TT-706 -- Cool Japan May Not Be So Cool After All. E-biz news from Japan.

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, Apr 14, 2013, Issue No. 706


- What's New -- Cool Japan May Not Be So Cool After All
- News -- Goldman says stocks will rise another 20%
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Matsushima, Miyagi and Fukushima-gata, Niigata
- News Credits

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Back in January, the Daily Yomiuri carried a short article about the government planning to allocate a massive JPY50bn (approx. US$500m) into the "Cool Japan" fund. The job of the fund will be to promote Japanese content, high-status food, and cultural products abroad, and to presumably encourage people to travel to Japan and try them here as well. In this respect, Cool Japan is a concept that has come of age. It combines the efforts of various government ministries (agriculture, trade, and infrastructure/tourism) in a way that foreign consumers can understand and relate to. Currently Japan's "soft" exporters are so fragmented and underfunded, that just like the inbound travel sector, they are basically a cottage industry in need of organizing into a coherent marketing force.

We also find the Cool Japan initiative interesting because it has morphed politically over the 7 or so years since the concept was first floated. Now, with the Abe government's overt concern about how the world views Japan, the whole idea that Japan has culture worth investing in and exporting is gaining some very serious traction at the highest levels. But we really wonder if there will be a serious effort at building a new industry, or if the intent is to create a boondoggle to further Abe's political beliefs?

Let's start at the beginning. As we understand it, "Cool Japan" as a concept was first covered by Douglas McGray in an article written for the Foreign Policy magazine, where he wrote about "national cool" and "Japan cool". He was talking about how Japan's "soft" power was underestimated, and that Pokemon, Spirited Away, and other cultural outputs were making deep inroads into the subconscious of young people globally, creating significant value and influence for Japan.

[Continued below...]

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[...Article continues]

We're not sure that anyone in Japan was actually plotting the cultural takeover the world through game cards and "My Neighbor Totoro", but the idea of structured effort to promote Japanese culture gained traction in the Japanese government several years later, and the Ministry in charge of trade and export, METI, decided to set up an office that would coordinate Japan's efforts. METI has been quite busy ever since, and has a bunch of projects going on under its Creative Industries Division.

Then in 2011 it was announced that a new public-private company would be set up by another government organ, the INCJ, which is the nation's investment arm looking after its more risky opportunities (mainly turnarounds of hurting major companies). The INCJ decided to make an investment of JPY6bn and take a 100% position in All Nippon Entertainment Works (ANEW), and tasked it with creating ten movies for JPY2bn-JPY3bn each, in the hope that some of them would become hits overseas.

ANEW then hired Hollywood deal maker Mr. Sanford Climan, to become the CEO, and quickly named quite a few Japanese content heavyweights, such as Asmik Ace Entertainment, Dentsu, Fuji Television Network, Mitsubishi, Nikkatsu, Production I.G., TOHO-TOWA, Tokyo Broadcasting System Television, TOMY, TV Asahi, and Yomiko Advertising, as "collaborators". They have nice offices in Kamiyacho and Wiltshire Boulevarde, LA.

So with that much cash and a star-studded team, you'd think ANEW would have exploded out of the gate, but in fact it took them a whole year to announce their first collaboration -- a solitary anime title with Toei, which is probably being made now. Given that Gree and other commercial entities can produce an entire games/anime series from scratch in the same time, we're not overly impressed with INCJ's investment. Further, someone needs to tell them that their website is broken -- listing a 2013 press release that opens up to show a Feb. 2012 date. Maybe they are just too busy with secret projects to take care of details...

Anyway, the Cool Japan initiative doesn't end there. Now that METI and INCJ have got their shows on the road, the Abe administration itself has decided to jump in as well. And that's where the press announcement about the JPY50bn fund and a shiny new Cool Japan Promotion Council to go with it, have come from. Although the government's press release doesn't say it clearly, we presume that the new Council will be in charge of dispersing the JPY50bn -- which means that like the folks at ANEW, they'll be housed in some nice offices in the near future, too.

