Let's Japan.org Debunking Eikaiwa and Ramblings in Japan

Day 6 of Sahashi's trial was today (funny, the papers seemed to have skipped reporting on the 4th and 5th sessions), and the notion that he might get off with a light sentence seems to have gained some ground. According to the Asahi shimbun, the judge threw out 2 depositions given by the assistant manager during the investigation in which he stated that Sahashi had instructed him to use money from the shayukai employee's fund.

During the second session of the trial, the assistant manager revised his statement, testifying that he told Sahashi about the money in the fund but never received any instructions from him in advance. This contradicts the prosecutor's assertion that Sahashi gave directions to divert the funds from the outset. It also contradicts testimony from Sahashi who said that he was told about the money and understood that it could be used to pay for canceled lesson contracts.

This looks like a blow for the prosecution as it loses the testimony of a key witness. At the very least, some doubt as to whether Sahashi acted illegally has been introduced and this can only benefit him.

Asahi article

「ＮＯＶＡ元社長指示」供述調書却下　公判証言を重視

2009年6月26日

経営破綻（はたん）した英会話学校「ＮＯＶＡ」（大阪市）の社員らの積立金３億２千万円を不正流用したとして業務上横領の罪に問われ、無罪を主張している元社長、猿橋望（さはし・のぞむ）被告（５７）の第６回公判が２６日、大阪地裁であった。樋口裕晃裁判長は、同社の元経理担当次長（５０）が「猿橋元社長から積立金の流用を指示された」とした捜査段階の供述調書２通について、検察側の証拠申請を却下した。

元次長は、猿橋元社長の共犯容疑で逮捕され、不起訴処分（起訴猶予）になっている。証人出廷した第２回公判で「積立金があることは私から元社長に報告した。元社長から事前に示唆されてはいない」と述べ、捜査段階の供述を修正。元社長が当初から不正流用を主導したとする検察側の主張を否定し、元社長は積立金があるとの報告を受けて受講生への返還金に使うことを了承しただけだとする弁護側の主張に沿う証言をしていた。樋口裁判長は公判での証言を重視したとみられる。

Terrie Lloyd's column in Japan Today is supposed to be a look at the state of eikaiwa in Japan, but it's a poor effort stuffed with meaningless business-speak. Teaching English has been on a downward slide ever since Japan's asset bubble burst. The collapse of NOVA only served to make things worse. Let's take a look at the column.

Last week, the ex-president of Nova Corporation, once Japan's largest English school chain, was in court to answer charges of embezzlement prior to the failure of his company. According to the prosecutors, Nozomu Sahashi diverted about 320 million yen ($3.3 million) from Nova to pay student fee reimbursements of a related company.

Quibble: the trial began on June 1st and is slated to end on July 3rd. The way this is written, it sounds as if the trial started last week.

To be honest, I'm surprised that this is the worst thing the prosecutors could come up with, because moving money between companies is common practice for conglomerates, especially if related firms are in trouble. Indeed, it's as simple, and legal, as making an inter-company loan. Maybe he didn't do the paperwork and so there is a case to answer for, but I'd be surprised if it will amount to prison time.

I think a lot of people are surprised that Sahashi was arrested for embezzlement given his shady stock dealings and the autocratic way in which he ran NOVA. Sahashi may not spend much time inside a jail cell, but he is ruined. After this trial is over, he will have to face the civil suits against him.

That said, referring to embezzlement as a paperwork error is a glib dismissal of the crime. Companies can, of course, move money around, but this ignores the relationship of Sahashi to the money. He ruled owned NOVA and pulled all of its strings. He also held ownership in NOVA Kikaku, which was run by a relative. Nova quickly ran out of cash after METI sanctioned the company, and had nothing in its coffers to pay employee salaries and reimburse the torrent of canceled lesson contracts. Moreover, the money Sahashi took belonged to an employee welfare fund, and he raided the fund after colluding with a manager, not bothering to consult with his board or the staff. It's difficult to say how his actions constitute a loan especially when the money was not his to use in the first place. This is robbing Peter to pay Paul, not some clerical error.

