparently not enough attention is focused on the teeth.

The University of Hong Kong's Faculty of Dentistry has found that two out of five children, or 37 percent of the 23,000 students in 125 kindergartens examined in the last academic year had dental cavities.

This averages out to 1.5 decayed teeth, 0.1 tooth less than two years ago. Although the overall prevalence rate of tooth decay in kindergarten pupils has dropped from 44 percent two years ago to 37 percent, Dr Chu Chun-hung, from the faculty's Community and Family Dentistry, said the situation warranted serious concern.

In the United States, the prevalence for tooth decay in children two to five years of age was 23 percent, and 18 percent in three-year-olds in Japan.

"The eruption of permanent teeth begins when they are six years old until 12. Decayed teeth could affect their learning at school, as there could be pain and fever," Chu said.

Those kids studying in Sham Shui Po, Wong Tai Sin and North District had more decayed teeth than average, around 1.9 to 2 teeth.

Dr Edward Lo Chin-man, chair professor in dental public health at HKU suggests this could be because of the parents' educational and wealth levels. He said some parents neglected the importance of cleaning the children's teeth because they think there are other more important things to look after.

Lo said the government should expand its dental care service from primary schools to kindergartens.

What's even more shocking is that in March, experts said more than 90 percent of five-year-olds in Hong Kong with cavities did not get treatment because their parents weren't aware of it, and that many patients didn't see a dentist until they were in their 50s or older.

This is such a bizarre observation considering most Hong Kong people are very conscientious about their grooming habits. But obviously they have not been taught, either by their parents or at school, about the importance of good dental care.

Having clean teeth and healthy gums also indicate the overall health of the individual, as some health problems can be detected by a dentist looking in someone's mouth.

But there are probably the usual fears of visiting the dentist and being scared of the pain, or concerns about the cost, but many Hong Kong people don't understand the benefits and the necessity of checking in with a dentist at least once a year.

As Lo says the government needs to educate people about how teeth in good condition are a sign of a healthy body, just like washing hands.

The MTR these days makes public announcements of how people should use a tissue when they sneeze, and wash their hands frequently. Maybe adding that people should brush their teeth twice a day and floss should be added...

Still Competing with Mainlanders

Hong Kong people may think the city has lost its brand on the international stage, but for mainlanders, it signifies anything above board and to international standards.

This past week, parents both locals and mainlanders queued up for two days and nights just to get a place for their child at a kindergarten in Sheung Shui. The school had 900 places, but many more families tried to vie for a spot in North District.

However there was a side business to be made -- some HK$2,500 will get you someone to line up for you, while over HK$4,000 will not only help you queue, but also give you tips on how to do well in the school interview.

Heidy Chan Hau-yi is a 27-year-old housewife who lives near the school and started lining up at around 10pm on Thursday for an application form for her two-year-old. "I'm really worried my child will have to go to a kindergarten far away," Chan said. "It's really unfair that I'm living here, but I have to queue overnight just for an application form."

Locals in the area are resenting the fact that many mainlanders are also in the line up, creating competition for spaces, even though their children were born in Hong Kong, making them eligible to study there.

At a kindergarten in Fanling, Li Liang, 31 from Shenzhen was happy to get a spot after applying to almost 10 kindergartens in North District for his two-year-old son who was born in the city.

"I want my son to experience Hong Kong society as early as possible, receive a thorough Hong Kong education and become a thorough Hong Konger," he said."

Li's comment is interesting as it goes against the current trend of mainlanders renouncing their Hong Kong residency as they feel they haven't received enough benefits from it.

Nevertheless, the idea of setting up a Hong Kong international school in Shenzhen won't assuage demand -- it seems mainland parents want to make sure their children get a good education on Hong Kong soil.

My relatives also pointed out that Mongkok and Tsim Sha Tsui are swamped with mainlanders, not to shop -- but to see doctors and dentists for ailments. This has resulted in spending three hours just to see the doctor. As a result they have begun seeing doctors in Central to save time.

Perhaps we will soon see medical tours to Hong Kong...

This demand for Hong Kong good and services will continue to exacerbate the system and both the Hong Kong government and Beijing have done nothing to either stem the flow or set limits.

The Chinese government should be faulted for not doing enough to regulate everything from food to health care, and for the Leung administration to think that Hong Kong's infrastructure has even more capacity to cater to tourists is pretty much at breaking point.

Hong Kongers continue to be second-class citizens in our own city -- when will we be able to claim it back?