How Japan’s youngest CEO changed Hello Kitty

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

But all was not always smooth sailing for Sanrio, the Japanese company that developed the character. This business has been through a tough financial journey with many ups and downs.

Hello Kitty ranks as the second-highest grossing media franchise in the world, behind Pokemon, ahead of the likes of Mickey Mouse and Star Wars.

Underscoring her worldwide fame, Britain’s King Charles celebrated her birthday during a state visit to the United Kingdom by Their Majesties the Emperor and Empress of Japan in June.

But in recent years, interest in Hello Kitty has waned, and Sanrio has struggled to turn a profit.

The past two sales spikes for Sanrio, in 1999 and 2014, were both due to the character’s popularity. But this surge in demand for the company’s products was not sustainable, said Yasuki Yoshioka of investment firm SMBC Nikko.

“In the past, there were many ups and downs in performance, like riding a roller coaster,” Yoshioka says.

In 2020, Tomokuni Tsuji took over the role as Sanrio’s boss.

He is the grandson of the company’s founder, Shintaro Tsuji, and was only 31 years old at the time, making him the youngest CEO of a listed company in Japan.

His grandfather later became the chairman of Sanrio.

Under the young Tsuji’s leadership, Sanrio changed its marketing strategy for other characters.

“This is not to make Hello Kitty less popular, but to increase other people’s awareness,” he says.

This caused Hello Kitty to lose her position as Sanrio’s most popular character.

That spot is currently held by Cinnamoroll, a blue-eyed white pup with pink cheeks, long ears and a cinnamon roll-shaped tail, according to a customer survey.

Sanrio is no longer just a cute character.

If Hello Kitty is Japan’s cute ambassador, the angry red panda Aggressive Retsuko, or Aggretsuko, represents the frustrations of an ordinary working woman.

The character, popular among Gen Z, first appeared in an animated series on Japan’s TBS TV before becoming a global hit on Netflix.

Another unconventional character is Gudetama, or “lazy egg,” who lives with depression and spits cold lines that reflect the dark realities of life.

Sanrio is diversifying its characters, strengthening overseas marketing, and stepping up efforts against counterfeit products.

“We are currently using artificial intelligence to detect counterfeit products and request removal,” Tsuji said.

He added that collaborations with big brands such as Starbucks, Crocs and the Los Angeles Dodgers baseball team are key to the company’s marketing strategy.

“In addition to our own promotions, our collaborations with global brands ensure we can bring our characters to market 24/7, all year round.”

In a society where seniority is highly valued, Tsuji’s last name was crucial to his ability to make big changes at Sanrio.

Almost a quarter of Japan’s listed companies, including automakers Toyota and Suzuki and camera company Canon, are run by their founding families.

According to Professor Dazai Hokuto of Nagoya University of Commerce, the reason lies in culture.

In Japan, home to the world’s oldest continuous monarchy, “there is a strong sense of family and family business,” he says.

The master-servant relationship that dates back to the samurai era has shifted to one between the founding family and employees, and “historically, common people have never competed for the top position.”

“This is partly because there are fewer professional managers to choose from in Japan,” says Professor Dazai.

“Companies tend to look for their next boss internally, including within the founder’s family.”

Still, Tsuji says, “I’d be lying if I said there wasn’t some pushback” from other managers and employees within the company.

He also said he once clashed with his grandfather over how the company was run.

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

“After about a year, my grandfather told me to run the company the way I wanted and leave it to me.”

The new boss’s business reforms are bearing fruit so far.

Within two years after the younger Tsuji took over as chief executive, Sanrio was once again profitable in what analyst Yoshioka called a “beautiful V-shaped recovery.”

The company’s stock price has increased tenfold since 2020, and the company’s stock market valuation is now over 1 trillion yen ($6.5 billion, £5 billion).

Away from boardrooms and stock markets, there was also an interesting incident earlier this year.

Hello Kitty’s true identity is relatively well known in Japan, but some overseas fans were shocked by Sanrio executives’ comments in July.

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

Her comments sparked posts on social media, with fans expressing shock and confusion over the revelation.

“Hello Kitty is Hello Kitty, and she can be whoever you want to be. She can be your sister, your mother, or your other self,” Tsuji says.

Asked if he had any idea why her grandfather decided not to make her Japanese, Tsuji concluded: “London is a great city and was the envy of many Japanese women, so that may be one of the reasons she decided she was from London.” ”

That may not be the definitive answer her fans are looking for, but as it turns out, Hello Kitty was created 14 years before young Tsuji was born. Now, half a century after her birth, the origin story of this beloved character is likely to remain shrouded in mystery for years to come.

For more information, see Business Daily on the BBC World Service. Listen again on the World Service website or download the BBC Sounds app.