What's interesting is that if you look at the companies remaining in the market since Nova imploded, none of the majors seem to been able to step in and steal significant market share. Indeed, by my estimates, the five largest schools between them probably don't teach more than 500,000 students and thus I can see that the industry is highly fragmented. This is quite unusual in Japan, where normally there is one massive incumbent taking a 70%-80% market share, then leaving mere scraps for everyone else.

This fact tells me that no one so far, including Nova earlier, has figured out how to systemize the English-teaching business, and that there are lots of students who appear to be happy studying in smaller schools. Perhaps the human element of local teachers you know and trust is still very important. Or perhaps it means that Japanese business owners and managers haven't figured out yet how to extract the best business growth and financial results from their foreign teacher employee base.

I'm sorry, but "none of the majors seem to been able?" Moving on, "there are lots of students who appear to be happy studying in smaller schools" is almost laugh-out-loud funny. People are happy studying at smaller schools? Impossible! And what does it mean to "extract the best business growth and financial results from their foreign teacher employee base?" Why does English teaching have to be systemized and run by a large company, anyway? The collapse of NOVA is like the asteroid that killed the dinosaurs. The little schools are picking up the crumbs of NOVA and thriving. There's nothing wrong with this. There is something to be said about learning English at smaller, more personal schools--they generally pay better attention to their customers.

For example, right now the marketing focus of most schools is on cheaper lessons and variations of private lessons and smaller classes. This is all well and good, but smaller classes are not cheap to do, so using simple Psych 101 theory, it would follow that popular teachers should be trying to convince their students that better quality learning means more one-on-one teacher time, and thus higher fees. I appreciate that many teachers may not see themselves as salespeople out to extract more value from their students. However, if some enterprising CEO could come up with a strategy that allowed popular teachers to overcome this reluctance, then with the right in-house training and incentives, that school could be pulling in much better margins and therefore grow more quickly.

More business gobbledygook. How do you extract more value from students? Sell them more lessons with a slick PowerPoint presentation? Pick their pockets? The bit about getting teachers to be salesmen is nothing more than a rehash of the way GEOS and AEON already do business. Here's where the analysis falls flat. It focuses too much on the financial viability of schools while ignoring the elephant in the room--that the large eikaiwas are, on the whole, poorly managed and terrible places to work. They are set up to reap maximum profit, not educate.

The problem with eikaiwa goes beyond money and trying to find the right strategy, and has everything to do with delivering quality. Sadly, the large schools aren't interested in this. Instead, they treat instructors as unskilled labour. They work for low pay, generally have no healthcare plan, have little opportunity for professional development, have few benefits, and have even less job security, but are expected to look and sound professional at all times. It's all about making a buck off selling time with English-speaking foreigners.

Using Berlitz and GABA as being representative of the entire industry is too simplistic. The author himself even says that the English teaching market is extremely fragmented, so looking at Berlitz's and GABA's numbers tell us about the health of the respective companies and nothing about the industry as a whole. By this metric, had Mr. Lloyd been writing about eikaiwa when NOVA was at its peak, he might have praised NOVA as a paragon of business for its high revenue stream, venture into videophones, slick advertising, and aggressive expansion policy. The numbers tell us that the schools are not very healthy, but we also need to consider what is happening on the ground.

Berlitz could have the best teaching methodologies in Japan, but the fact that they are suing some of their teachers for trying to unionize exercising their right to strike and are stalling for time suggests that they don't care about them. GABA is equally dodgy. It is more of a middleman than school, and as a result, it's "partners" work at "studios" for no guaranteed salary, no paid holidays, or any other benefits.

The pressure sales tactics used by the schools to vacuum as much money out of students' pockets, the poorly trained instructors working in even poorer conditions, and the mistrust of the whole operation by students combine for a perfect storm that David McNeil describes as an industry rigged for implosion. It's no wonder the industry is in decline because it is completely lacking in credibility.

How about this for a radical idea? Make eikaiwa about education. Set standards. Have strict curriculums. Hire instructors with qualifications and treat them with respect, and pay them a decent salary. This may be a pipe dream, but it makes a lot more sense than "pulling in much better margins," or trying to "extract value" from students. The large eikaiwas might be surprised to learn that delivering a quality product leads to financial success.

