Kousei Shimoda, a junior at Tokyo's Hibiya High School, has bad news for Japan's cram schools: He says his generation doesn't worry about university entrance examinations the way past high-school students did.
Years ago, the difficulty of the exams and the growing number of students taking them combined to set a high standard for entry into a Japanese university. Many who failed -- known as ronin, or lordless samurai -- went to the cram schools to study for another year or so before retaking the exam.
Now, a decline in Japan's birth rate and an economy in its third recession in a decade have led to fewer students chasing university seats. That's opened the door to higher education for many who would otherwise have been weeded out.
"I think now there are many universities, except the top universities, that will accept us even though we haven't attended cram schools," Shimoda said.
Cram schools are common in Japan, where 21 publicly traded companies offer courses to help students pass tests for entry into schools from kindergarten to college. These companies had combined sales of ?162.7 billion (US$1.27 billion) last year. The largest are Eikoh Inc, Ichishin Co, Wao Corp and Nagase Brothers Inc.
Three privately held companies are the biggest cram school operators, with an 11 percent share of the ronin market: Takamiya Gakuen, which operates the biggest cram school, the Yoyogi Seminar chain; Surugadai Educational Institution, operator of Sundai Yobigakko; and Kawaijuku, which operates schools under its own name.
Public and private cram-school companies alike are seeing their market shrink as the ronin population dwindles. Total university applicants fell to 3.51 million this year from a record 5.06 million in 1992. The number of ronin students, who pay the highest fees, fell to 1 million last year from a peak of 2.27 million in 1992, according to Japan's education ministry.
"In 1992, one teacher used to lecture to 200 or 300 ronin students in each class," said Atsushi Sudo, a spokesman for Kawaijuku. "Now we usually have 40 to 50 high school students in each."
That's put a financial squeeze on the schools, which look to ronin to fill daytime hours before regular high school students arrive for evening lessons. At Nagase Brothers, ronin sales make up 10 percent of overall revenue, down from 80 percent in 1990. "The ronin that thronged cram schools in the 1990s are seldom seen now," said company President Akiyuki Nagase. Nagase shares have plunged 51 percent this year.
To cope with the decline, some schools are adding courses in new areas, including nursing care and computer programming, or through new methods, such as satellite broadcasting. Some are reducing class sizes, using smaller rooms or office cubicles, and hiring university students as teachers to keep costs down.
Meiko Network Japan Co, Riso Kyoiku Co and Tokyo Individualized Educational Institute Inc, for example, offer classes for individuals and small groups, said Yoshiaki Hida, a Shinko Securities Co analyst who follows the industry.
For this type of operation, "only one floor is enough," he said. "Rooms can be divided by partitions." Hida has an "outperform" rating on Tokyo Individualized Educational Institute stock. He doesn't rate the other two, whose sales are about half as much.
The school is the only one rated by analysts in the last year, according to Bloomberg data. The ratings include one "buy" and three "holds." Masatsugu Nakagawa, who helps manage ?50 billion for Kokusai Asset Management Co, including shares of Tokyo Individualized Educational Institute bought two years ago, said the school has found a niche with its tutoring style.
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