Japan's 'Cool Japan' lost W500b while K-pop conquered the world, Japanese media says

As K-pop and Korean drama series racked up hit after hit in global markets, Japan's "Cool Japan" policy suffered a crushing failure, accumulating losses of around 500 billion won, a Japanese media outlet has said.

IT Media Business Online ran an article Wednesday titled "Why does Korea keep scoring global hits while Japan burned through 54 billion yen ($346 million)?" analyzing the Cool Japan initiative and concluding that it lacked focus.

The Japanese government established the Cool Japan Fund in 2013 under then-Prime Minister Shinzo Abe, with the goal of promoting manga, anime, games, film, music, food, fashion, traditional culture and tourism abroad while attracting more foreign tourists.

The fund consistently fell short of its earnings targets after launch, and its accumulated deficit swelled to about 54 billion yen — roughly 500 billion won — as of fiscal year 2025. Japan's Ministry of Economy, Trade and Industry has since decided to dissolve the fund, according to the outlet.

IT Media questioned why a public-private fund set up to promote Japanese anime and manga abroad — sectors that have been expanding their global influence — managed to lose 54 billion yen. The answer, it said, becomes clear when you look at where the fund actually invested.

The outlet cited biotech fiber venture Spiber as a prime example. The Cool Japan Fund poured 14 billion yen into the company, but Spiber was liquidated carrying roughly 36 billion yen in debt.

The fund also invested 8 billion yen in theme park developer Dora and 3.1 billion yen in education platform Rough & Peace Mother, neither of which delivered the expected results, the outlet said.

The core problem, the outlet argued, was that the Cool Japan Fund spread its money across a wide range of sectors — biotech, education and theme parks alongside anime and manga — rather than concentrating on content.

The outlet described the initiative as "Baramaki Japan" rather than Cool Japan — a pointed reference to "baramaki," a Japanese term for scattershot government spending that distributes funds broadly across many sectors instead of targeting a strategic few.

South Korea, by contrast, succeeded by concentrating investment in sectors with genuine global competitiveness, such as entertainment and cosmetics, the outlet said.

South Korea was compelled to aggressively pursue overseas markets after the Asian financial crisis in order to cultivate new industries, the outlet said. In that process, hallyu policy was similarly focused on specific sectors — chiefly entertainment and cosmetics.

The result, the outlet said, was the rise of companies such as Hybe, home to BTS and Le Sserafim, and Studio Dragon, Asia's largest drama production house, which has delivered a string of global hits.

The outlet traced this divergence to the differing economic and industrial structures of the two countries.

South Korea, with a smaller population and a relatively limited domestic market compared with Japan, had little choice but to build industries aimed at overseas consumers. Japan, on the other hand, could nurture a wide range of industries — from automobiles and materials to food — within its own domestic market of about 120 million people.

The outlet also observed that when the Japanese government allocates public funds, it tends to favor sectors that spread benefits across a larger number of industries and workers rather than concentrating resources on a select few. That instinct toward "equitable support," it said, makes it harder to pursue the kind of strategic focus that effective industrial policy requires.