In the forums, Inflames provides a link to a G.communication PDF. It seems that they have decided to rent out space at its Yaesu school. There's nothing unusual about this as businesses look for ways to generate revenue during the economic collapse. I've heard about parts manufacturers making confectioneries to help make ends meet. Still, it suggests that business isn't very good at the Yaesu school.

Let's back up a bit to March 2008:

YAESU NOVA

Well, not surprising, the opening of the YAESU school today was a complete bomb! They had a total of about 7 calls and hardly any visitors. There are plans to open new schools in Shibuya, Shinjuku and Ginza next. One has to wonder if they'll get the word out for those schools.

Now, fast forward to the present:

The reason for this is that Yaesu has now become a HALF DAY school. Its only open from 5-9, Monday-Friday. It used to be a regular school. I worked there for six months, up until the end of last year almost, but then got the forced transfer BS and was told to move - as have other instructors, due to the reduced operating hours.

It doesnt surprise me now that they have to rent out the rooms - probably just to cover the rent. My understanding is that now ALL of the instructors that teach there are newbies, who came after the collapse and received the Mickey Mouse, lecture-style training by Mr.Smiley and crew. Some received actual training, basically like OJT (especially last year, cuz we had training every couple weeks and I was doing Obs for pretty much the whole six months I was there). At the time I was there, however, and shortly thereafter, the instructors (myself included) pulled through the bankruptcy and had gone through Old Novas system of training (again, nothing amazing, but more comprehensive than what most have received following the collapse), and were used to the textbooks, the lessons, etc.. Even instructors that were relatively new (started with Neo-nova) were working with seasoned instructors and could receive tips/advice if they wanted it.

The flyer is straightforward: the Yaesu school has space for rent. Says the first ad:

1. 2 minutes from the Yaesu Exit
2. So close, you can catch your (bullet) train with seconds to spare
3. No other businesses next to the school. Nice and quiet
4. Close to izakayas, so you can head out for a drink after your meeting
5. Same-day reservations available

There are four rooms (1 ten-person and 3 six-person rooms) with videophone booths, white boards, and access to washroom. The 6-person room rents for ¥3000/hour while the larger room goes for ¥4500/hour.

The second ad is more of the same, but with an added touch of humor. This time, instead of a meeting room, G. com is renting out "private offices" which suspiciously resemble the meeting rooms, for the low price of ¥500/hour. Again, the 5 merits of their service:

1. 2 minutes from the Yaesu Exit
2. So close, you can catch your (bullet) train with seconds to spare
3. No other businesses next to the school. Nice and quiet
4. Large desks for efficient work
5. It's cheap

The hilarity is in the two text boxes in the bottom right corner.

The top one says, "All you can drink coffee" and the bottom one, "OK to ask foreigners questions after 5:00 P.M." How demoralizing. Instead of giving lessons, instructors will be expected to entertain users and their endless parade of hits such as, Do you know Ichiro? How long you Japan? and the timeless classic, Can you eat Japanese food? Why not just turn the school into a host/ess bar and be done with it?

I wonder if there's a catch here. ¥500 for the first hour and ¥400 for every subsequent hour is really cheap, and I don't see how that covers costs unless all of the offices are used. Will users have to sit through a sales pitch for lessons? Does G.Com hope that people will magically sign up after renting their rooms? Moreover, what's to stop someone from using this service as an eikaiwa? Would a businessman be able to snag an instructor and have him correct or edit some correspondence?

Like the parts manufacturers forced to make candy, G.Com's attempt at converting the school into a meeting space is delaying the inevitable. If you can't make a go of your primary business, it's time to think about closing the school or downsizing it, and accept the fact that it will never be very busy or profitable.

Regarding my comments previously made about people giving up their cars in favor of bicycles and car-sharing, here's a clip on Orix's car-sharing business:

The video notes a shift in thinking from purchasing and owning a car to borrowing and using one. The housewife in the video figures it costs her at least ¥60,000 a month to operate a car, but with car-sharing, her costs drop to around ¥10,000 a month. That's a significant savings. While Orix already has 5,000 members and the business is just getting started, it's a step in the right direction toward reducing CO2 emissions and the number of cars on the road.

Via Japan Probe

While I'm on the subject of immigration, the Lower House passed a bill on new residency rules last Friday.

