CHAGEE in Seoul and the Fates of Japan and Korea, Divided in 1997

After three days or so of walking around Seoul, I kept meeting the same realization at every turn. In a remarkably short time, and in almost every respect, Japan has been overtaken by its neighbor. If I had to put the feeling into words, to borrow Japan’s own era names, it is as though Korea leapt straight from Showa to Reiwa, boldly compressing the Heisei years in between and forcibly overwriting the Showa framework with a Reiwa one.

The numbers bear this out. In 2022, Korea’s nominal GDP per capita exceeded Japan’s for the first time, and over the past few years state-led digitalization has gathered pace. In GDP per capita at purchasing power parity, Korea overtook Japan in the late 2010s, and the gap widens every year. Anyone who visits a Japanese tourist spot and sees how many Korean travelers are there will find these figures easy to believe.

The same picture emerges from passport ownership. Only 18.4 percent of Japanese citizens held a passport at the end of 2025, while in Korea the figure stood at around 60 percent as of March 2025, which is remarkably high. It reflects Koreans who take for granted a life that cannot be completed within their own borders, and who search for their future in many directions at once, partly as a way of spreading risk. North Korea, the neighbor the nation regards as its potential enemy, is part of the reason, yet in Taiwan, which faces a potential enemy of its own in China, more than 60 percent of citizens also hold passports. For the people of these countries, owning a passport is not simply a matter of travel or of doing business abroad. It can also be read as evidence that they do not tie their own future to the future of the state.

Japan’s low rate does not mean that the Japanese are simply “inward-looking.” It shows that a great many of them still lean on an illusion inherited from the Showa era, the image of Japan as a safe and secure country. Seen in this light, I have long felt that the Japanese think of their own future as one and the same with the future of the state. And here lies a troublesome problem of thought.

When people say “the future of Japan,” most of them mean Japan as a state, a bureaucratic system with the government at its center. It is true that dark clouds hang over the future of Japan in that sense, and it is plain that the system will eventually collapse. But there is no reason, and no obligation, to bind its fate to one’s own life. Living for the future of Japan is necessary, but it is not the same thing as protecting Japan’s bureaucratic system. This is the distinction the Japanese people are unable to make.

The people of Korea and Taiwan draw this line clearly. In Korea’s case, the Asian financial crisis of 1997 brought the country to what was, in effect, a national fiscal collapse. It requested emergency financial support from the IMF, the International Monetary Fund, and only narrowly avoided default. When the IMF began imposing harsh austerity in 1998, citizens answered with a movement to hand their own household assets over to the nation. Known as the gold-collecting campaign to overcome the national crisis, it saw people donate gold, rings, and anything else they owned that could be turned into money, in a bitter effort to somehow renew the country. Because all this happened in the late 1990s, the experience is lodged deep in the bones of many Koreans still in the workforce today.

The fiscal crisis became Korea’s turning point. The country swept away the chaebol, the family-run conglomerates that had guarded the old system, and set about remaking its opaque structures as part of building a new nation. Armed with bold structural reform, a shift toward the IT industry, and an “offensive national strategy” to strengthen its exports, Korea staged a near-miraculous recovery, repaying its IMF loans in full, about 19.5 billion dollars in all, in August 2001, ahead of schedule.

In the midst of this sweeping overhaul, Daewoo, among the most powerful players in the country, went under, while survivors such as Samsung and the Hyundai Group accelerated their expansion overseas. At the same time, under the IMF’s guidance, “lifetime employment collapsed,” mass layoffs swept through the economy, and unemployment soared. This negative legacy is a remote cause of the brutal competition over entrance exams and the extremely low birth rate in Korean society today.

Still, what we can learn from Korea’s modern history is that Koreans abandoned their old habit of entrusting their future to the state and came to their senses. I believe this was the real force that allowed Korea to overtake Japan in the twenty-first century. It shows in the transparency of Korean society. In Korea, the pursuit of corruption works even when the suspect is the president, while in Japan it does not work at all. What the Japanese truly need in order to win sovereignty as citizens, then, is not new legislation. It lies in a decision made by each individual not to bind their own future to the future of the state.

