From the Editor

Japan's Hippest Export: Art -- The SDF's Identity Crisis -- Atom's Birthday Bash

WHAT TO MAKE OF modern Japan? Within the span of several days this winter, I read two reports on Japan that couldn't be more completely at odds with each other. One, "The Irrelevance of Japan," by Nikko Salomon Smith Barney analyst Alexander Kinmont, was scathing in its indictment of Japan's "intellectual sterility and incompetence in elite circles" and essentially wrote off the country as being of "no general importance except as a laboratory experiment concerning deflation."

The other was a report on the UCLA International Institute's Web site by Leslie Evans entitled, "The Battle for the Global Entertainment Industry: Japan's Growing Strength in Digital Culture." Evans was covering a speech in January by Ronald A. Morse, who holds the Paul I. Terasaki Chair in US-Japan Relations at UCLA. Morse called Japan the "Godzilla of competition," and predicted the country would be back with a vengeance in a year or two as it moves ahead of everyone else in forging digital pop culture.

Morse had this to say about Japan's ability to rebound: "For years they said they were good at manufacturing. I never thought they were as good as they thought they were. They've put their esthetic and their quality control into their auto products. Similarly, cellphones are not particularly a Japanese technology. But they are very big because they have put their special orientation into the use of the cellphone. It is a cultural content, a powerful core cultural competence. They are good at drawing, illustration, artistic sensibility and combining that with technology gives them a competitive advantage. Japan may be even more competitive here than they were in autos or steel."

Contrast that positive, hopeful statement with this assessment of Japan from Kinmont: "It has not been long since there was a Northeast Asian country ruled over by an oligarchic clique with an outmoded, non-market economy, still under the sway of a failed ideology. Today, though, that country appears to be Japan, and not, as it was, China."

Sounds like they're talking about two different countries -- and in a way, they are. Kinmont is focusing his diatribe on the ineffectiveness and lack of will among the political and ruling elite: the Bank of Japan, the Koizumi administration, money managers, the corporate executive class. Morse, on the other hand, is talking about Shibuya, the keitai culture, the mobs of young people and the companies that serve them with manga, anime, i-mode and more.

Kinmont has written off the country after taking a top-down view. Morse sees activity bubbling on the streets. "A lot of retooling doesn't show up on the radar screen," Morse says in the UCLA piece. "These [changes] will begin to emerge in 2004-05 in renewed competition in a big way. The private sector has seen a tremendous amount of restructuring. The banks may look bad, but at the micro-level there has been a turnaround. l think they will come out like gangbusters."

Kinmont, I'm sure, wouldn't concur. But from our perspective -- much closer to the teeming streets of Shibuya than the cloistered halls of Western money managers -- Morse wins the debate hands down.

On a more personal note, this marks my 17th and last edition as editor in chief of J@pan Inc. From next month, Roland Kelts, a talented writer and editor with a deep interest in Japan, business and technology, will take the helm. I'm passing him the baton as editor in chief, but I plan to keep very strong ties with J@pan Inc as an editorial consultant and contributor while I also pursue a couple of other professional goals. I want to thank the most supportive staff I've ever worked with for putting up with all that goes into making this magazine each month, a publisher just mad enough to stay independent in this day and age, and of course, all of you.