Heading up the Council will be a conservative LDP politician named Tomomi Inada. Wikipedia has this to say about Ms. Inada's right wing opinions on film-making: "Inada questioned why the 2007 film Yasukuni received government funds, and said that such funds should not be given to films with a 'political agenda'." Apparently she said this because the award-winning movie, which received just JPY7.5m from the Japan Arts Council, was made by a Chinese national and the Japanese right wingers hated it. Further, Ms. Inada is also quoted by Wikipedia as being, "A supporter of right-wing filmmaker Satoru Mizushima's 2007 revisionist film The Truth about Nanjing, which denied that the Nanking Massacre ever occurred."

OK, so now we can see where the "Cool Japan Promotion Council" is going politically... Not surprising, given PM Abe's own public opinions about Japan's history. However, we do hope that the entire fund doesn't get hijacked by revisionist documentary makers.

The other members of the council include some well-known content businesspeople who are actually capable of exporting their works abroad. Unfortunately they also seem to be quite right wing and none of them comes from the software or internet sectors, which are where most of Japan's current content export earnings come from, but we suppose that is par for the course. Politics is not about commonsense.

If the government decides to apply even just 10% of the Cool Japan budget to propaganda-free content production, then it will have a major effect on the local content development industry, which is currently under huge pressure to survive due to the depressed economy and shrinking cohort of local consumers (specifically kids and teens). Not only are there hundreds of struggling manga, anime, and games development companies who would love to have translation and foreign marketing, but there are also other types of media producers that the folks at Cool Japan probably don't even know exist.

One such group which is close-to-home deals with our sister company, ChampionVisions. Japan's 50 or so action sports production houses create about 100 titles a year on skateboarding, cycling, trekking, and snowboarding, and are gaining a cult following in SE Asia. By their very nature, these alternative sports video houses are cool, and as kids abroad grow up watching and emulating them, they want to come here to enjoy snowboarding in perfect powder snow for themselves. Surely isn't that the ultimate cool Japan content pay-off?

Hopefully someone in the new Cool Japan Promotion Council will take note and place some of that budget where it can best be used.

...The information janitors/


----------------Spinning the Wheel in Fukushima------------

Perhaps you have seen NHK’s historic drama set by a picturesque castle in Aizu Wakamatsu? It’s a real castle in a part of Fukushima sheltered by beautiful mountain ranges from the radioactive fall out. In fact, radiation is slightly higher in Tokyo, so there is no excuse not to enjoy the sakura blossoms. To coincide with this special time, CLIF Bar is sponsoring a local invention called the
Fukushima Wheel. LED lights project images as the bike is riden through the castle.

Read more about the concept here: and join us every day during Sakura season at the famous castle in Aizu Wakamatsu!

+++ NEWS

- Japan sells more music to consumers than U.S.
- Peach flies to Sendai
- Takeda suffers from patent expiry
- Goldman says stocks will rise another 20%
- Thermal power consumes record amounts of LNG

=> Japan sells more music to consumers than U.S.

Are Japanese kids and teens more into music than their peers in the USA? Well certainly it seems that they are more willing to pay for the real thing, given that sales of physical and digital recorded music in Japan surpassed that of the USA for the first time. The International Federation of the Phonographic Industry (IFPI) said that sales of CDs and music downloads hit JPY425bn in Japan for 2012, versus JPY405bn for the US market. (Source: TT commentary from, Apr 11, 2013)

=> Peach flies to Sendai

The commoditization of domestic air travel in Japan continues, with the announcement by Peach Aviation that it will be the first LCC to service the Tohoku region. Peach started flying twice daily between Osaka and Sendai last Friday. Air fares on the route have now fallen from JPY10,000-JPY30,000 one way to JPY4,400-JPY18,000. ***Ed: No word on when flights from Haneda or Narita might happen -- but we believe that demand by the foreign community in Tokyo will be strong for this route.** (Source: TT commentary from, Apr 12, 2013)

