Giant balloons depicting Pokemon characters and boy detective Conan filled the air at the Thursday kickoff of the Tokyo International Anime Fair 2007 in Tokyo, as 270 companies, including 55 from overseas, came together for the world's biggest animation festival.

Companies from Japan, China, South Korea, the U.S. and Canada are taking part in the four-day event at Tokyo Big Site in the capital's Odaiba district, although the first two days are open only to the press and businesses.

The fair is an ideal venue for Japanese and foreign distributors alike to sniff out another smash hit like the Pokemon or Dragon Ball series to introduce to Western audiences.

Though the number of overseas companies taking part fell to 55 from last year's 73, organizers say this is due to the fact that more Asian companies are registering in groups.

After peaking at $5 billion in 2003, Japan's animation industry has seen its returns fall in the United States -- down to $3.1 billion in 2006. Hitoshi Suzuki, the event's chief organizer, admitted it's a worldwide trend.

"The only solution is for Japan to offer better products that might become a big hit," Suzuki said.

However, animation itself is not the only product for sale.

A delegation of Canadian companies that make software for 3-D animated movies is hoping to lure animators in Japan and other countries.

According to the Canadian Embassy, which helps to promote their products, Canadian companies provide about 90 percent of such software worldwide.

"This event could be a mecca of the world's animation industry," said Stephane-Enric Beaulieu, second secretary at the Canadian Embassy in Tokyo. "My job is to let Japanese companies know about the capabilities of Canadian companies and also for the Canadian companies to know about the Japanese market."

Imajen, a California-based production company, is at the fair for the first time, hoping to interest companies in creating animated features or video games out of its adventure novel "Ancients & Immortals."

Japanese firms are also boasting new products, including TWN, or Takarajima Wondernet Inc.'s mobile comics, which let users download and read comics on mobile phones.