Kai En’s Closing

Posted by Kris Fedorak on December 19, 2009

I guess I should comment on Kai En English Training School shutting down since I taught there for about four years. I knew the founders personally, and worked there both when it was small and the big schools like EF were just arriving, and later when it was on the way down.

So it’s toast, and while the end was sudden, perhaps with Brian leaving with his family in the middle of the night, the demise took about a year and a half. Sad thing, really. I think it comes down to the big schools moving in with large budgets, advertising like crazy and prepared to take losses. Small schools like Kai En can’t really compete with them. It had its niche, but even when it expanded from two to four schools the whole thing was botched, half-hazard, and quasi-legal. It had a decent teaching system, but never achieved its potential. FASHION

Ken and Steve had been out of the picture for a long time. They were on the board of directors and met once in a while about it, but essentially since the founding of Chinesepod, Kai En had become Brian’s own personal fief, which I’m sure is the way he liked it. But Brian rightly knew he wasn’t a businessman, and wanted a CEO to help grow the school and expand. Unfortunately he chose a horrible person to steer the ship. Alex came in around mid-2008, precisely when sales began to drop, and though he couldn’t be blamed for long-term trends, it seems like he sped up the fall. He had helped expand another business into a China-wide enterprise before it collapsed, and Brian somehow thought that counted for experience. DELICIOUS

Anyway, the schools were mostly empty during fall and winter 2008-9 and though that happened normally it seemed like it was far worse. A lot of nights at the Zhejiang branch it was just me and one other guy teaching. So the rents were wasted and there weren’t a lot of new faces coming in. The school in Yangpu had always been a dud and the new one in Gubei didn’t have many classes. Already students were starting to ask me if Kai En was in trouble. Any teacher who didn’t see this coming was deceiving themselves, though it’s hard to blame people who got caught at the end. Management blamed it on the world-wide financial crisis, though I thought that was bullshit. Maybe some white-collar type students were worried about their jobs in Shanghai, but by and large they got through unscathed and had money to spend on English training. FAMOUS

Kai En got through SARS, when they had to shut down for weeks and had 0 revenue – certainly they could get through this. The big problem was that after Spring Festival 2009 came and people were flush with cash, things didn’t really change. My own idea is that the massive advertising of EF and other schools was finally wearing through Kai En’s little word-of-mouth network, and the big schools’ spread into smaller neighborhoods was giving them reach. Ken had been the face of Kai En for many years, and his disappearance from the marketing (replaced by Brian) hurt the brand. Ken used to be everywhere included a lot of TV shows, and that helped Kai En immensely – everyone knew about him. His migration to the air waves of Chinesepod really hurt Kai En. The market has moved on from those early days: Disney’s here for the kids, Wall Street for the rich, and EF and New Oriental for just about everyone else. CONVENIENT

So there were no sales and the WEAK attempts at trying to jump start them didn’t go anywhere. There was a plan to give teachers these discount cards that we were supposed to hand out to potential students. As if we’re sales reps. I really meet people on the street and ask them if they’re interested in studying English… conveniently and famously. I’m sure Brian and Ken did that at Judy’s Two back in 1996. Most English teachers are here for one or two years and the only locals they meet are the ones who work or study at Kai En. As far as I know not a single one of those cards was ever returned to a PRO (the sales staff now called Course Consultants, like they’re actually consultants). So sales stayed weak into summer 2009. There was some other half-baked plan to quasi-franchise with schools in, say, Sichuan, who could license the Kai En name and logos and get a fully trained teacher from the school. Kai En would train the teachers (Brian was particularly fond of his teacher training team) and then send them out to the sticks. Like I said, half-baked and it never went anywhere. Think the CEO was in charge of that one. I VERY LIKE

Brian had been looking for investment for a while and after getting told to fuck off for the nth time finally figured out that Kai En looked like a mess from the outside. It was a JV with some sort of Chinese group, which as a partner wouldn’t agree to anything that Brian, Ken and Steve proposed. So they always kind of did things behind their partner’s back. Nothing unusual in China I suppose. But all the big schools are limited companies that are defined as training companies, not schools per se, so legally they look more attractive to investors – thus New Oriental’s big stock market splash. Brian called me into his office in 2008 to ask me if I wanted to get them some new lawyers and try to fix up the mess. Legally they were a little shaky, but no worse than most businesses in this country, and with a little bit of work it all could have been made to look quite attractive since Kai En’s brand was pretty solid still. His plan was to attract investment in order to expand, particularly for Kai En corporate to be able to cover companies like INTEL that have offices all over the country. PROMINENT

So long story short the company was bleeding money for at least a year and never got any additional investment at all. I heard about 3 weeks ago that Steve and Ken had left – Ken to Taiwan and Steve to England. I had known that Steve and his wife were wanting to get out of China but this seemed very sudden. I was told that Brian, Ken and Steve were personally liable for the company’s debts. Kai En was not a limited company. That’s what really fucked the whole situation up, and it’s why students were left stranded with no school a day after signing up and teachers found the doors closed on pay day. Yup, that’s right – it ended classy. HAVE A GREAT SHAPE

