NOVA Goes Bust

Well, I can safely say now that I left the Japanese eikaiwa school business at the right time. Recent mega corporation NOVA officially went belly-up last Friday, closing down it's schools and suspending operations indefinitely, thereby disaffecting scores of staff, teachers, and students. There is the posibility that an outside buyer will save the staggering giant as they haven't applied for full bankruptcy, but have opted for 'reorganization proceedings'. However the likelihood of salvation seems meager at best, with two of the three likely candidates for bailout immediately declining to take on the burden.

I had never even once considered that my relatively posh, albeit mind-numbingly repetitive, job of 'teaching' English to Japanese denizens could ever suddenly come to such a jaw-dropping halt. But that was the reality for nearly 6,000 instructors and staff in early October who saw their future with the company cut short. Those living in NOVA housing, as I had done at the start of my one and a half year stay, have recently come home to find evictions on their doors, since NOVA had not paid the rent they normally deduct from teacher salaries. Instructors have yet to see a dime of their pay from late September on while some staff have been unpaid since July.

Here are a few numbers just to give you an idea of the scope of the demise:

Total number of schools in operation shut down: 924 in addition to the huge multimedia center in Osaka

Total market share by revenue in 2003: 61.5 billion yen ($61,500,00)

Total number of students: 410,000

Total number of foreign workers: 7,000 (5,000 of which were language instructors)

First quarter losses for fiscal year 2007: 4.3 billion yen

What could precipitate such a massive, rapid decline?

Well it didn't happen overnight according to the earnings posted by NOVA several years prior to the collapse. Net sales began a long slow decline as early as 2003, and prompted an aggressive campaign of marketing, promotions, and the opening of new schools. The practices, suspect from the beginning, gradually became more and more draconian causing a huge rift with students as they were no longer able to return unused tickets for refunds. As a result of such measures and the disaffection of customers it inevitably brought about, the Japanese government got involved and in June of 2007 a six-month ban against soliciting new long-term contracts for students was placed on Nova by the Ministry of Economy, Trade, and Industry. This was to be the death knell for the language school giant, as the loss of their reputation or social face, such a precious commodity for any business in Japan, precipitated their meteoric fall.

As far as what will happen to the language industry in Japan in general, its flagship now sunk, the future is unclear. Some feel that the collapse will actually be a boon for other language schools and provide better salaries and more scrutiny in the selection of teachers. They maintain that once the bitterness subsides, Japanese in general will still need to realize the necessity of integration within the global economy and the fact that they'd better learn English and other foreign languages or be left behind. Others however, feel this is just the beginning of the end, as the economy wanes and the percentage of the elderly increases. As a general trend, salaries of foreign workers had been on a steady decline since 2001 or so, and the decision will ultimately have to be made as to whether the average student, considering foreign opportunity will decide to be a consumer or a student.