Let's Japan.org Debunking Eikaiwa and Ramblings in Japan

Old news is fun! The Japan Times reports on Yano Research's survey on the foreign language learning market in Japan, which I wrote about this at the beginning of August and touched on again earlier this month. The only difference with today's article is that the JT spoke with somebody at GEOS.

Susumu Ikegami, a spokesman for Geos Corp., which runs English-language schools in Japan and other countries, said they have been facing a serious decline.

"As the number of students decreased, the number of classrooms also declined," said Ikegami, who declined to give the figure for the classrooms.

Ikegami said the market's downward trend began about five years ago, although the reason is hard to pinpoint. However, he pointed out that the bankruptcy of Nova Corp. in October 2007 had some impact.

It's amazing that Ikegami can't figure out why business is down. You can try and blame NOVA, Lehman Brothers, or swine flu, but you can only wring so much mileage out of those excuses. The article ends with this brilliant plan:

However, Ikegami of Geos said the overall outlook for the language-school market in Japan doesn't appear bright.

"We have 53 schools overseas, and they are doing pretty well. So, while there is the chance of growth from a global outlook, we don't really have a good picture for the Japanese market. Rather than getting more students, we are working to run the business more economically," Ikegami said.

Things don't look good down the road, so let's cut costs? That's it? The market has been sliding for years and GEOS is still at the cut costs/efficiency stage? The article is titled "Few answers for the language market." Is the problem about finding answers to the downturn or the dreadful way in which eikaiwa schools conduct business?

My guess is that it's the latter, with NOVA being the straw that broke the camel's back. All the schools really care about is putting bums in chairs and vacuuming their students' wallets, and NOVA was the poster child of this kind of behavior. METI's press release　describes it in vivid detail, from pressure sales to exaggerated advertising to underhanded refund practices to outright thievery and deception. Other schools have tried to blame its instructors for the failings of the company or sue them for exercising their right to strike.

But the bad behavior doesn't stop at eikaiwa. Dispatch teaching is just as bad. Not only does the job have no benefits, instructors are disposable employees that boards of education pick and choose from and discard at will. Although teaching English looks promising in elementary schools, it should not be forgotten that the potentially lucrative job scene hinges on school budgets. BOEs with no money are more likely to stick with a Japanese teacher than hire an ALT.

The homestay business is more of the same. Gateway21 tore a page from the NOVA playbook with 950 million yen vanishing into thin air as the end result.

To put it bluntly, the rot is extensive, and teachers and students know it. But if the Susumu Ikegamis of the business can't understand why business is bad, then there's not much hope for them. What's the answer that eikaiwas should be looking for? How about: Stop abusing your employees and ripping off your customers?

Reporting on companies that go bankrupt follows a predictable script. First, the shocking news of the bankruptcy is announced followed by a few more details. Next, are the stories about the people who lost their money, which are then followed by the stories of anger from the people who lost their money. The Chugoku Shimbun brings us a story about the anger.

The October 26 edition of the Yomiuri Weekly carries an article that illustrates how much of a scam the travel abroad sector is--it's all about money, and the rules to protect consumers from being swindled are few and far between. The YW takes a look at why Gateway21's clients will never see the ¥950 million they paid the company.

When Gateway21 announced that it was bankrupt, there was talk of students already studying abroad having to return home due to Gateway stopping payments to overseas schools. Some students appear to have caught a break:

On Wednesday, TBS aired an exclusive interview with Tomomasa Fukui, president of the failed study abroad agency, Gateway21, in which he said the company failed due to poor management. Fukui also denied embezzling any of the ¥950 million in fees paid by students.

Failed study abroad agent Gateway21 held a meeting Sunday to apologize to its clients, telling them that their money had vanished into thin air.

Another sign that the eikaiwa industry is still in trouble: Gateway21 plans to file for bankruptcy protection with debts totaling 1.29 billion yen.