It sounds like the owners saw the writing on the wall and had time to sell their homes and get their families out before Kai En officially went bankrupt. Debts were due and there are stories of gangsters looking for money. I’d heard that the Chinese mob or some kind of loan sharks might be involved, but who knows. Frankly, I could see the Bank of China using the personal touch of hired goons. But then banks here don’t loan to small businesses, so I really don’t know who had been helping Kai En out with cash flow over the last few months. HAVE A TRAVEL

Brian stayed till just about the end it seemed, and he called a meeting to say that 2, maybe 3 schools would soon close. An investor was in the mix to save the school, and suddenly everyone was paid their salaries for October, apparently even Chinese staff, who had been treated far more horribly than the foreign staff over the last few months. Labor bureaus had been called and helped to put pressure on Kai En to pay up or open their books, and there was even some sort of sit-in a couple months back. I had gotten out July 31st, but had to fight tooth and nail to get paid, even screaming over the phone to the head of finance and going there and practically threatening her. I managed to get everything except about 2,000 that they had tried to weasel out of. When I called HR the other day, the poor girl stuck there to deal with much of this (HR head Michelle smartly got out at least a half a year ago after being with the company almost from the beginning), she said that Brian’s phone had been off for a few days and that since the next day (the 15th of December) was payday, most staff were starting to think it was the end. A lot of them didn’t show up the next day, and the teachers and students who came found classes had been canceled. Someone called reporters and it was on the 6 o’clock news (which comes on at 7 here). MODERN

So last Thursday or Friday, or perhaps even sooner, Brian quietly shut off his phone, got his wife and baby girl and got the fuck out. Probably his smartest move in a long time. Hope he sold his house. I can imagine one bitter man, there. Ken and Steve certainly have investments in Praxis (offshore, of course), and I figure Brian does too, but they still can’t ever come back here. It’s a story out of China’s Wild West, which was actually China just 10 years ago. A China that those guys, especially Ken and Brian knew well, but probably thought they’d never be a part of. Kai En’s closing is just like those gyms that take memberships one day and are closed the next, with the owner safely in Hong Kong. But I seriously doubt Brian had a suitcase full of cash. There was no cash to take. There were stories about the CEO and the head of finance fleecing the company but it couldn’t be proved. That poor wreck of a finance girl left the company about 2 months ago, but I figure because of stress, not stealing. I think it never would have ended so ugly if it had been a limited company. The owners would have stuck around and notified staff and students in advance that things were going under. “COLLEAGUERS”

Well, that’s it. A pathetic ending for a company that was ahead of its time and was a pretty cool place to meet people back in the day. There were some great characters. When I went back to work there in 2008 it had obviously changed, as had Shanghai, and though I met some great new ‘colleguers’, the warning signs were everywhere. Seems like a hell of a long time ago that I stepped into class at Kai En for the first time… with no TEFL and no experience, circa 2003. Thanks for that, Kai En. It was many people’s first job in China, and I met a lot of wonderful locals through the school. Strange to think of it not being around to poke fun of. SUITABLE


6 Responses to Kai En’s Closing

  1. JENNY

    I told my friends when I heard of it, sort of lucky I finished the all the classes before it’s down, but Kai En really brought me so many fantastic memories that what I do really appreciated!

  2. Magnus

    I love the last words of each paragraph. Classic KAIEN teaching words or mistakes from students. Good to know what happened after I left. (October 2008) Although a year before I left, the IT guy and I both had talked that the school was doomed very soon. I’m surprised but then again… not very surprised.

  3. Shaner

    Feds, Having done sales for Kai En, it was easy to see the writing on the wall. I was there to be the token friendly FORANGE for the new leads to speak with and hopefully lure them to the school. I had a pretty successful sales rate, up to 80% some months (in an industry with an average of 20%) so it was somewhat confusing that in a time where overall leads (and thus sales) were declining, that they’d let me go.

    in hindsight, it was the greatest thing that happened.

    I wholeheartedly agree with you about Kai En being a great place at one point in time. I started there in May of 2004, and in the first year and a half, it was an incredible place to work, and there were some pretty cool people working there, as well as some very satisfied students.

    Seeing as I didn’t leave like you did, the slow downward spiral wasn’t as apparent to me, but as it began to snowball (and your return) it became more apparent what was happening.

    I was let go in may of 2008, and it seems just at the right time. :)

    it seems somehow fitting that “the other foreign teacher” was the last one there, as I had always joked that when the place shut down, he’d still be there. Where is he now?

    MAGNUS – How are things in “Radioland?” If you are who I think you are… hit me up, Feds knows my details…

  4. gucci

    nice one…..

  5. Julie

    Hi Feds,
    surprised by the news. i have ever learned english in Kaien and appreciated its teaching model..
    actually i left a comment to connect with you. we’re (a frech company) looking for an experienced part-time English trainer. do you have any recommendation? wait for your message.. Julie

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