Steven Bogos said:
For a little background, the word "gaijin" comes from the Japanese "gai koku jin" - which translates to "outside country person," or foreigner. When you drop the "koku" from the middle of the word, gaijin takes on the literal meaning of "outside person" or "outsider," and is considered an offensive term by many foreigners living in Japan.
This is commonly believed, but as I understand it factually incorrect. I recall reading somewhere that there is a historical record of Japanese people using
gaijin to refer to unknown strangers to their village well before any recorded use of
gaikokujin and well before significant international migration would create the need for the word in the first place.
The term is controversial and is avoided by Japanese television broadcasters. To put it to you this way - as a foreigner living in Japan, a Japanese person would never call me gaijin to my face, unless he was looking for a fight.
I would say the term is more controversial because it assumes foreign ethnicity dictates in-group/out-group identity. There are many in-groups I should be recognized as part of based on my participation: my job, my neighborhood, my friends, etc. If people in my in-groups call me a
gaikokujin they're factually describing my nationality as not-Japanese. If they call me
gaijin what they're implicitly saying is that because of my foreign-looking face, no matter what I do, no matter how much I adapt to this society, no matter how much I
contribute to this society, I'm an outsider and unworthy of the group membership many Japanese people receive automatically when they participate in those groups.
A lot of Japanese people don't realize the degree of insult the term entails, largely because they mistakenly believe that it's simply short for
gaikokujin. On the other hand, I can't even remember the last time anyone Japanese used that term in my presence. I probably use it far more often when talking with other foreigners as a part of expressions like, "Gaijin bar" or "Gaijin SMASH!"
As for the company now known as "Choice Provisions", well, I suppose it's an alright gesture. I don't know anything about them but just from what I've seen about how Japanese people tend to consume games, I don't know if I expect them to have had any presence in Japan in the first place. So their previously calling themselves "Gaijin Games" may involve a racial slur, but it's not exactly likely to influence Japanese people and make the slur more commonly used. So it's a small gesture, but at least it's a gesture in the right direction.