How Hello Kitty transformed Japan’s newest CEO

Hello Kitty, arguably Japan’s most beloved creation, is celebrating its 50th anniversary.

But all has not always been well at Sanrio, the Japanese company behind the character. The business has been on a spectacular ride of financial peaks and troughs.

Hello Kitty is ranked the second highest grossing media franchise in the world behind Pokémon, and ahead of the likes of Mickey Mouse and Star Wars.

Underscoring her global fame, Britain’s King Charles wished her a happy birthday during the state visit to the UK by the Japanese emperor and empress in June.

In recent years though Sanrio has struggled to make money as interest in Hello Kitty waned.

Sanrio’s two previous sales spikes, in 1999 and 2014, were both fueled by the character’s popularity. But these increases in demand for the firm’s products were not sustainable, says Yasuki Yoshioka of investment firm SMBC Nikko.

“In the past, his performance had a lot of ups and downs, like he was on a roller coaster ride,” Mr. Yoshioka. says.

Then, in 2020, Tomokuni Tsuji inherited the role as Sanrio’s boss.

He is the grandson of the firm’s founder, Shintaro Tsuji, and was just 31 at the time, making him the youngest chief executive of a listed Japanese company.

His grandfather then became chairman of Sanrio.

Under the leadership of Mr. The younger Tsuji, Sanrio changed the marketing strategy of the stable of other characters.

“It’s not about reducing the popularity of Hello Kitty, it’s about increasing the recognition of others,” he says.

This resulted in Hello Kitty losing her position as Sanrio’s most popular character.

According to a customer survey, that spot is now held by Cinnamoroll — a blue-eyed white puppy with pink cheeks, long ears and a tail that looks like a cinnamon roll.

Sanrio is also no longer just about cute characters.

If Hello Kitty is the Japanese ambassador of beauty, then the angry red panda Aggressive Retsuko – or Aggretsuko – channels the frustrations of an ordinary working woman.

The character, who is popular among Gen Zers, first appeared in a cartoon series on Japanese television TBS before becoming a global hit on Netflix.

Another unconventional character is Gudetama, or “lazy egg,” who is living with depression and drops chilling packages that reflect the dark realities of life.

In addition to diversifying its characters, Sanrio increased its overseas marketing and is now cracking down more strictly on counterfeiting.

“We are now using artificial intelligence to detect fake products and make takedown requests,” says Mr Tsuji.

For its marketing strategy, collaborations with major brands — including Starbucks, Crocs and the LA Dodgers baseball team — have been key, he added.

“Besides our promotion, collaborating with world brands, we are trying to have our characters on the market throughout the year without many breaks.”

In a society that places so much importance on seniority, Mr. Tsuji’s last name was crucial to his ability to make big changes at Sanrio.

Almost a quarter of Japan’s listed companies, such as car makers Toyota and Suzuki and camera firm Canon, are managed by members of the family that founded them.

The reason 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 carried over to the relationship between the founding families and their employees, and “historically common people have never fought for high office.”

“This is also because Japan has a smaller pool of professional drivers 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 wasn’t any pushback” from managers and other employees in the company, says Mr. Tsuji.

He also says he clashed with his grandfather over the way the company was run.

“But one day I realized that I was being arrogant, trying to convince someone 60 years older,” he says.

“After about a year, my grandfather told me to run the company as I see fit – that he will leave it in my hands.”

The new boss’s rebuilding of the business has paid off so far.

Within two years of the younger Tsuji becoming chief executive, Sanrio was profitable again, according to what the analyst Mr. Yoshioka calls it “a nice V-shaped recovery.”

Its share price has increased tenfold since 2020, and the company now has a stock market valuation of more than a trillion yen ($6.5 billion; £5 billion).

Away from the boardroom and the stock market, there was also an intriguing incident earlier this year.

While Hello Kitty’s true identity is relatively well known in Japan, some overseas fans were shocked by comments from a Sanrio executive in July.

Speaking on US television, retail business development director Jill Koch told viewers that “Hello Kitty is not a cat” and is in fact a British schoolgirl.

Her comments sparked a flurry of posts on social media, with fans expressing their shock and confusion at the revelation.

“Hello Kitty is Hello Kitty and she can be whoever you want her to be – she can be your sister, your mother, she can be another you,” says Mr Tsuji.

Postpone if any Whatever the idea of ​​why his grandfather decided not to make her Japanese, Mr Tsuji concludes: “London is an amazing city and it was the envy of many Japanese girls, so that might be one of the reasons they decided she was from London.”

It may not be the definitive answer her fans are looking for – but after all, Hello Kitty was created 14 years before the youngest Tsuji was born. Half a century since its creation, it’s possible that the beloved character’s origin story will continue to be shrouded in mystery for years to come.

Find out more at Business Daily on the BBC World Service. You can listen again via the World Service website or download the BBC Sounds app.