Faced with a national fiscal crisis, Korean citizens and companies understood in their bones that a society kept stable by its domestic market alone was an illusion, and they learned the harsh lesson that dependence on the home market leads a country to ruin. A global awareness took root. The timing was apt, since this was the era after the collapse of the Soviet Union, when the United States was driving globalization forward. Riding that wave, Korea turned the helm hard toward a global strategy.

Many of those who had come to their senses during the crisis also decided to leave the country for a time, for the sake of the future. They formed Koreatowns on the West Coast of the United States, escaping the danger of national decline, and prepared themselves for the day their homeland would rise again. In time, the second-generation immigrants raised in those Koreatowns emerged as the cultural core behind today’s Korean Wave of K-pop, K-dramas, and Korean films. On the West Coast, they learned American-style global marketing and absorbed one of the world’s foremost agency systems, and while keeping the raw material of their content rooted in their parents’ homeland, they took the world by storm over the course of many years.

Meanwhile, having broken free of its outdated system, Korea succeeded in a deeper shift. Because each person understands firsthand the risk of tying their own future to the nation’s, people began to think earnestly about how a rich individual life could be put to work for Korea’s future. As I walk through Seoul, its streets and atmosphere still feel like those of a twentieth-century city, but the city’s “invisible OS” has been updated for the twenty-first century. In digital society alone, Japan cannot compare.

On this visit, what struck me about Korea’s digital policy was its method. Rather than climbing the stairs cautiously, one step at a time, at a pace suited to each citizen, the country’s leaders drove a bold digital reform from the top, and the people were left to adapt to it. This is hard on older generations, but it is something they can get used to, and young digital natives can now go on living with hardly any need to leave home. As a result, the city has begun to hollow out.

Yet this is what the future looks like. The future is not some “city of the future” of the kind once pictured in science fiction films. It is a timeline that seeps quietly into everyday life, and it is opened up by the decisions of those who stand at the top.

In Japan, digital policy is designed above all to suit each individual citizen, and especially the elderly, who form the core of the vote, so it advances cautiously, like someone slowly climbing a staircase. Worse, no one can take even the first step until the handrails are in place and every difference in the height of the steps has been accounted for. Meetings on these matters are held again and again, and insurance against falls and the necessary legislation are debated before anything else. The result is that Japan has been left completely behind by the accelerating progress of digital technology. It has become one of the world’s digital laggards, it fails to raise digital natives at home, and it has sunk to the dismal point where its young people, of all groups, have the weaker grasp of digital technology.

Japan, Korea, and China form a distinctive region that has to be understood as the sphere of Confucianism. At the root of Confucianism lies the idea that the character of the leader is reflected directly in the lives of the people and creates the prosperity of each individual. Those who stand at the front therefore bear the duty to keep learning every day, to take in new experiences and values, and to lead reform.

In that sense, 1997 was a turning point for East Asia. That same year in Japan, Yamaichi Securities collapsed, and the bubble economy that had begun in 1985 came to a complete end. Yet because Japan had amassed enormous assets during its era of high economic growth, it ironically never faced a fiscal collapse of the kind Korea did. Even after the bubble burst, the vested interests of those in power were protected, and since the regime could be kept going simply by drawing down the national savings the people had built up, the country steered toward a bad future. Meanwhile, the dysfunctional bureaucracy survived the 2001 Central Government Reform by joining hands with politics, and today bureaucratism operates at a level that outweighs politics itself. In the same year, then, Japan let its last chance for transformation slip away, while Korea pulled through a drastic cure. Thirty years on, the verdict is now plain to see in the stark difference between them.

Korea succeeded in “dismantling the old system and shifting to IT and globalization,” and Japan failed.

Nearly thirty years have passed since then. In that time, Korea has conquered the world with a soft-power strategy built on content, while Japan has fallen from grace amid the Johnny Kitagawa sexual abuse scandal. And young Koreans, passports in hand and with strong purchasing power, come to Japan one after another, gather new material, carry it home, and launch one business after the next.

