SecProbe.io

CORRESP
1
filename1.htm

TCTM Kids IT Education Inc.

6/F, No. 1 Andingmenwai Street, Litchi
Tower

Chaoyang District , Beijing 100011

People’s Republic of China

September 30, 2024

VIA EDGAR

Mr. Tony Watson

Mr. Joel Parker

Ms. Jenna Hough

Ms. Taylor Beech

Division of Corporation Finance

Office of Trade & Services

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

 Re: TCTM Kids IT Education Inc. (the “Company”)

Annual Report on Form 20-F for the Fiscal Year Ended
December 31, 2023

Filed on April 19, 2024

File No. 001-36363

Dear Mr. Watson, Mr. Parker, Ms. Hough, and Ms. Beech,

This letter sets forth the Company’s responses
to the comments contained in the letter dated September 19, 2024 from the staff (the “Staff”) of the Securities
and Exchange Commission (the “Commission”) regarding the Company’s annual report on Form 20-F for the fiscal
year ended December 31, 2023 filed with the Commission on April 19, 2024 (the “2023 Form 20-F”). The
Staff’s comments are repeated below in bold and are followed by the Company’s responses thereto. All capitalized terms used
but not defined in this letter shall have the meaning ascribed to such terms in the 2023 Form 20-F.

Annual Report on Form 20-F filed April 19,
2024

Item 3. Key Information, page 3

 1. Please revise to disclose that the VIE structure involves unique risks to investors, explain whether the VIE structure is used
to provide investors with exposure to foreign investment in China-based companies where Chinese law prohibits direct foreign investment
in the operating companies, and disclose that investors may never hold equity interests in the Chinese operating company. Also acknowledge
that Chinese regulatory authorities could disallow this structure, which would likely result in a material change in your operations and/or
a material change in the value of your securities. Additionally, your disclosure should clarify that you are the primary beneficiary of
the VIE for accounting purposes.

Division of Corporation Finance

Securities and Exchange Commission

September 30, 2024

Page 2

In response to the Staff’s comment, the Company respectfully
proposes to revise the referenced disclosure as follows (page reference is made to the 2023 Form 20-F to illustrate the approximate
location of the disclosure) in its future Form 20-F filings (with deletions shown as strike-through and additions underlined), subject
to updates and adjustments to be made in connection with any material development of the subject matter being disclosed.

Page 3:

Our Holding Company Structure and Contractual Arrangements
with the Variable Interest Entities

TCTM is not a PRC operating company but a Cayman Islands
holding company with operations primarily conducted through (i) our subsidiaries incorporated in mainland China, or mainland China
subsidiaries, and (ii) contractual arrangements with the variable interest entities based in mainland China. Laws and regulations
of mainland China restrict and impose conditions on foreign investment in certain internet value-added businesses. Accordingly, we operate
these businesses in mainland China through the variable interest entities in order to comply with these laws and regulations, and rely
on contractual arrangements among our mainland China subsidiaries, the variable interest entities, and their nominee shareholders to control
the business operations of the variable interest entities. Such structure enables investors to share economic interests in China-based
companies in sectors where foreign direct investment is prohibited or restricted under laws and regulations in mainland China.

Revenues from continuing operations contributed by the variable
interest entities accounted for 1.3%, 2.9% and 6.6% of our net revenues from continuing operations for the years of 2021, 2022 and 2023,
respectively. As used in this annual report, “we,” “us,” “our” or “TCTM” refers to TCTM
Kids IT Education Inc. (formerly known as Tarena International, Inc.), its subsidiaries, and, in the context of describing our operations
and consolidated financial information, the variable interest entities in mainland China, including but are not limited to, Beijing Tarena
and Beijing Tongcheng for the effective period of their respective contractual arrangements with us. The current VIE, Beijing Tongcheng,
holds our ICP license as an internet information provider and a permit for the production and operation of radio and television programs,
and operates our 61it.cn website and Tongcheng Online App. Our variable interest entities are domestic companies incorporated in mainland
China in which we do not have any equity ownership but whose financial results have been consolidated into our consolidated financial
statements based solely on contractual arrangements in accordance with U.S. GAAP, and we are the primary beneficiary of the variable
interest entities for accounting purpose only. Investors in our ADSs are not purchasing any equity interest in the variable interest
entities in mainland China, but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands, and
may never directly hold equity interests in the variable interest entities in China.

[…]

Division of Corporation Finance

Securities and Exchange Commission

September 30, 2024

Page 3

This type of corporate structure may affect investors and
the value of their investment. The contractual arrangements may not be as effective as direct ownership in providing us with control
over the variable interest entities, and we may incur substantial costs to enforce the terms of the arrangements. If the variable interest
entities or the nominee shareholders fail to perform their respective obligations under the contractual arrangements, we could be limited
in our ability to enforce the contractual arrangements that effectively assigned us the voting rights in the variable interest entities,
and these agreements have not been tested in the courts of mainland China. Furthermore, if we are unable to maintain such effective assignment,
we would not be able to continue to consolidate the financial results of these entities in our financial statements. As such, the VIE
structure involves unique risks to investors of our Cayman Islands holding company. See “Item 3. Key Information—D. Risk
Factors—Risks Related to Our Corporate Structure—Any failure by Beijing Tongcheng or its shareholders to perform their obligations
under our contractual arrangements with them would have an adverse effect on our business” and “Item 3. Key Information—D.
Risk Factors—Risks Related to Our Corporate Structure—The shareholders of Beijing Tongcheng may have potential conflicts of
interest with us, which may materially and adversely affect our business and financial condition.”

