Asian American Empowerment - Is Japanese Style Taking Over The World?

By Christopher Palmeri and Nanette Byrnes
©2004 BusinessWeek
July 26, 2004

From video games and cartoons to cell phones and cars, Japan's influence on pop culture and consumer trends runs deep

Justin Zelada and Steven Hausdorfer are 17-year-olds from suburban Los Angeles. Over the recent July 4th weekend they ventured south to Anaheim, not to visit Disneyland but to attend Anime Expo 2004 at the convention center next door. Fans of anime, the distinctive Japanese-style cartoons, the pair even dressed like two of their favorite characters, one in a samurai-style headband and sword, the other in a fur cape with one hand disguised as a giant gold hook. Says Hausdorfer: "Some of my friends think everything Japanese is cool."

Indeed, anime is just the most visible sign of a growing trend. In the last few years, Japan has become a rising force in a wide swath of fashion-focused industries, from kids' toys to entertainment, cell phones, and car racing. In an April report, Tsutomu Sugiura, director of the Marubeni Research Institute, figured Japan's cultural exports, including music, books, magazines, films, handicrafts, collectibles, patent royalties, and performances at $15 billion in 2002, up from $5 billion in 1992. That, of course, doesn't include Japan's influence on products made elsewhere. As evidence that this is just the start, Sugiura estimates that almost 3 million people outside Japan are now studying the Japanese language, up from 1 million in 1990.

Much of Japan's cultural output travels to other parts of Asia, but, increasingly, U.S. consumers are embracing Japanese style, too. The distinctive look of anime, with its wide-eyed characters, is influencing toys, cartoons, comics, video games, even movies. And while U.S. kids have been enthralled with Japanese exports before -- from Godzilla to Nintendo -- the breadth of products has never been greater and their acceptance goes far beyond the Cartoon Network crowd.

Now the popularity of Kill Bill, Iron Chef, and even evergreen properties like Hello Kitty shows how deeply Japanese culture is weaving its way into the fabric of America. "High-school girls in Japan are the key to any trend," says Stuart J. Levy, founder of TOKYOPOP, a Los Angeles-based publisher of Japanese-style comics called manga that are as thick as paperbacks and sell for $10 apiece at retailers such as Target and Borders. "They are the center of pop culture today."

Getting the Drift

For U.S. culture merchants, the consequences of that shift could be profound. Instead of watching for trends to emerge from urban America that can be packaged, mass-produced, and sent overseas, marketers will have to become just as adept at importing trends as exporting them. "The U.S. has for a very long time been the center of global culture. It is the only place that had that kind of cachet -- movies, music, food -- but now that's no longer true," says Anne Allison, chair of cultural anthropology at Duke University.

Japanese pop culture is now so mainstream in the U.S. that it has become big business. TOKYOPOP's Levy, for example, has raised $12 million in venture capital from big investors such as Softbank Finance Corp. and Mitsui & Co. and in the past year has cut licensing deals with U.S. media giants Viacom, 20th Century Fox, and Walt Disney. The careers of Japanese artists Takashi Murakami and Yoshitomo Nara are on the ascent; at Sotheby's contemporary art auction last May, their quirky characters and patterns sold for record prices, hundreds of thousands of dollars a pop. Louis Vuitton's chief designer Marc Jacobs loves Murakami's work so much he asked him to design a series of handbags that are now a $300 million global business for the luxury goods giant.

Japanese leisure is also infiltrating U.S. culture. Consider "drifting," a professional motor sport that was born on the twisty mountain roads of Japan. Drivers compete by taking sharp turns on oval tracks that leave their cars skidding sideways. They are judged by how well they handle the drift, the level of smoke generated by their squealing tires, and how close they get to the track's wall without hitting it.

The first professional drifting circuit was launched in the U.S. this summer, and although drivers and judges are mostly Japanese, the trackside sponsors are Western heavyweights, including DaimlerChrysler's Mopar parts division and Cooper Tire & Rubber Co. "This is the opposite of NASCAR," says Mark-Hans Richer, marketing director for General Motors Corp.'s Pontiac division, which is sponsoring a team driving its new GTO. "It's not broad and huge. It's bubbling up."

