The sudden resignation of Zhang Xiaolong, the outspoken founder and chairman of Fenbi, marks the end of a turbulent era for one of China’s most high-profile vocational education firms. On July 8, the company announced Zhang’s immediate departure to handle personal affairs, appointing long-time vice president Sheng Haiyan as his successor. While the official statement was clinical, the market interpreted the move as a desperate attempt to distance the brand from a leader whose public outbursts had become a significant governance liability.
Zhang, a philosophy scholar turned entrepreneur, was once the face of Fenbi’s meteoric rise from a division of Yuanfudao to a multi-billion dollar IPO. However, his tenure was defined as much by his combativeness as his business acumen. From publicly insulting top venture capital founders like Zhang Lei to berating fund managers during roadshows, Zhang’s behavior often triggered sharp volatility in Fenbi’s stock price. His exit follows a 30% decline in share value over the last month alone, following yet another social media controversy.
Beyond the personality cult, Fenbi is grappling with a brutal fundamental reality that has seen its valuation collapse by 95% from its peak. Once a darling of the Hong Kong Stock Exchange with a 24 billion HKD market cap, Fenbi has devolved into a 'penny stock' worth barely 1 billion HKD. This decline reflects two consecutive years of revenue contraction and a structural shift in the civil service exam preparation market, where the company earns over 80% of its income.
Traditional tutoring giants are being squeezed by a surge of individual teachers and low-cost content creators on platforms like Douyin and Bilibili. This fragmented competition has forced Fenbi to lower prices and increase efficiency, but the limits of human-intensive labor are becoming clear. While the company has pivoted heavily toward artificial intelligence, deploying nearly all its remaining IPO funds into AI tutoring systems, these new ventures currently contribute less than 1.5% to the total top line.
A failed attempt to diversify into health supplements earlier this year further signaled a management team searching for a lifeline in a saturated market. While new CEO Sheng Haiyan brings a decade of operational stability, she inherits a company whose core product is under siege. The transition to a leaner, AI-first model is now a race against time as the firm struggles to justify a tech-sector valuation for what remains, at its heart, a teaching service business.