Specialty coffee is the emblem of this. Around 2023, I was surprised to find so many young Korean travelers at a specialty coffee shop I often visit. When I asked them about it, they told me that good specialty coffee was hard to come by in Korea, so they came to Japan for it. Yet that conversation from three years ago already sounds like a tale from the distant past.

Seoul today is home to what may be the fiercest struggle for survival among cafes anywhere in the world. New cafes open and vanish in quick succession, and the scene keeps swelling even as it weeds itself out at high speed. The sheer number of cafes is abnormal, and I sense that, to survive such fierce competition, they are gradually beginning to move toward personalization. Behind all this stands an unexpected presence, and that presence is China.

A quiet sense of China is creeping into Korea, and its emblem is CHAGEE, known in Chinese as Bawang Chaji.

Founded in 2017 in Yunnan Province, this modern premium tea brand swept across mainland China in no time, and on April 30, 2026, it astonishingly opened three stores in Seoul at once. Appearing in Gangnam, where young people go to shop, in Sinchon, full of university students, and in Yongsan, the focus of recent redevelopment plans, CHAGEE quickly captivated trend-conscious young Koreans and became wildly popular. Then, on May 21 and 22, it opened two more stores in the city, so that within a month of arriving in Korea, it was already running five.

CHAGEE already has more than 7,000 stores in mainland China and has expanded into Malaysia, Singapore, Thailand, Indonesia, the Philippines, Vietnam, the United States, and Korea. In other words, Japan is not on the list. It would be easy to put this down to relations between Japan and China, but another reading is possible. The reality may be that the purchasing power of each Japanese consumer has been judged less attractive than that of other Asian countries.

In fact, when I visit a CHAGEE in Seoul on a weekend, trend-conscious Japanese travelers stand out among the customers. They now come to Seoul and make a point of stopping at this Chinese brand. The speed of CHAGEE’s expansion is thoroughly contemporary, and the brand is also moving rapidly online, offering a wide range of options to suit each customer’s taste. What is more, in the space of a single month, it has opened stores in districts where every kind of customer passes through, from tourists and young shoppers to university students and businesspeople.

All around stand countless Starbucks, the symbol of American globalization, yet they feel strikingly outdated, as if they reflected the end of America and the rise of China in Asia.

Interestingly, CHAGEE was designed from the very start, down to its logo and store design, so that it could move straight into former Starbucks locations as they stand. Above all, Starbucks has reached saturation. In Japan, too, it has become little more than a study room, and its brand no longer carries any value. Starbucks originally conquered the world with coffee that Americanized Italian espresso culture, a sensibility well suited to the global age. By contrast, CHAGEE reinterprets and presents a tea culture whose true home is China, so it is not at the mercy of price swings in the global coffee bubble, and it deftly draws off only the sweet part of globalization.

Korean Wave content is now saturated, and Korea’s soft power has reached a turning point worldwide. Quietly, as if to mark that moment, China’s soft power is beginning to make its way into Seoul. Seen this way, Korea looks to me like a nation with a new self-image, one that is keeping its distance from the United States in every respect and beginning to search for a twenty-first-century way of facing its neighbor China. In a sense, Korea today is Asia’s canary in the coal mine.

From here on, Korea will presumably try to update itself while steadily absorbing Chinese influence. If it succeeds in its next renewal, the unification of Korea could become reality, resolving its structural problems of a low birth rate, stagnation, and a small market. North Korea’s military technology could then intertwine with South Korea’s advanced industrial structure, with China and its cutting-edge technological base standing behind them. In short, Korea holds the potential to evolve, within this century, beyond anything we can now imagine.

If that happens, it is Japan that will be driven into a corner. It still cannot bring itself to put distance between itself and the United States, and its dealings with China are slipshod. It has become a digital laggard, and most of its people do not even own a passport. The futures of Japan and Korea have already been decided.

A rapid shift in the bedrock has begun in the streets of Seoul. Just as young Japanese now travel to Korea again and again, we have already entered an era in which we must learn, in earnest, from Korea what the next form of the nation might be.