The big changes:

• The alien registration card is replaced with a zairyu (residence) card containing an embedded chip.
• Visa extensions increased to 5 years from 3 years
• No need for re-entry permits provided you return to Japan within one year
• Control of information passed to Immigration Bureau from local governments
• Foreigners listed on the Juki Net resident registry network
• Severe punishment for failure to notify changes in personal information

There are definitely some good things in here, such as longer visa extensions and dropping the requirement for re-entry permits, but I can't help but think that the negatives outweigh any changes for the better.

It's going to be a pain in the ass to have to go the nearest (which could be really far away if you don't live in a large city) Immigration Bureau to report that you've changed jobs. Debito suggested in a recent podcast that employers would not be receptive to foreigner employees taking time off to update their personal information, but I think that's unrealistic. In my experience, employers aren't that hard-nosed and I suspect that they would understand that this has to do with one's ability to reside in Japan. On the other hand, foreign employees will probably end up having to use paid holidays to go about this business.

Then there's the matter of being listed in Juki Net. The system is unpopular with the public due to fears over invasion of privacy and data leaks. The constitutionality of the system was challenged by a group of Aichi residents, but the Nagoya High Court ruled in 2007 that Juki Net was constitutional. Still, there are reasons to be suspicious of how personal information will be used, stored, and protected as the safeguards in place are incredibly flimsy:

The bills also have a provision to prevent the ministry from using that data improperly, a decision that was made to ward off criticism that "the minister" could abuse the zairyu card number to violate foreigners' privacy. But no penalty for such abuse was listed.

The practice, dubbed data-matching, was outlawed by the Supreme Court in regard to its use on Japanese citizens.

The provision says "the justice minister" must limit the use of foreign residents' personal information to the minimum required for managing such residents and that the information must be handled with care to protect the rights of individuals. But no penalties or methods for enforcing such compliance are listed in the bills.

Provisions to prevent abuse of data but without penalties? This is a joke.

Perhaps the most worrisome change has to do with punishment for failing to update one's information:

On the other hand, the Immigration Bureau will tighten control of foreign residents by stripping away their residential status if they fail to report changes in address, marital status or workplace within three months. No regulations for that exist under current law.

In addition, those who fail to report such changes within 14 days or are found not carrying their zairyu cards could be hit with a ¥200,000 fine, the same regulation as the current law.

To crack down on fake marriages, the bills allow the justice minister to cancel the residential status of foreigners holding spouse visas who have not conducted "normal spousal activities," such as living together, for six months without legitimate reason. Legitimate reasons include things like domestic violence, Hosokawa said.

These are very severe punishments. In my case, I wonder what would have happened to me had this law already been in place. When I renewed my visa three years ago, I neglected to inform city hall. It's an easy thing to forget. How often does one look at their alien registration card let alone remember that you have to go to city hall and inform them? If you've been in Japan for more than a few years, it's easy to forget. For all city hall new, I was in the country illegally. The matter only recently came to my attention when my town was handing out the ¥12,000 Taro Aso kickback. I received the application form plus a letter asking me to visit them and confirm my residency status. My visa status? I renewed that years ago. It was only when I looked at my alien registration card that I realized the problem. I quickly cleared things up and the people at city hall were very understanding, but had this new law been in effect, I would have been dealing with the Immigration Bureau and it's unlikely they would have left the matter unresolved for two and half years or be very sympathetic. At best, I may have been fined, at worst, deported.

The new law now criminalizes my forgetfulness. When you consider that police can detain suspects for up to three weeks without charges and regularly stop foreigners they catch riding bicycles, it seems to me that the authorities have added extra pretense to stop foreigners and check to make sure their papers are in order. We're told that the changes are supposed to bring more conveniences to legal foreign residents, but obeying the law won't insulate you from police harassment and scrutiny over your residency status should the provisions in the new law be strictly enforced.

Update: Table of changes from the JT article.

As of June 1st the Yokohama Immigration Office has moved from the goudou chousya building in Ishikawa-cho to a new facility [PDF] near Shin-Sugita Station on the Keihin-Tohoku Line.

