Japan rejects hard-sell teaching

Last month's collapse of another chain of English language schools in Japan has left thousands of teachers facing an uncertain future and many more students out of pocket. It may also sound the death-knell for a business model that placed quick profits and rapid expansion above all else. Almost three years after Nova, Japan's biggest eikaiwa, or English conversation school chain, went bust, Geos filed for bankruptcy with debts of about $81m. It immediately closed 99 schools employing 483 people, with G.communications, a Nagoya-based chain, acquiring the 230 remaining branches. Students at the closed schools were told they would not receive tuition rebates but would be allowed to transfer to other schools or learn online with the money they had already paid. Few were surprised that Geos, founded in 1973, met the same fate as Nova, but that did little to mollify students unable to transfer to other schools or teachers uneasy about the new working conditions at G.com. Geos reportedly started finding new buyers for its overseas schools as soon as the depth of its financial crisis became clear. It operated schools in several other countries, including the UK, US, France and Canada, and in January closed all eight of its schools in Australia, leaving 2,300 students unable to receive refunds and 390 staff without jobs. While disaffected teachers and students consider their options, the eikaiwa sector is left reeling from its second high-profile failure in three years. The once booming industry, its image already tarnished by Nova's sudden collapse, is grappling with falls in student numbers and an inability to adapt to a more sophisticated market. Geos, like Nova, fell victim to its unshakeable belief in an over-ambitious business model that depended on persuading students to part with huge sums of cash up front and investing it in advertising and new schools. But the current climate is a long way from the eikaiwa heyday when Nova operated about 900 branches and Geos about 500. Enrollment in foreign-language schools in Japan plummeted from 826,858 students in February 2006 to 335,604 this year, according to the ministry of economy, trade and industry. About 40,000 students attended Geos schools in September 2008, but the number had fallen by more than 3,000 by the time the company collapsed, according to Teikoku Data Bank. It had become trapped in a cycle of falling student numbers and the revenues needed to fund aggressive TV commercials."It was clear that things weren't going well for Geos," said Dennis Tesolat, general secretary of the General Union, an Osaka-based organisation that represents mainly language teachers. "They were paying high rents to build schools near train stations in rural areas where people tend to use cars. Geos was expanding without knowing what it was doing." Tesolat acknowledged that the school had moved quickly to reach a deal with G.com and prevent the widespread panic that followed Nova's collapse, but said the industry's future remained cloudy. "The market has changed because students have options that weren't open to them before. "In the old days you had to go to an eikaiwa, but students no longer believe that you have to hand over $10,000 to a school. They can take lessons online, there are free materials on the internet. Being with a native English speaker is not seen as the only way to fluency." The industry is now on the brink of a potentially painful period of restructuring that could lead to the emergence of a more cautious breed of schools that focus more on career development and teaching than on expansion and advertising. "The schools that devise a way to keep good teachers for a relatively long time will win in the end," said Tesolat. Industry insiders agree that the Geos debacle should bring an end to the time-honoured practice of persuading students to hand over large sums of money, often borrowed from consumer loans firms, for long-term contracts. "Eikaiwa is an education industry, but it is also a business so you have to grow in a healthy manner and look after your employees and students," said Dean Rogers, owner of the Dean Morgan chain of language schools. "The 100% prepaid package, financed by loans, is not the right way to do it." Surprisingly perhaps, Rogers believes now is a "great time" to be in the industry, particularly for smaller chains that offer more manageable deals to students and have no interest in empire building. "The market is already out there and you don't need to be a rocket scientist to make it work. This is a crisis for the larger schools because their brand image has been tarnished." The fate of Geos and Nova may also force prospective teachers to reconsider a short-term career in the eikaiwa industry. While classes at surviving Geos schools have resumed under their new owners, some teachers shunned the offer of provisional three-month contracts with G.com. "The contract was very vague," said Tuan Hong, an ex-Geos teacher from Britain who is looking for a new job. "To me it looked like a diplomatic way of putting people out of a job." The 29-year-old, who had taught for Geos in Tokyo for more than three years, said the school had long ago lost sight of its responsibilities to students and teachers. "Our priority as teachers was to sell, whether it was books, calculators or new contracts. We were treated more like salespeople than teachers. If Geos had concentrated more on the product than on sales, then it might still be around today."