Walking in your footsteps … Nova
Posted by Matt Dioguardi on September 21st, 2007
I know of at least three blogs, Japan Probe, Let’s Japan, and Mutantfrog Travelogue that have reported about Nova’s school closings.
For the record there was once a school called Bi-lingual in Japan that was the fourth largest English school in Japan. About 13 years ago, they started paying teachers late, closing branches, and then kaput, they collapsed and went under.
The premise was that they were too big to go under and so somebody would step in and help out or take over or something … nope.
At least for now Nova would seem to be going in Bi-lingual’s footsteps.
September 21st, 2007 at 1:41 pm
Wasn’t TOZA the largest when they went under? We’ve been writing from time to time on this at Japan Economy News, and the NOVA situation seems to be following along with the recent bankruptcies of NCB, Lado and ABC. At one time, NCB was also in the top 10 of eikaiwa schools in Japan, and Lado was nothing to sneeze at. Like any other matured, oversaturated sector, we’re seeing a natural consolidation in the industry. The problem with NOVA is that they are the market leader in a shrinking sector of a growing industry. Big chain eikaiwa has been losing market share as part of the overall ESL industry in Japan for the past five years, but the management of these schools has done nothing to offer new products to new markets - and if they can’t do that, they can’t survive.
September 21st, 2007 at 1:48 pm
You might be right in that Bilingual wasn’t the biggest. I’m really not sure. I just happen to vividly recall bilingual from … ahem … personal experience …
September 21st, 2007 at 2:42 pm
This whole notion that the size of Nova will save it from bankruptcy is an uninformed myth that must be beaten down. Nova’s size exists entirely in the number of schools it operates and the number of students it has “enrolled.” In terms of capital, Nova is very small, something like 50 million USD, IIRC. If you go back about 3 or 4 pages on Let’s Japan and start reading blog posts from June 13th, when METI punished NOVA, up to the present, it should be obvious that Nova has completely run out of cash. Its business is a ponzi scheme that depends on an increasing number of students buying expensive lesson packages. Once that flow of cash is interrupted, the whole operation fails.
The way Nova has operated has been wholly illegal and underhanded. The law caught up with them and they are suffering the consequences. If Nova were “normal,” the board of directors would have fired Sahashi and put into place a restructuring plan to get the company back on its feet by now. That hasn’t happened and it doesn’t look like it’s going to happen because Nova’s biggest worry now is trying to pay its teachers and pay the rent.
September 21st, 2007 at 4:44 pm
“Too big to fail” generally applies to vitally important institutions, like banks. Eikaiwa doesn’t fit in that category and I’m surprised anyone working for a language school would take that sort of delusional attitude. “Too big to just evaporate without some bigger company stepping in to snatch up any assets that might possibly have value” might be closer to the truth (a la Simul and its attached academy getting bought by Benesse some years back).