=> Takeda suffers from patent expiry

As if any proof were needed as to why Japanese pharma companies had to go on the M&A trail over the last couple of years, leading drug maker Takeda is expected to report a 40% drop in operating profit for FY2012, due to the expiry of its Actos diabetes drug. Actos is now competing against generics and while overall sales actually rose 3% due to the Nycomed acquisition in the USA, profit nonetheless will fall to around JPY160bn. (Source: TT commentary from, Apr 13, 2013)

=> Goldman says stocks will rise another 20%

Apparently Goldman Sachs is very bullish about Japanese stocks for 2013 and has upgraded its 12-month target for the Nikkei, saying that it expects the markets to rise at least another 20% thanks to robust corporate earnings among exporters, arising from the lowered yen. Goldman says that it expects the Nikkei to hit 16,000 over the next 12 months. (Source: TT commentary from, Apr 12, 2013)

=> Thermal power consumes record amounts of LNG

The nation's ten major power companies consumed a record 55.79m mt of LNG between April 2012-March 2013, due to the fact that only two of the nations 54 nuclear reactors are running. Nuclear normally supplies about 20% of Japan's electricity and is only running at 3.9% of normal capacity. This means that the gap is being made up with thermal power plants fee with LNG, crude, and coal. ***Ed: A report put out by the IEEJ in 2011 estimated that Japan has to spend an extra JPY3.5trn a year on hydrocarbons to make up for the loss of nuclear. Expensive, but not crippling.** (Source: TT commentary from, Apr 12, 2013)

NOTE: Broken links
Some online news sources remove their articles after just a few days of posting them, thus breaking our links -- we apologize for the inconvenience.



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------------------ ICA Event - April 25 -------------------

Speaker: Andrew Silberman, President and Chief Enthusiast of Advanced Management Training Group
Title: "Professional Networking Made E.A.S.Y."

Details: Complete event details at
Date: Thursday, April 25, 2013
Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members) Open to all. No sign ups at the door!!!!!!!
RSVP: RSVP by 5pm on Friday, April 19th

Venue is The Foreign Correspondents' Club of Japan,

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Entrepreneur's Handbook Seminar 25th of May, 2013

If you have been considering setting up your own company, find out what it takes to make it successful. Terrie Lloyd, founder of over 17 start-up companies in Japan, will be giving an English-language seminar and Q&A on starting up a company in Japan.

This is an ideal opportunity to find out what is involved, and to ask specific questions that are not normally answered in business books. All materials are in English and are Japan-focused.

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In this section we run comments and corrections submitted by readers. We encourage you to spot our mistakes and amplify our points, by email, to

=> No corrections this week.


=> Matsushima, Miyagi
Beautiful in all seasons for all time

The name Matsushima conjures ancient images -- clusters of rugged, pine-clad islets in a snowy winter mist or framed in a glittering bay and magnificent summer sunset. Though the islands are legendary, venerated as one of the Three Views of Japan in 1643 and immortalised by the poet Basho in The Narrow Road to the Deep North, they continue to carry great weight in the Japanese psyche in the modern era.

Today, they serve as possibly the premiere tourist attraction in Miyagi and though their great fame has seen the bay developed and re-developed, the rugged outcrops remain much as they have always been.

=> Fukushima-gata, Niigata
A boat ride through time... and pink flowers

The Japanese word “gata” means lagoon or lake, and there are quite a few of these “lagoons” all over the Niigata (New Lagoon) City area. One of the most scenic is Fukushima-gata in the former town of Toyosaka, a 20-or-so minute car ride north of downtown Niigata. The people of ages past once made a living farming the fertile ground around Fukushima-gata and fishing from its waters.

The whole area has been turned into an outdoor nature and history park and museum. A reconstructed (or refurbished) house with sheds for storing firewood, stick and log fences for drying out brush for the roof or grain for the table offers a hands-on glimpse into the way of life that once was. The lush green lawns and water plants, allowed to grow naturally, provide an ideal habitat for a wide range of local birds and other wildlife. A walk on one of the park’s many trails is also bound to be very pleasant.



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