Japan backs 'soft' export firms with cool cash
Abe's administration hopes to put its popular cultural wares on global map with US$1b fund
Reuters in Tokyo
Japan’s industry bureaucrats once guided the country’s world-beating drive to export cars and electronics.
Now that Toyota and Sony have been household names worldwide for decades, the government wants to make sure the rest of the world buys Japanese sake, sashimi and anime.
The Cool Japan Fund, which launches on Monday, aims eventually to use about US$1 billion of mostly public funds to boost distinctive food and drink, fashion, animated and live-action movies and other “soft” exports.
Although conceived before Prime Minister Shinzo Abe took office last December, it fits his theme that “Japan is back”.
Some experts question the need for taxpayers to pump money into private companies. But Nobuyuki Ota, chief executive of Cool Japan Fund Inc, said it made sense for the government-dominated effort to pick winners among companies keen to expand abroad.
“A state-backed fund can do what private investors cannot,” said Ota, a former fashion executive who brought Issey Miyake designs to the world.
“Private investors sell their assets once their investment targets becomes profitable. We can be a long-term investor, because it takes time for those small companies to grow.”
As disputes with neighbours like China and South Korea simmer, Abe’s government is keen to exploit chances to project Japan’s popular cultural wares.
The expected adoption soon by Unesco of Japanese cuisine – washoku – as an intangible cultural heritage is the latest example of Japan’s soft-power push.
The Cool Japan Fund is starting with 37.5 billion yen (HK$2.87 billion): 30 billion yen from the government and 7.5 billion yen from 15 companies, such as airline ANA and advertising giant Dentsu.
The fund will swell to 60 billion yen by March and eventually reach 90 billion yen by March 2015, said Yoshiaki Akamatsu, an official at the Ministry of Economy, Trade and Industry (Meti), which is overseeing the project.
But if these businesses getting public support are worthy ones, the question arises, why do they need public backing?
Such public-private funds are in fact public, and they face a conflict between policy goals of promoting chosen firms and the need to maximise returns, private equity consultant Joji Takeuchi said.
“The fund idea is created by the government, most of the money is provided by the government, the government raises funds from the private sector and the government assembles the fund managers,” said Takeuchi, chief executive of Brightrust PE Japan.
“Investments from the private investors are very small and are nothing more than a token of their support for the government initiative.”
Abe’s government, which has pumped more than US$3 billion into state-linked funds investing in Japanese companies, expects annual returns of 7 per cent to 9 per cent from the Cool Japan Fund, a person directly involved in the project said.
The fund’s remit, according to its website, runs from anime and other comics to movies, TV programmes, games, fashion and local products such as lacquerware, beauty products and food.
Its aims are broader than investor returns.
“It is difficult to preserve local culture without injecting government money,” Ota said. “Local manufacturers are shrinking, and many young people leave for bigger cities. Once the older generations die, there will be no one who would take over that.”