Monday, July 13, 2009

Nova and the Eikaiwas

AEON and Geos ads in a Kofu alley. I am fairly certain that Geos has not obtained the necessary permission to use that Shrek image.

English conversation schools (eikaiwa) in Japan are big business. Many adults who studied written English in school for the dreaded TOEIC exam later find themselves wanting to actually communicate in English for business, travel, or just for fun; and over the past thirty years several huge corporations have sprung up to fill this demand (and, arguably, to create a larger demand). These companies advertise on billboards, subways, and on television; often employing actors or other traditional gimmicks to entice consumers. Aside from AEON (currently the largest eikaiwa chain) and Geos, Berlitz and ECC currently offer classes for adults and children in cities from Hokkaido to Okinawa. The rivalry between AEON and Geos is particularly strong, as the heads of both companies were once partners who split over the issue of whether to expand worldwide or to focus on conversation schools within Japan.

Even Kofu—whose rural character guarantees a low demand for English education—boosts an AEON, a Geos (technically the Geos is now located in a neighboring city, as the company abandoned the aging streets of Kofu for a brand-new shopping center to entice Yamanashi’s affluent suburban population); for kids, the Perfect English School, the humorously titled Speakeasy, Peppy’s Kids Club;* and, surprisingly, a Nova.

That a Nova school still operates in Kofu is astounding after the company’s embarrassing bankruptcy less than two years ago. Nova was the biggest, most powerful eikaiwa of them all, operating nearly a thousand schools (compared to AEON’s three hundred), and whose colorful likeness and annoying pink rabbit mascot (pictured at left) overloaded television stations across Japan, making the company’s name as well-known as McDonald’s or Lawsons. At its peak, the company employed five thousand English-speaking foreigners; many of whom found themselves stranded in Japan without jobs or back pay after the company went bankrupt. This lead to a job crunch when many teachers desperate to stay in Japan took jobs at smaller schools wherever they could. Those that couldn’t find jobs either went home or stayed with help from generous parents.

So why did Nova go bankrupt? As far as I’ve been able to piece the story together, Nova’s incredible profits and outrageous expansion were due to its aggressive marketing policies and bait-and-switch sales tricks to lure in new students. Whereas AEON and Geos offer students a reserved spot in one class (with the option to switch if a conflict arises), Nova sold ticket books that students could supposedly use anytime they wanted to take a lesson. Because the individual lesson price was cheaper if students bought tickets in greater numbers, many students bought more tickets than they could use before they expired. When students did show up, they were frequently turned away because a class had maxed out. Customer dissatisfaction was huge, and to make up for this loss of renewal revenue, Nova reached out to more new students with even more aggressive expansion. The bubble finally burst in 2007 when Nova filed for bankruptcy and cast a black spot over the eikaiwa chains.

However, that was a long time ago, and the eikaiwas march on. Expansion has slowed, and companies are now more careful about where they open new schools. Meanwhile, an organization called G.Communication—who operates, among other things, several cram school and restaurant chains—took over what remained of Nova; and now operates just thirty schools. I like to think that there is a lesson in this story about people refusing to be manipulated by the education business’s pushy advertising and sales gimmicks—but that could be wishful thinking. Maybe Nova was just stupid enough to go too far.

*A funny story about Peppy’s Kids Club: the company is changing its name after one of its Canadian teachers was caught in Thailand messing around with little boys. Not the kind of club I’d like to join.


Mike said...

I want to punch that rabbit.

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