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Fast-growing Business in Online English Conversation

Fast-growing Business in Online English Conversation

By Ryoji Shimada, staff writer

129 Yen ($1.60) for 25 Minutes?

No, it’s not the price of an overseas telephone call, or for going online in an internet café…  It’s the rate for a one-on-one English lesson.  Normally the cost of a one-on-one or private English lesson is 6,000-8,000 yen ($75-$100) for 40 minutes.  So how can lessons be offered at less than 1/10th of the going rate?

“Lately I started learning English online from a Filipino student,” tells a young Kyoto office worker in her 20s.  She was thinking about doing some kind of self-study, when she heard about a place that offered cheap English conversation lessons and thought she’d give it a try.  Her quote reveals the answer to the puzzle, namely, the company provides English lessons using Skype, which is free, using tutors in the Philippines, where labor costs are very low.

The first item in the RareJob Inc mission statement is “Being as readily available as running water:  Provide quality one-on-one lessons at low cost to many.”  This “running water” philosophy is one of the precepts of the Konosuke Matsushita school of business management, and means that just as tap water is readily available to all, a product should be provided in abundance in order to render the price eminently affordable and thus make the product easily available to all.  RareJob has applied this idea to English conversation lessons.

Today there are a number of companies that offer English lessons online from the Philippines, but all these have sprung up in the last two or three years.  In comparison RareJob as the largest player in the industry has been around forever, though it only opened in October 2007, not even five years ago.  According to RareJob public relations spokesperson Uiko Hashimoto, the company had 80,000 free memberships as of August 2011.  Their goal has been to double membership every year, and so far the company has been able to maintain that pace.

But there is a bit of a problem here.  An Englishman in his 30s who teaches English conversation to Tokyo business people offers his frank advice about the recent proliferation of Filipino English tutors: “Philippine English is not really proper English.  If you’re going to learn English you need to learn from a native speaker.”  Certainly English is not the mother tongue of the Philippines, though it is her official language.  Some Japanese students are also expressing doubts.  An office worker in his 50s complains, “My impression is that Filipino speakers have a strong accent in English.”  Hashimoto answers such doubts firmly, saying that “special care is taken in the selection of tutors.”   It seems that RareJob’s president travels to the Philippines to interview potential new tutors himself.  Only one in 10 interviewees is hired for this hard to get position, and in fact the company is obsessive about only hiring tutors who are graduates or students of the University of the Philippines, the only national university in the country. 

Prices for lessons vary somewhat depending on the lesson plan, starting from 129 yen for a single 25 minute session.  Though it would seem highly doubtful that the tutors can earn a living at this rate, Hashimoto explains, “In Japanese terms it would be about the equivalent of the hourly rate earned by a Tokyo University student working as an after-school tutor.”  Such tutors go for at least 2,500 yen ($31) an hour, and for a Tokyo University student or other such qualification that would surely be over 3,500 yen ($43). 

Most people using RareJob’s tutoring are business people, since instruction time is limited to weekdays from 8:00pm to 1:00am, but since last April, when English language became compulsory in elementary school, the number of children has increased.  Instruction is now being offered in afternoon time slots, so as to broaden the potential student market to include housewives and others. 

Scheduling lessons could not be easier – you can book a lesson online up to 5 minutes before you want to start.  Popular tutors however tend to get booked up quickly.  If available tutors outnumber students, tutors tend to lose motivation as their earnings go down.  On the other hand, if there are too many students it becomes difficult to book lessons and then students become dissatisfied with the service.  Hashimoto says this means that “we are most attentive to the balance between the number of students and tutors.” 

The market for English language instruction in Japan is massive. The overall language business in 2010 including language schools and related businesses like textbooks, electronic dictionaries, software, e-learning enterprises and correspondence school businesses was up 1.6% from the prior year to 74.9 billion yen or $9.3 billion. Yano Research Institute offers the following explanation of the increase: “The prospect of economic recovery from the autumn of 2010 added to the impact of globalization and the shift to the use of English as the official language within leading corporations has meant increased demand for English ability in business.”

Following the “running water” philosophy in the RareJob company mission statement are the phrases “so that 10 million Japanese can speak English” and “aiming for a global enterprise from the Philippines.”  This young company spearheaded by a 31-year old president seems robust and energetic, but there are some grounds for concern.  Hashimoto shows where the worrisome factor lies:  “As long as the yen is strong things are fine but…”  Since the company leverages the income discrepancy that exists at the moment between Japan and the Philippines, it is inevitably a business model that can be greatly swayed by exchange rates as well as the direction of economic development in the Philippines.