Japan Finds Its Seoul.(Japanese attracted to South Korea)(Statistical Data Included)

Nothing in Suguru Okuhara's life prepared him to like Korea. His grandfather, an unrepentant veteran of Japan's Imperial Army, called Koreans racist names and sang songs in the shower with lyrics like "Koreans sound like pigs." Six years ago his father almost had to drag Okuhara, now a 25-year-old ad-agency employee, onto the ferry from Japan to South Korea for a family holiday.

On the opposite shore, though, he found "a beautiful world," says Okuhara. The people he met were expressive and confident. He loved the boisterous food stalls that lined the city's open-air markets. "It is a culture in which you don't have to be self-conscious about your lust for food," he says. "I think that's very human." Upon his return, Okuhara began studying Korean and in 1997 designed a Web site dedicated to what he called "Korea envy syndrome." The site posts essays and travelogues that celebrate Korea's attributes, while poking fun at Japanese stereotypes of the country. He occasionally reviews Korean music and movies, and in a section prefaced with the warning "You might not want to enter," offers Korean perspectives on Japan's brutal colonization. His recurring theme: Japan lacks Korea's confidence, passion and kindness. "These things must be important, otherwise I wouldn't be so touched by them," he says. "I hope for the Koreanization of Japan."

He is no longer alone. A decade of political and economic malaise has steadily eroded Japan's once vaunted sense of superiority. Japanese have long worried that they were falling behind the West; now even Koreans--Japan's closest neighbors and long considered the barbarians at its gate--seem to have gained the upper hand. Korean movies and pop music attract millions of Japanese fans. Korean women are idealized for their beauty, men for their prowess as lovers. Seoul is beating out London and New York as this year's coolest vacation spot for Japanese tourists. Frustrated dotcomers gaze longingly at the entrepreneurial atmosphere that has transformed South Korea into the most-wired country in Asia. "Japan envies a South Korea that can change and is changing," says Kan Kimura, an associate professor of Korean studies at Kobe University, "even though Japan doesn't want to change, and can't."

Not so long ago, Japan thought it would remake Korea in its own image. In 1910 Emperor Meiji annexed the Korea Peninsula to blunt what the Japanese leaders of the late 19th century considered "a dagger aimed at Japan's heart." The plan: export Japanese settlers to the area, impose Japan's language and culture, and build an enduring empire on mainland Asia. Koreans resisted mightily and to this day resent the Japanese for their bloody rule. Japanese, for their part, continued to look down upon their neighbors even after losing their colony in World War II. When pro-capitalist South Korea and other Asian countries implemented industrial policies modeled after Japan Inc., Tokyo likened them to geese flying in formation behind its benevolent lead.

Many Japanese remain culturally arrogant and openly xenophobic. But their number is dwindling, while the ranks of those who admire and even envy Korea have risen dramatically. In a recent government survey, 51.4 percent of respondents reported warm feelings toward South Korea, up from 35.8 percent in 1996. The new fascination owes much to the different ways the two countries have handled their most recent woes. After the won collapsed in 1997, threatening to take down major banks, Seoul accepted a humbling IMF bailout. As part of the bargain, the government implemented sweeping financial reforms, shuttered bankrupt companies and thoroughly globalized its economy. Japan, in contrast, has failed to fix its bad banks or fully open its markets. Today, says Kimura, "Japan, a huge Titanic, is sinking slowly within sight of a small new ship called South Korea."

Japanese, particularly those working in technology, worry that their country is missing the boat. (According to a recent newspaper poll, 80 percent of Japanese are concerned about the future of their economy.) They point to the success of Korea's New Economy, which outpaces Japan's by almost every digital measure. Its households are 40 percent more likely to be wired, and Koreans spend an average of 18 hours each on the Internet monthly, as opposed to just five hours for the average Japanese. Nasdaq Japan, which opened last year, lists only 48 companies compared with the five-year-old Kosdaq's 610 firms.

Then there's broadband. Korea boasts 3 million ADSL subscribers, compared with fewer than 40,000 in Japan. The result: Koreans move data 10 times faster on the Internet. This bandwidth gap means Internet broadcasting has flourished in Korea--where about 1,000 companies now stream music, games and video--but floundered in Japan, where fewer than 100 firms are in business. "Even if we think of great CONTENT to offer online, most people are not ready to receive it," laments Yoshiyuki Dempo, president of the Japanese venture company Polytech. "Sometimes we wish we were in Korea."