In the wreckage of Japan's increasing inability to compete against the lower labor costs and rekindled ambitions of its rivals, however, a number of observers both inside the country and out are turning to the nation's creative and cultural enterprises as a source of potential salvation. For this has been one of the greatest Japanese ironies: even as Japan's economic leadership has been slipping for more than a decade, its cultural hegemony has only swelled. "Japan has changed from being a corporate manufacturing and industrial society to a pop-culture society," says Ichiya Nakamura, a visiting scholar at Stanford Japan Center and M.I.T. Media Lab. Pokﾃｩmon has supplanted Astroboy in the hearts of schoolkids in more than 65 countries, and 60% of the world's animated-cartoon series are made in Japan. Games running on PlayStation 2 and (to a lesser degree) Nintendo's Game Cube rule the video-game universe just as tightly as before, despite a frontal attack from none other than Microsoft and its sinister-looking black Xbox.
And high-end Japanese fashion designers such as Hanae Mori, Yohji Yamamoto and Issey Miyake are not only as vital as they once were; they have also been joined by a generation of young turks such as A Bathing Ape, Jun Takahashi and Naoki Takizawa who set the style for hipsters from Berlin to Bangkok and beyond. Japanese films, TV series, music acts and lifestyle magazines, meanwhile, routinely spark fads all over Asia. (Turn on MTV in Singapore or Hong Kong and you are just as likely to see Ayumi Hamasaki as J. Lo.) According to Tsutomu Sugiura, director of the Marubeni Research Institute, an economic think tank, Japanese cultural exports窶敗uch as from the media, licensing, entertainment and other related industries窶派ave tripled over the past 10 years to $12.5 billion, while manufacturing exports have increased by only 20%. Granted, $12.5 billion seems like a rounding error in Japan's $4 trillion economy (Toyota alone hauls in nearly $11 billion in sales every month), but it's still the result of a growth rate almost unheard of anywhere else.