In the toy industry, where Japanese influence has reached gargantuan proportions in the wake of hits like Mighty Morphin Power Rangers and Yu-Gi-Oh!, manufacturers have started to co-develop toys for the U.S. and Japanese markets simultaneously. That's what Hasbro Inc.'s Wizards of the Coast division did with Japan's manga publisher and entertainment giant Shogakukan Inc. in creating Duel Masters, a new TV show and trading-card game. But it wasn't until after the story and its hero, Shobu Kirifuda, became a hit in Japan that Hasbro brought it to the U.S. "If something is successful in Japan, there's a story to tell to retailers here," says Joe Hauck, a vice-president at Wizards of the Coast who is in charge of the property.

Japan's rising worldwide cultural influence has a lot to do with changes which have taken place within Japan. The country has developed more of a leisure class. Young Japanese women, for example, now work in high-paying jobs but still live at home with their parents, giving them plenty of disposable income. They spend it on everything from upscale fashions to pricey collectible dolls.

Oddly, Japan's economic slowdown over the past decade may have also played a role. The potential for superior investment returns has Japanese industrial giants such as Mitsubishi, Nippon Telegraph & Telephone, and Japan Railways Group backing kid entertainment properties such as Pokémon and Duel Masters. Designers and businesspeople who might have worked for large corporations for life, found themselves out of work and forced to be more entrepreneurial. Many of the nation's most creative products in entertainment and fashion are started by small companies that license their work to larger ones. "This is pretty similar to the punk rock revolution in England in 1970s," says Ken Miller, editor of Tokion, a U.S.-based pop-culture magazine with half of its 150,000 subscribers living in the U.S. and half in Japan. "You're getting access to a culture parallel to yours but reacting to [the world] in different and interesting ways."

The Value of Style

Part of the Japanese cool factor is the result of the new competiton from China and Korea. Forced to compete with lower-cost products, Japanese designers have differentiated their goods by adding a bigger element of design and fashion. Toyota Motor Corp., for example, has had a big win in the U.S. with its Scion xB, a distinctly boxy wagon aimed at younger drivers that was originally a hit in Japan. In cell phones, Japan is a design innovator, first championing cell-phone cameras and now using phones for paid services from cartoons to local weather reports and maps. Juha Christensen, president of mobile and devices at software maker Macromedia Inc., always stops by Akihabara, an electronics district near Tokyo, on his business trips to Japan. "Japan is a great place to look at to find the trends we will see here in two to three years," says Christensen.

The mission can go beyond just checking out the latest Japanese trends to trying to seed the market. Sneaker king Nike Inc., for example, releases a few pairs of new shoes in Tokyo and can count in days the time it takes for them to start appearing on the feet of trendsetters in New York. "Kids connect in Tokyo, New York, London, and Los Angeles," says Roger Wyett, a marketing exec with Disney's consumer-product division. "If you establish yourself in those cities, products move around very quickly -- and very virally."

At the same time that changes have been sweeping Japan, the U.S. has also been going through a cultural metamorphosis. Many U.S. consumers are simply bored with the traditional symbols of popular culture. And young Americans lean more to individual pursuits than do their predecessors. Team sports such as football, baseball, and basketball are declining in popularity, notes Harvey Lauer, president of the research firm American Sports Data Inc. The number of U.S. residents practicing Asian martial arts, however, has seen a 28% increase, to 6.9 million, over the past five years.

Meanwhile, American kids who grew up playing Japanese video games are now expanding their interest to other Japanese-inspired products, or even creating their own. Take Ugly Dolls, a line of $30 fabric dolls co-created by David Horvath, a 33-year-old commercial artist who grew up playing with Japanese video games and robot dolls that his father -- an advertising executive -- brought home from Japan. Horvath says his whimsical figures were inspired by his early look at Japanese cartoons, toys, and comics. He's now selling 60,000 a month in stores from Barneys New York to specialized Asian culture boutiques like Giant Robot. "We get people from America looking for Ugly Dolls because they think it's this cool thing from Japan," Horvath says. "This cool thing is from Brooklyn."

Pop culture trends are notoriously fickle, of course, and tastes can change overnight. For now, however, if you want to find out what's hot, ask a Japanese schoolgirl.