Sanrio’s Revival: How its Youngest CEO Reshaped the Hello Kitty Empire

Hello Kitty, often regarded as Japan’s most beloved creation, is commemorating its 50th anniversary. However, the Japanese company responsible for the character, Sanrio, has not always experienced smooth operations. The business has undergone a remarkable journey marked by significant financial highs and lows. Hello Kitty has been recognized as the world’s second-highest grossing media franchise, trailing only Pokémon and surpassing popular entities such as Mickey Mouse and Star Wars. Emphasizing her global appeal, Britain’s King Charles extended birthday wishes during the state visit of Japan’s Emperor and Empress to the UK in June. Nonetheless, in recent years, Sanrio had faced financial difficulties as interest in Hello Kitty waned. Two prior surges in Sanrio’s sales, in 1999 and 2014, were both fueled by the character’s popularity. Yet, these increases in demand for the firm’s products proved unsustainable, according to Yasuki Yoshioka of the investment company SMBC Nikko. “In the past, its performance had many ups and downs, as if it was on a rollercoaster ride,” Mr Yoshioka says. Then, in 2020, Tomokuni Tsuji assumed the leadership role at Sanrio. He is the grandson of the company’s founder, Shintaro Tsuji, and was merely 31 years old at the time, making him the youngest chief executive of a publicly listed Japanese company. His grandfather subsequently became Sanrio’s chairman. Under the younger Mr. Tsuji’s direction, Sanrio modified its marketing approach for its collection of other characters. “It is not about lowering Hello Kitty’s popularity but it is about boosting others’ recognition,” he says. This change led to Hello Kitty losing its position as Sanrio’s most popular character. Based on a customer poll, that spot is now occupied by Cinnamoroll—a blue-eyed white puppy with pink cheeks, long ears, and a tail resembling a cinnamon roll. Sanrio’s focus has also expanded beyond solely cute characters. If Hello Kitty symbolizes Japan’s cuteness, then the angry red panda Aggressive Retsuko—or Aggretsuko—articulates the frustrations of an ordinary working woman. The character, popular among Gen Zers, first appeared in a cartoon series on Japan’s TBS Television before achieving global success on Netflix. Another unconventional character is Gudetama, or “lazy egg,” who grapples with depression and delivers cynical one-liners that reflect life’s darker realities. In addition to diversifying its characters, Sanrio intensified its overseas marketing and is now more rigorously addressing counterfeits. “We are now using artificial intelligence to detect fake products and to make removal requests,” says Mr Tsuji. For its marketing strategy, collaborations with major brands—including Starbucks, Crocs, and the LA Dodgers baseball team—have been pivotal, he added. “In addition to our own promotion, by collaborating with global brands, we are trying to have our characters in the market throughout the year without many breaks.” In a society that places significant importance on seniority, Mr. Tsuji’s surname was crucial to his capacity to implement substantial changes at Sanrio. Nearly a quarter of listed companies in Japan, such as car manufacturers Toyota and Suzuki and camera firm Canon, are managed by members of their founding families. This phenomenon is cultural, according to Professor Hokuto Dazai of Nagoya University of Commerce and Business. In Japan, home to the world’s oldest continuous monarchy, “there is strong recognition of families and family businesses,” he says. The master-servant relationship from the samurai period has evolved into the dynamic between founding families and their employees, and “historically commoners never fought over the top job.” “It is also because Japan has a smaller pool of professional executives to choose from,” says Professor Dazai. “Firms tend to look for their next boss internally, including founding family members.” Still, “it would be a lie if I said there was no pushback” from other managers and employees within the company, Mr Tsuji says. He also mentioned that he clashed with his grandfather over how to manage the company. “But one day I realised that I was being arrogant, trying to convince someone 60 years senior,” he says. “After about a year, my grandfather told me to run the company as I see fit – that he will leave it up to me.” The new leader’s revitalization of the business has proven successful thus far. Within two years of the younger Tsuji becoming chief executive, Sanrio was profitable again, in what analyst Mr. Yoshioka terms “a beautiful V-shaped recovery.” Its share price has increased tenfold since 2020, and the company now boasts a stock market valuation exceeding a trillion yen ($6.5bn; £5bn). Beyond the boardroom and stock market, an intriguing incident also occurred earlier this year. While Hello Kitty’s true identity is relatively well-known in Japan, some overseas fans were surprised by comments from a Sanrio executive in July. Speaking on US television, retail business development director Jill Koch informed viewers that “Hello Kitty is not a cat” and is, in fact, a British schoolgirl. Her comments triggered a flurry of social media posts, with fans expressing their shock and confusion regarding the revelation. “Hello Kitty is Hello Kitty and she can be whoever you want her to be – she can be your sister, your mother, it can be another you,” Mr Tsuji says. When pressed on whether he had any insight into why his grandfather decided not to make her Japanese, Mr. Tsuji concluded: “London is an amazing city and it was the envy of many Japanese girls, so that may be one of the reasons they decided that she’s from London.” This may not be the definitive answer her fans are seeking—but after all, Hello Kitty was created 14 years before the younger Tsuji was even born. Half a century since her creation, it is possible that the beloved character’s origin story will continue to be shrouded in mystery for years to come. Further information is available on Business Daily on the BBC World Service. You can listen again via the World Service website or download the BBC Sounds app. Copyright 2024 BBC. All rights reserved. The BBC is not responsible for the content of external sites. Read about our approach to external linking.