South Korea's economy has taken a beating due to Seoul's frayed ties with Tokyo, and the South Korean pop culture craze in Japan has also lost some of its fizz since then South Korean President Lee Myung Bak visited the Takeshima islands in Shimane Prefecture in 2012.
Last year, 2.28 million Japanese tourists visited South Korea, a drop of 35 per cent from 2012.
Direct flights linking Japan and the tourist resort of Jeju Island will be discontinued in October, the first such suspension since a service from Osaka to Jeju was launched in 1981.
South Korea's export industries account for almost 50 per cent of that nation's gross domestic product.
The significant weakening of the yen in recent years has blunted the price competitiveness of South Korea's exports and battered these industries.
Shipbuilding has been experiencing a particularly severe crunch. According to the Shipbuilders' Association of Japan, orders won by South Korean shipbuilders in 2014 were down 30 per cent by tonnage from the previous year, and South Korea's share of the global market slipped to under 30 per cent.
These economic doldrums have resulted in Seoul accelerating moves to cosy up to China.
In 2003, China eclipsed Japan as a trading partner of South Korea by value, and overtook the United States in 2004 to become South Korea's top trading partner. In 2014, bilateral trade with China accounted for 21 per cent of South Korea's total trade.
On June 1 this year, China and South Korea formally signed a bilateral free trade agreement.
South Korean President Park Geun-hye has high expectations for this pact, saying, "This will become a historical milestone which will further deepen the strategic cooperative partnership between the two countries."
Seoul dawdled while other nations announced they would participate in the Trans-Pacific Partnership trade deal being spearheaded by Japan and the United States.
South Korea is not among the 12 countries holding these negotiations, which are nearing completion.
Despite being urged by the United States not to join the China-led Asian Infrastructure Investment Bank, South Korea signed up as a founding member and holds the fifth-largest shareholding in the bank.
Seoul's objective is to get a head start over Tokyo by entering the massive economic sphere Beijing is seeking to create.
However, this could drive a wedge between Japan, the United States and South Korea - which is precisely what China wishes to achieve.
Earlier this year, South Korean Foreign Minister Yun Byung Se was optimistic his nation could stay on good terms with both the United States and China.
Yun said South Korea was "getting 'love calls' from both the United States and China because of our strategic value."
However, the chilly reaction of Tokyo and Washington to Seoul over the AIIB issue has led to emerging concerns that South Korea could become isolated.
There is a growing opinion within the South Korean government and business circles that history and territorial issues should be handled separately from economic matters.
Despite this, there is no indication that Japan is preparing to offer any concessions to South Korea over its pending economic problems.
A close aide to Prime Minister Shinzo Abe told The Yomiuri Shimbun: "Prime Minister Abe often says that if South Korea remains fixated on these history issues, we should just leave it alone.
He isn't trying to attract their attention by acting as if he isn't interested in its actions. The prime minister doesn't have any special sentiment toward South Korea."
This year marks the 50th anniversary of the normalisation of diplomatic relations between Japan and South Korea and the 70th anniversary of the end of World War II.
Questions remain as to whether the leaders of both nations have the resolve to get bilateral ties back on the road to improvement during this significant year.