By Ichiro Suzuki In the late 20th century, when Japan was slipping into an identity crisis due to its key industries’ relative decline, one aspect of Japanese culture received a spotlight as the one that identifies the country to a large number of people around the world. It was ‘manga’, Japanese comic books and graphic novels that is aimed at adults as well as children, and ‘anime’, an animated version of manga that are aired on television. At a time when bureaucrats were struggling to figure out ways to export Japan’s pop culture, manga emerged without anyone’s help. While many grownups raised eyebrows on young men reading a comic book on a commuting train, others saw it as ‘cool’. Manga has become an ambassador that sells positive images of the country, and even earns foreign exchanges. Children overseas become interested in the country watching Japanese anime on TV, and such an interest leads some of them to study in Japan. Recently there are some signs of change in what could be considered as a crown jewel of Japan’s pop culture. As have been the cases with industries that brought Japan prosperity, China is trying to catch up even on manga. On this front, China is not undercutting Japan with less expensive offerings as the country has done in a variety of industries. In manga, Chinese corporations are offering three times as much salaries to young animators in Japan. Animators are notoriously poorly paid in a country where wages and salaries hardly rose for a generation. There is no shortage of aspiring young animators. So the supply-demand equilibrium in the domestic market keeps suppressing their salaries, and that has made the industry exploit ‘cheap labor’. Then, here comes a disruptive threat from abroad that breaks the existing equilibrium. Animators have been poorly paid due primarily to a structural problem in the industry. Production studios are not entitled to receiving a big slice of a pie. It is investors’ consortium that receives profits when an animated TV show or movie turns out to be a smash hit. It makes sense for risk-takers to capture profits since only a handful of movies, animated or live action ones, bring sizable profits. Investors have to absorb losses from flops that are not rare at all. While this makes good business sense, it is leading to exploitation of young animation talents since only a fraction of profits go into the hands of production studios. A consortium often consists of heavyweights in the entertainment industry including an ad agency, a film distributor, a media company (TV channel) as well a major animation studio. On the other hand, demand for animated films has been rising in recent years due to dramatic increase in TV channels. In addition, rise of video games have added fuel on demand surge for animated films and animators. Animated films' demand growth has been a global trend as well, especially in the U.S. and China. Rapid rise in income in China has brought greater demand for entertainment contents. Import restrictions on foreign films are also boosting demand for home-made animated films in China. Japan has had this kind of experience before. Almost 170 years ago, the U.S. Navy’s Commodore Matthew Perry arrived in Tokyo Bay on imposing ‘Black Ships’ and plied open Japan that had been closed for external trade for over two centuries, shattering the domestic equilibrium that had kept peace for over 200 years. Commodore Perry’s arrival has fundamentally shifted Japanese people’s psychology to question the governing system of the country and eventually led to a revolution, toppling the reign of Tokugawa shoguns. From a different perspective and in a more subtle fashion, Asian competitors raided Japanese talents by offering lucrative packages to inadequately paid professionals by global standard. Since the mid-1980s, Japanese electronics engineers made short weekend trips to Seoul helping South Korean chaebols (conglomerates) improve their products, eventually laying a foundation in the making of super competitive Korean electronics industry. What these engineers did was a breach of a code of employees' conduct if such a thing existed at that time. There might not have been such a code back then, but it was still questionable ethically. More recently, Chinese appliance makers are recruiting Japanese engineers who have hit the retirement age of 60. By law, anyone who has reached 60 must be rehired by the same employer for another five years if he or she wants it, but only at a fraction of what has been already low pay. Those who are not interested in such working conditions that might be insulting to some might choose to take an offer from a Chinese corporation. That offer would require them to work in China for a few years. While that becomes a bar, those who choose to move to China are handsomely paid and well respected within the organization. There is no legal or ethical issue about it. Having hit a retirement age, they are free to do things as they wish. In addition to Chinese players, Netflix is said to have an interest in investing in Japan’s animation industry, bringing in the system that have revolutionized film production in Hollywood. Entry of deeply-pocketed players into what is becoming a greater industry than heretofore believed presents a chance of a disruptive change in the industry that has so far operated on a purely domestic logic. Animators many have a chance of living a more humane life with improved working conditions. As the value of the industry rises, consumers could be asked to pay higher prices for their work.