There are also substantial uncertainties regarding the interpretation
and application of current and future laws, regulations and rules of mainland China regarding the status of the rights of our Cayman
Islands holding company with respect to its contractual arrangements with the variable interest entities and their nominee shareholders.
It is uncertain whether any new laws or regulations of mainland China relating to variable interest entity structures will be adopted
or if adopted, what they would provide. If the PRC government deems that our contractual arrangements with the variable interest entities
do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation
of existing regulations change in the future, we could be subject to material penalties or be forced to relinquish our interests in those
operations or otherwise significantly change our corporate structure. We and our investors face significant uncertainty about potential
future actions by the PRC government that could affect the legality and enforceability of the contractual arrangements with the variable
interest entities and, consequently, significantly affect our ability to consolidate the financial results of the variable interest entities
and the financial performance of our company as a whole, which would likely result in a material change in our operations and/or a material
change in the value of our securities. If we or the variable interest entities are found to be in violation of any existing or future
laws or regulations of mainland China, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities
would have broad discretion in accordance with the applicable laws and regulations to take action in dealing with such violations or failures.
See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds
that the agreements that establish the structure for holding our ICP license do not comply with applicable laws and regulations of mainland
China, or if these laws and regulations or the interpretation of existing laws and regulations change in the future, we could be subject
to severe penalties or be forced to relinquish our interests in those operations” and “—If the PRC authorities determine
that we can no longer own and operate certain of our learning centers through our subsidiaries in mainland China, we may need to restructure
the ownership and operation of these learning centers (including possibly transferring these learning centers to the variable interest
entities), our business may be disrupted and we may be exposed to increased risks associated with the contractual arrangements relating
to the variable interest entities.”

Division of Corporation Finance

Securities and Exchange Commission

September 30, 2024

Page 4

2. Please disclose the location of your auditor’s headquarters
                                            and whether and how the Holding Foreign Companies Accountable Act, as amended by the Consolidated
                                            Appropriations Act, 2023, and related regulations will affect your company. Also provide
                                            cross references to applicable risk factors.

In response to the Staff’s comment, the Company respectfully
proposes to add relevant disclosure as follows (page references are made to the 2023 Form 20-F to illustrate the approximate
location of the disclosure) in its future Form 20-F filings, subject to updates and adjustments to be made in connection with any
material development of the subject matter being disclosed.

Page 12:

The Holding Foreign Companies Accountable Act

Pursuant to the Holding Foreign Companies Accountable
Act, or the HFCAA , as amended by the Consolidated Appropriations Act, 2023, if the SEC determines that we have filed audit reports issued
by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit
our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate
completely registered public accounting firms headquartered in mainland China and Hong Kong, or the PCAOB Determination Report. On December 15,
2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the
list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.

Our current auditor, Marcum Asia CPAs LLP, or Marcum Asia,
the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor
of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States
pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Marcum Asia,
whose audit report is included in this annual report on Form 20-F, is headquartered in New York, New York, and was not included in
the list of PCAOB identified firms in the PCAOB Determination Report issued in December 2021. Our ability to retain an auditor subject
to PCAOB inspection and investigation, including but not limited to inspection of the audit working papers related to us, may depend on
the relevant positions of U.S. and Chinese regulators. Marcum Asia’s audit working papers related to us are located in mainland
China. With respect to audits of companies with operations in mainland China, such as us, there are uncertainties about the ability of
our auditor to fully cooperate with a request by the PCAOB for audit working papers in mainland China without the approval of Chinese
authorities.

Division of Corporation Finance

Securities and Exchange Commission

September 30, 2024

Page 5

Each
year, the PCAOB will determine whether it can inspect and investigate completely registered public accounting firms in mainland China
and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate
completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions
to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following
the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified
as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become
subject to the prohibition on trading in the United States under the HFCAA. For more details, see “Item 3. Key Information—D.
Risk Factors—Risks Relating to Doing Business in China— Our ADSs will be prohibited from trading in the United
States under the Holding Foreign Companies Accountable Act, or the HFCAA, in the future if the PCAOB is unable to inspect or investigate
completely our auditors. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value
of your investment.”

3. Please amend your disclosure here and in the Summary Risk Factors, Risk Factors, and Operating and Financial Review and Prospects
sections to state that, to the extent cash or assets in the business is in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets
may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions
and limitations on the ability of you, your subsidiaries, or the consolidated VIEs by the PRC government to transfer cash or assets, and
state that there is no assurance the PRC government will not intervene in or impose restrictions on the ability of you, your subsidiaries,
and the consolidated VIEs to transfer cash (or assets). Provide cross-references to these other discussions. To the extent you have cash
management policies that dictate how funds are transferred between you, your subsidiaries, the consolidated VIEs or investors, summarize
the policies and disclose the source of such policies (e.g., whether they are contractual in nature, pursuant to regulations, etc.);
alternatively, state that you have no such cash management policies that dictate how funds are transferred. Also discuss whether there
are any restrictions on your ability to convert Renminbi into foreign currencies. Lastly, provide cross-references to the condensed consolidating
schedule and the consolidated financial statements.

In response to the Staff’s comment, the Company respectfully
proposes to revise the referenced disclosure as follows (page reference is made to the 2023 Form 20-F to illustrate the approximate
l