Toyota's Old School Ties

The auto maker is teaming with other Japan Inc. titans to launch an elite boarding school inspired by England's Eton. Coming soon: A crop of hand-raised execs?

Toyota Motor (TM) and Britain's superelite Eton College have little in common at first glance. Eton—or King's College of Our Lady of Eton beside Windsor, to use its full name—was founded in 1440 by King Henry VI and is one of Britain's most renowned educational establishments. Among its alumni are 19 former British prime ministers and second-in-line to the royal throne, Prince William.

Toyota is an auto industry giant and global profit machine. It's on track to make history later in the decade when it is expected to overtake General Motors (GM) as the world's biggest auto maker.

Yet take a three hour train journey from Tokyo to Gamagori, a city of 80,000 along the Pacific coastal line of Japan's Aichi prefecture, and these two proud institutions unmistakably cross paths. There you will find Kaiyo Academy, a $175 million school founded by former Toyota President Shoichiro Toyoda and heavily influenced by Eton.

GREAT EXPECTATIONS.

  Primarily funded by three companies—Toyota, Central Japan Railway, and Chubu Electric Power—Kaiyo is Japan Inc.'s answer to what some maintain is an alarming decline in Japanese academic standards in recent years. Japan's school system has been criticized for dumbing down its curriculum and turning out uninspired high school graduates and incoming university students at a time the Japan needs more innovation and creative spark from its corporate leaders to bolster the country's economic competitiveness.

The Toyota-backed school clearly aspires to produce the Japanese business and political elite to lead the country in the decades ahead. "Kaiyo Academy aims to produce wonderful people who can lead the Japan of tomorrow," Toyoda said in a speech at the school's opening ceremony in April. Yoshiyuki Kasai, vice-chairman of Central Japan Railways, echoing Toyoda's remarks, says that the minimum expectation for pupils graduating from Kaiyo will be to enter an elite university in Japan or overseas.

While the school plays down suggestions that it will be "Japan's Eton," there are obvious parallels with the fabled British school. For one, Eton's headmaster has proffered advice to Kaiyo officials and a teacher from Eton will be on loan to Kaiyo starting from September. Like Eton, Kaiyo is also boys only, educates the same 12 to 18 age group, and requires all pupils to board—a rarity in Japan.

HIGH PRINCIPALS.

  Also in line with the British boarding school tradition, residential quarters are divided into "houses," each home to 60 students and overseen by "housemasters" who live on the premises with their families. Three "floor masters" are also provided, by sponsor companies like Toyota or Chubu Electric Power, to each house to help supervise pupils and provide insights into the business world.

School officials are confident that high quality teaching and first-rate educational resources will create an atmosphere conducive to passing exams, instilling leadership skills, and producing high school graduates of the highest caliber. Kaiyo's first headmaster, Takeo Izuyama, is professor emeritus at Tokyo University and has been a principal of junior and senior high schools "We want you to receive a fundamental education that will enable you to be active overseas, as well as in Japan," Toyoda, son of Toyota founder Kiichiro Toyoda, told pupils at the opening ceremony.

Of course that kind of talk instantly clicks with many of Japan's education-obsessed parents. Despite annual fees of $26,000 a year — far more than a typical Japanese private school — over 900 pupils took an entrance exam to be one of the lucky 120 chosen as first-year students at Kaiyo in February. One attraction is the focus on developing kids who can do more than just pass exams — a long-held criticism of Japan's top private schools.

Another is attending a school backed by Japan's corporate superstar. "The school is reliable since it is backed by Toyota, the world's leading company," one mother whose son passed the entrance exam told Japan's Asahi Shimbun daily.

OPPORTUNITY GAP.

  Looking round the campus, it's easy to see the attraction. Being so new, the school has a slightly eerie feel and it will take five more years for the number of pupils to reach capacity. But the facilities are first rate. From grand pianos in the music room to wireless-enabled classrooms where pupils can surf the net using laptops while sitting at their desks, there's the kind of detail you'd expect from a Toyota-led project. Even the classrooms are designed so the boys always sit with their backs to windows. The reason: to stop the leaders of tomorrow gazing out towards over the Pacific when they should be learning.

Still, Kaiyo has plenty of critics. One concern is that the school exemplifies a growing opportunities gap between Japan's rich and poor. A government decision four years ago to ease the workload for elementary and junior high school children by 30% has already led to a huge rise in demand for cram schools, with wealthier parents spending as much as $500 a month to give their children a head start and better chances of entering top universities (see BW Online, 4/18/05, "Japan: Crazy for Cramming").

A Kaiyo spokesperson points out that because its pupils won't attend cram schools during term time, families will save thousands of dollars a year and that the school offers an undisclosed number of scholarships. Kaiyo is also cheap compared to the original Eton which charges a princely $43,500 a year.

LIMITED DOWNTIME.

  Others question the regimented educational environment at Kaiyo. Students study far more content each year than regular school pupils — for example, they'll begin studying Japanese classics at an earlier age than most—and are required to study two and a half hours every night in their houses and attend additional classes on Saturdays. Privileges are also limited. Pupils aren't allowed to leave the premises unattended and carrying cash is forbidden.

Instead, pupils are given handheld electronic devices which can be used to borrow books from the library or pay for snacks. The same devices also emit a signal which allows the school to keep track of pupils' whereabouts. Radios and TVs—other than those in specially designated areas — are also banned, although pupils may have up to five CDs which they can play on their laptops.

"The school is isolated and students have little contact with outside world," says Naoki Ogi, a professor at Hosei University in Tokyo. "I seriously question if they can foster real elites in such circumstances."

INVESTOR FEEDBACK.

  Some critics also complain that Kaiyo sends a depressing message to Japan's girls. Men-only boardrooms may still be the norm in Japan, but Toyota and partners' backing for a boys-only school hardly makes them look progressive. There are no immediate plans to build an equivalent school for females. "Why only boys?" asks Hirohito Komiyama, an education specialist and author. "Go-ahead companies are good at getting the most from women employees. This seems old fashioned."

Investors may also wonder why companies like Toyota, Central Japan Railways, and Chubu Electric Power are getting into the education business. After all, the synergies between their core businesses and elite education are nonexistent. Of course, with annual profits of $12.5 billion through March this year, Toyota can certainly afford the expense.

What's more, if Kaiyo can educate half as many future prime ministers as Eton or raise more Japanese companies to Toyota's global position, few in Japan will complain.