To get to the new office, take the Keihin-Tohoku/Negishi Line to Shin-Sugita. Exit the turnstyles and walk straight down the shopping arcade to the end. There are signs in English, so watch for them and make your way to bus stop #1 at the bus loop, and get on the #61 bus. The bus goes right to the gates of the immigration office, so there's no way you're going to get lost.

大きな地図で見る

I was there this morning and noticed how large it was. It's a dedicated building, unlike the old office in Ishikawa-cho, with a detention center, visiting facilities, and a Mini Stop convenience store. I suppose putting it out in an industrial park near a dock where cars are loaded onto freighters makes it "out of sight out of mind" to the public, but having to take a bus is a bit of a pain. Still, I was in an out pretty quick and it looks to be an improvement over the old office.

Update on the Sahashi trial today. According to the Sankei shimbun, Sahashi testified that he didn't know how much money was in the shayukai employee's fund and didn't remember checking the balance himself. He also denied that taking money from the fund was his idea.

Sahashi testified that back in the summer of 2007, NOVA was hurting for cash and wasn't able to pay employee salaries. He stressed that he realized that he had to do something about the situation and decided to use his own shares in the company as collateral to come up with some money.

In previous court sessions, testimony was given that a former assistant manager told Sahashi about the money in the shayukai fund, and that Sahashi ultimately decided that there was no alternative but to "borrow" from the fund.

Comment: I don't remember? I don't understand his strategy. Whatever it is, it makes little sense. Sahashi would have us believe that he was the noble president doing everything in his power to save the company and pay salaries, but he doesn't remember anything about the shayukai fund, and "borrowing" from it wasn't his idea anyway. Apparently Sahashi thinks he can have his cake and eat it, too.

Sankei article

積立金の流用経緯は「よく覚えていない」　ＮＯＶＡ元社長が証言

2009.6.17 11:42

経営破綻（はたん）した英会話学校「ＮＯＶＡ」の社員らの積立金３億２千万円を横領したとして、業務上横領罪に問われた元社長、猿橋望被告（５７）の第５回公判が１７日、大阪地裁（樋口裕晃裁判長）で開かれた。猿橋被告は被告人質問で、積立金を流用した経緯について「よく覚えていないが、積立金の残高は知らなかった。自分で確認した覚えもない」と話し、流用が自らの発案であることを否定した。

また、「当時は資金繰りが悪化し、売り上げで社員の給与をまかなえる状況ではなかった」と証言。「給与が気になり、私がなんとかしなければならないと思った。個人で持っている株券を売却したり、担保に入れたりした」と強調した。

これまでに開かれた公判では、元経理担当次長も「積立金があることは私から報告した。（猿橋被告は）考えて、最終的にはやむを得ない状況なので借りて対応するという指示を頂いた」と証言している。

起訴状によると、猿橋被告は従業員らが福利増進を図ることを目的とする「社友会」の積立金を、ＮＯＶＡの事業資金へ流用することを計画。元役員らと共謀して平成１９年７月２０日ごろ、社友会の口座にあった３億２千万円をノヴァ企画の口座に入金して横領したとされる。

This is disturbing:

The farm ministry uncovered 879 cases of mislabeled food products last year but only disclosed 110 of them in order to protect the companies responsible, according to documents obtained from the ministry Saturday.

The 879 cases involve companies that were issued warnings or guidance by the Agriculture, Forestry and Fisheries Ministry or its regional offices during the year, the documents show. The documents were obtained through an information disclosure request.

A ministry official said it decided not to announce all of the cases because it might deliver "a big social blow" to firms that got caught up in mislabeling through simple negligence or temporary law-infringement cases. It therefore decided only to announce cases it considered "malicious" or requiring orders to take corrective measures.

No, no, no, no,no! This is beyond messed up. How is the public supposed to make informed decisions about the food it eats if the ministry withholds information? For a nation that prides itself on the quality, freshness, and awesomeness of its cuisine, it's poorly served by the Ministry of Agriculture. The fact that the ministry withholds information to prevent "a big social blow" says that it's more interested in protecting profits than protecting the public. It's even more tragic when you consider that the ministry is behind the Food Action Nippon campaign that is supposed to inform the public about food issues and promote domestically produced food.

Right on cue, the Asahi reminds us why it's important that the public is informed about its food with a story about a the chairman of a company arrested on suspicion of labeling Chinese eel as being a product of Kagoshima.

