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Can Japan profit from its national 'cool'?

By Mairi Mackay, CNN
  • Global brands look to Japan for new fashion trends for their home markets
  • Small, fashion-forward Japanese fashion labels often don't export
  • Japanese government proposing to invest $237 million in creative industries to make profit
  • There are some sceskepticsho think it's impossible to turn "cool japan" into cash

(CNN) -- Japan's finances may not be in great shape, but when it comes to fashion, there still aren't many places more cool.

Consumers from Asia, Europe and the United States might not be buying as many Japanese cars and TVs, but they continue to be influenced by Japan's culture. That means that when global brands are looking for the hottest new fashions, eyes almost inevitably turn eastward.

"Most of the time, most global trends start in Tokyo," trendspotter Loic Bizel told CNN. A Tokyo-based fashion expert who consults for labels like Timberland, Lacoste and Sonia Rykiel, Bizel also takes foreign fashionistas on tours of Tokyo to scout for street style trends to replicate in their home markets.

"People really started to look at Japan as a lab about seven or eight years ago," he added. "Trends are picked up really quickly in the streets."

That's why, according to Bizel, brands like Topshop from the UK and Sweden's H&M come: "They know they have time to produce what they have spotted in Tokyo for next season and it will be a hit."

"It's easy for big brands to come to Japan, and compete, and send [designs] to their home market," according to Bizel, because, crucially, hardly any Japanese fashion labels sell abroad.

But, says the Japanese government, things are set to change. It is proposing to pump just over ¥19 billion ($237 million) into the creative sector in 2011 to see if it can make more money from Japan's national cool.

Mika Takagi is the Deputy Director of the Creative Industries Promotion Office -- aka the "Cool Japan" Office -- the government body charged with making Japan's cultural industries (anime, graphic design, film, fashion and more) start paying.

Part of what makes Japan cool is this innocence they have in the way they do things.
--Charles Spreckley

"Japan has a lot of unique culture ... [but] if you compare it with other money-making industries, the creative industries don't make much money," Takagi told CNN.

"We want to try to invest more in these cultural issues and try to brand Japanese products with the uniqueness of Japanese culture," she added.

The aim, by 2020, is to increase profits by $85 billion (¥6.9 trillion) -- to $698 billion (¥56.6 trillion). Revenues in 2007 amounted to $613 billion (¥49.7 trillion), according to Cool Japan. Japan's GDP in 2007 was $4.4 trillion.

The office's figures include already-established sectors like food and drink and tourism, and Takagi says there are no specific figures for fashion. They also don't provide any breakdown of how much money Japan makes from fashion exports, Takagi says, because "it is hard to define."

Some experts aren't so sure the Japanese government can turn cool into a commodity. One skeptic is Charles Spreckley, the Tokyo-based co-founder of consumer research and trends company Five by Fifty, with customers like Unilever and Coca-Cola.

"I am incredibly skeptical that a bunch of bureaucrats can succeed in turning the nebulous concept of Cool Japan into something that makes the country money," he told CNN.

Spreckley says that Japan's uniqueness is one of the reasons it seems so cool, but this special brand of creativity may be tough to translate to the global stage.

"Japan is so out on its own and it's still a huge economy -- a massive market, 120 million people -- so there's a lot going on here and cities like Tokyo are overflowing with stores selling fashion, graphic design, comics. It's a very intense place and it's one that's got its own unique style," Spreckley told CNN.

According to Spreckley, the most creative individuals work on a very small scale. He fears that trying to commercialize Japan's creative cottage industries could kill their cachet.

"Part of what makes Japan cool is this innocence they have in the way they do things," Spreckley said. "They do things very well here, with sincerity and lack of ego and I think the very act of commercializing it will make it inherently uncool."

There is little opportunity for entrepreneurs to break out because big, old-fashioned conglomerates dominate Japan's economy, according to Spreckley.

And then there are the cultural blocks. "(These individuals) are generally not very globalized ... They don't speak languages like (they do in) Korea and China," Spreckley told CNN.

I think there's a lot of potential in the global market that we have not acquired.
--Mika Takagi, Cool Japan

"They don't know how to go overseas and sell themselves and communicate with potential buyers," he added.

Takagi agrees that while Japan's fashion trends are very popular in Hong Kong, China and Korea, Japanese clothing companies have struggled to enter the wider Asian market.

Takagi told CNN, "Japan has lots of fashion magazines that are sold in China and they are very popular. The clothes that are shown in the magazines are made by small and medium-sized companies. They have no knowledge or networks or capital to be able to enter Asian markets."

She says that Cool Japan will help companies like these with marketing abroad.

"Japan has a lot of unique culture which is very important to us. We have not utilized that very much until now because we could compete in (other) industries," she explained.

In fact, Japan's Ministry of Economy, Trade and Industry (METI) sees the cultural industries as a strategic sector that could drive the nation's future economic growth.

"I think there's a lot of potential in the global market that we have not acquired," Takagi said.