"Entering the senior developing stage after initial capital accumulation, New Oriental is pursuing standardized business management in line with international standards in terms of intellectual property protection, restructuring and market strategy," said Hu, who took office early this year as New Oriental's second president.

China has made serious commitments to intellectual property protection in its WTO membership agreement. Under such circumstances, private education organizations, such as New Oriental, can no longer use excuses to bypass rules but must fully comply with global business law, Hu commented.

Hu said New Oriental - whose business formerly concentrated on providing test preparation for examinations such as the GRE (Graduate Record Examinations) and GMAT (Graduate Management Admission Test) - had committed copyright infringement before but now is trying its utmost to compensate for its past misconduct.

Disputes between US-based Educational Testing Service (ETS) and New Oriental began in December 2000 when ETS, the world's leading non-profit testing institution, filed a lawsuit against New Oriental, alleging that China's top private English-teaching organization had been reproducing, publishing and distributing copyrighted GRE test questions and test forms without authorization from ETS since the mid-1990s.

ETS said New Oriental distributed confidential test questions that could appear on the GRE and the TOEFL (Test of English as a Foreign Language) exam papers to its customers.

The alleged infringements led ETS to send a letter to US universities on January 30 last year "urging them to treat all GRE and TOEFL test scores from China with caution" as "certain individuals may have gained unfair advantage through intensive coaching that included exposure to undisclosed test questions."

The testing institution has threatened to suspend English-language testing in China if it loses its pending case.

The copyright row which triggered panic and outrage among Chinese hopefuls seeking further education abroad seems to now be headed towards resolution, with a win-win agreement in the works.

"We have made significant progress in negotiations with ETS, and we are very near to a deal with our US counterparts," Yu Minhong, former president and founder of New Oriental, said.

The main reasons for the sudden positive development in negotiations can be credited to New Oriental's sincere and concrete action in settling the case.

Yu flew to the United States in person to negotiate with ETS authorities, and the training institution has so far spent upwards of 10 million yuan (US$1.2 million) to purchase authorized teaching materials.

Although authorities from ETS were not available for comment, the optimism expressed by New Oriental's senior officials suggests ETS is co-operating in full and is also devoted to solving the problem.

Like the old saying goes like "every coin has two sides," the copyright crisis has turned out to be a stimulus accelerating New Oriental's corporate reshuffling and shift in market strategy.

Restructuring is under way since late last year with the help of PricewaterhouseCoopers, the global consultation giant.

The private education powerhouse is gradually lowering the business proportion brought in by its exam-oriented training programme and is pursuing long-term sustainable growth by strengthening other growth areas related to the English education industry.

The New Oriental Science and Education Group was formed last August, with its planned businesses including language training, publication of teaching materials, development of English-learning software, online education and other language services, such as translating.

Robert Du, dean of New Oriental Applied English College, expressed confidence in the group's long-term development, "With good reputation, qualified teaching staff and explicit market identification, the group can also perform well in other arenas, such as training programmes aiming to enhance students' general English ability."

(Business Weekly February 28, 2002)