Sadly, modern industrial food and agriculture is about making money. Where money is involved, corners are bound to get cut in the name of making a profit. I'm told that Japan is in the midst of a gardening boom, and it's not hard to see why.

Article on falsely labeled eel

ウナギ偽装容疑、会長ら逮捕　中国産を「鹿児島産」

2009年6月10日15時37分

中国産のウナギを「鹿児島産」と偽って卸したとされる産地偽装事件で、警視庁は１０日、東京都中央区の食品会社「浜伸」会長の中村驥（はやま）容疑者（６７）ら３人を不正競争防止法違反（虚偽表示）容疑で逮捕した。同庁によると、中村容疑者は調べに「自分１人でやった」と供述しているという。

生活経済課と築地署などによると、中村容疑者らは昨年５月、中国で養殖されたウナギのかば焼き３千パック（約５００キロ）を「鹿児島産」と偽り、築地市場の卸売業者に１７１万円で販売した疑いがある。

同課は、中村容疑者らが０７年９月～０８年８月、産地偽装したウナギ約５０トンを築地市場の水産卸を通じて都内のスーパーなどに販売したとみている。売り上げは約２億１千万円、利益は約８千万円にのぼるという。

捜査関係者によると、中村容疑者はこれまでの任意の調べに「国産ウナギの流通が低迷しており、産地を偽装することで市場が活性化しているように見せたかった」と説明していたという。

この事件をめぐっては、東京都が昨年７月、ＪＡＳ法に基づき立ち入り調査しようとしたが、浜伸側が拒否したため、警視庁に通報。同庁が昨年９月、不正競争防止法違反容疑で浜伸の関係先２６カ所を家宅捜索していた。ウナギのＤＮＡ型鑑定や、押収した帳簿類からウナギは中国産と判明した。

As was reported last week, Japan's fertility rate is up but the population is still in decline:

Japan's fertility rate edged up for a third consecutive year in 2008, three years after dropping to a record low of 1.26 in 2005, the health ministry said Wednesday.

The total fertility rate, or the estimated number of children a woman would bear in her lifetime based on current birth trends, rose 0.03 point to an average of 1.37 compared with a year ago.

[...]

Meanwhile, deaths rose to a record of 1.14 million, up 34,133 from a year ago and the highest since 1947, as mortality continued to outpace births.

This resulted in the population shrinking by a record 51,317 in 2008 — the steepest fall ever.

Japan's population shrank by 18,516 in 2007.

Meanwhile, the writing's on the wall:

A vacant elementary school in Niikappu, Hokkaido, that was put up for sale online has been purchased by an Osaka-based operator of spas and hot springs.

With a successful bid of ¥30 million, Mitaka Club hopes to turn the school into an art museum, according to town officials.

Good luck with that.

No buyers have stepped forward for the three other buildings, but the town, a two-hour drive from Sapporo, is currently negotiating their possible sale with a Hokkaido educational foundation, municipal officials said.

"I am happy that we put the facilities for sale online to reinvigorate the local community," said Mayor Kuniaki Kotake. "It sets a precedent for the future."

Niikappu's population, which stood at 5,901 at the end of March, has been declining for the past decade, especially in the number of children, prompting the town to close seven of its nine elementary schools in April 2008.

No buyers for the three other buildings up for sale, 7 of 9 elementary schools closed, and a population in decline for a decade. The mayor's happy he used the internet to sell a building, but I wonder why the new owner thinks buying an empty school is a good idea. How viable is an art museum in a shrinking town? Maybe he has plans for a giant ferris wheel, like the one in Kamifurano.

Niikappu illustrates is the severity of Japan's demographic problem. While the population continues to concentrate in urban areas, the hinterlands are becoming barren. There won't be any redevelopment of buildings and towns if there's nobody around to live in them.

Ｉt's not as if this problem snuck up on Japan, either. The fertility rate peaked in the 1970s (report in Japanese), but the government chose to ignore the problem instead of thinking about ways to mitigate it. Now reality has taken over and the best they can do is hope men take more time off to make babies. Niikappu is just one of many soon-to-be-ghost towns that will suffer a fate much like that of Yubari.