(Updated to change student data)
Geos, one of Japan’s major “eikaiwa” English conversation chains, has entered the bankruptcy process (see Let’s Japan or any number of news reports for more details). Some reactions are declaring eikaiwa dead and encouraging teachers to look for employment outside Japan. It does seem like the old eikaiwa business model is not poised for a serious comeback barring a significant improvement in the Japanese economy. That said, eikaiwa as a concept and attractive learning option for Japanese people isn’t going away.
From the looks of it, some eikaiwa bankruptcies are all but inevitable. Revenue is down, and according to Nikkei “the number of language schools in operation last year remained mostly unchanged from 2008, but the number of new students enrolling in the schools plunged 35.7%.” That’s down 35% from post-NOVA levels!
Let’s see some of those numbers in graph form:
And some indicators of our own:
As overall revenues have fallen, sales of teaching materials have risen in importance, now accounting for around 10% of the language school business.
The industry overall now employs more part-time teachers than full-time, but now both categories of teacher are in decline. Not exactly a good sign for financial health or the job security of teachers.
Revenue per student has risen slightly as the average number of classes per student is down, which suggests to me a slightly lower value for the lessons.
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.
(The stats above can be had at the METI website (bilingual Excel file))