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The Foreign Language School Market by the Numbers

Adamu at MutantFrog has taken the time to graph the numbers for the foreigner language market in Japan. If you've been following developments, you know that the numbers are bad. That said, he has an optimistic take on what's in store in for eikaiwa.

Paradoxically, this sort of downsizing is exactly what the industry needs, but when schools collapse so suddenly and spectacularly it scares people away and hurts business even more. Nevertheless, I would not be so intensely pessimistic as some of the commenters I have read. The initial success of these schools has created the “eikaiwa paradigm” that will live on, I think, even if all the big chain schools fall to the wayside. Just as small-time piano teachers can make good money anywhere in the world, any halfway decent teacher who can reliably provide value for his/her services can do OK. Maybe not “tens of thousands of western immigrants descend on Japan” kind of OK, but OK nonetheless. Japanese people still want to learn English and are willing to pay for it. They just can’t afford it as much anymore and don’t want to hand their money to crooks.

The problem is that these major players set up large-scale businesses that profited by essentially gouging customers – promising stellar results and pressuring them into long-term contracts only to give sub-standard lessons to people who may not have really been able to benefit from them in the first place. Now, a combination of factors – tighter laws, the bad economy, rise of the Internet as a study tool, people generally getting wise to the con – has come crashing down on Geos.What the numbers don’t show is that the major operators seem to be offering more or less the same product as before – if anything, they are diluting the product with less value and more part-time teachers – and customers just aren’t as interested anymore.

Can't say I disagree. Read the rest of the article and download the Excel file he used for the graphs.

Comments

I disagree with his optimism. It means less people will have a chance to come to Japan unless they're quite wealthy already or already fluent in Japanese and somehow get hired. Those here or who wish to stay here are fighting over fewer and fewer, lower and lower paying jobs. Maybe it's good people are forced to learn the language to make it here, but even that's not a certainty. You're also then a part of Japan's over-worked, underpaid job world where workers have very few rights anymore. The eikaiwa boom was a reflection of good economic times in Japan, and now its current downward trend reflects the downward trend of the country's wealth. Likewise, Japan's poverty rates are among the top 3 in developed countries now. The only positive I can see from the single English teacher's perspective is you become even more of a novelty with fewer and fewer foreigners to compete with here. Though that's countered if the salaries continue to drop or remain low.

For me, the surprising thing about those graphs is with the exception of the bump around 2005-2007 (representing Nova's huge expansion & subsequent collapse), the number of language schools has been on a pretty steady increasing trend. I'm sure most of the increase is in smaller independent schools, but to me it still suggests the industry has a lot more contraction to do.

If correct, these figures are quite extraordinary.

They suggest that average school size has gone from 174 in 2000, to 209 in 2005, to 94 in 2009.

Revenue per school has almost halved from around 3 million per month in 2000 and 2005 to 1.6 million per month in 2009. Jan and Feb 2010 figures are looking even worse than 2009.

how does he get these numbers. Alot of smaller schools must be flying under the government`s official numbers radar. Ive seen a large number of start ups from independent do rather well because of thier low overheads and general lack of greed. I wonder if all the students going to these smaller schools are included.

I have been blogging about the Yano Research numbers, which show that the Eikaiwa implosion is just a subset within a rather robust industry.

I appreciate what Adam Richards put out at Mutant Frog. But it doesn't sound like it's about the whole English teaching industry by any means.

I also wonder how many independents fly under the radar.

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