Sanrio Company, Ltd.

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Sanrio Company, Ltd.

6-1, Ohsaki 1-Chome
Shinagawa-ku
Tokyo 141-8603
Japan
Telephone: (+81) 3 37798111
Fax: (+81) 3-3779-8054
Web site: http://www.sanrio.co.jp/english

Public Company
Incorporated: 1960 as Yamanashi Silk Center Co., Ltd.
Employees: 1,008
Sales: ¥139.18 billion (US$1.26 billion) (2000)
Stock Exchanges: Tokyo
NAIC: 339932 Game, Toy, and Children’s Vehicle Manufacturing; 713110 Amusement and Theme Parks; 511120 Periodical Publishers; 511130 Book Publishers; 512110 Motion Picture and Video Production; 512131 Motion Picture Theaters (Except Drive-ins); 722110 Full-Service Restaurants; 451120 Hobby, Toy, and Game Stores

Japan’s Sanrio Company, Ltd. is helping to make the world a cuter place. The company designs, manufactures, markets, and distributes a vast range of gifts, greeting cards, and other products—ranging from toasters to luxury cars to condominiums—bearing the likeness of one or more of dozens of company created characters with names like Pochacco, Winkipinki (a character whose birthday is described by the company as “the day the tulips bloom in the garden”), Chippy Mouse, and My Melody. By far the most popular of Sanrio’s characters, however, is Hello Kitty, which has inspired some 26,000 products and rivals Mickey Mouse as one of the top contemporary cartoon characters. Hello Kitty represents some 5,000 of the 15,000 available Sanrio products. The Hello Kitty character accounts for about half of Sanrio’s annual sales, which topped ¥139 billion (US$1.2 billion) in 2000. Although Hello Kitty and other characters have helped Sanrio gain worldwide notoriety, more than 90 percent of the company’s sales are generated in Japan, where the company operates a restaurant chain and movie theaters; produces movies, television series, and video games; publishes books and magazines; and operates two amusement theme parks—the Hello Kitty-dedicated Puroland, and Harmonyland, located in Oita, Kyushu. Sanrio also owns or franchises a chain of more than 2,500 retail stores, located principally in Japan but including more than 200 stores in the United States. Sanrio, trading on the Tokyo Stock Exchange, is run by founder, President, and CEO Shintaro Tsuji.

Bringing Cuteness to the World in the 1960s

Sanrio Company, Ltd. began business in 1960 as Yamanashi Silk Center Co. But founder Shintaro Tsuji, who had raised ¥1 million to launch his company, had ambitious plans for building what the company called “the Social Communication Business.” Built around the Japanese culture’s tradition of gift-giving, Tsuji’s company quickly turned to producing the gifts themselves. In 1962 the company began decorating its gift products with Strawberry, the first of what was to become a long string of company-designed characters. The Strawberry character enabled Tsuji to take his company’s products overseas, finding success in the United States. The success of the character—which was able to capitalize as well on such worldwide hits as the Beatles’ “Strawberry Fields Forever”—inspired the company to open a retail store in San Francisco, dubbed the Strawberry Shop. Strawberry also inspired the company to begin production and publication of its own newspaper, Strawberry Newspaper.

The company opened a new retail store concept in Tokyo in 1971, the Gift Gate store. Two years later, the company changed its name to Sanrio Company, Ltd. In that year, the company began production of a new magazine, Shi to Meruhen {Poetry and Fairytales). The company also was preparing the launch of what was to become its greatest success, even becoming an icon in its country.

In 1974, the company introduced two new characters, Patty and Jimmy. These characters were joined by another new character, a pink and white, somewhat expressionless, cat with a box behind its ear. Dubbed “Hello Kitty,” the new character initially was marketed toward young girls, especially at the ages of five and six, who were still too young to adopt “older” Barbie or other dolls of that type. Yet Hello Kitty quickly proved to be a hit far beyond its original target audience.

As with all of its characters, Sanrio marketed Hello Kitty on nearly every product imaginable as well as on even the most unimaginable products. By the end of the century, Sanrio had placed the Hello Kitty character on more than 15,000 products, including a condominium complex built in celebration of Hello Kitty’s 25th anniversary. Licensees brought Hello Kitty to such diverse products as toasters, telephones, watches, and even specially designed automobiles, as Hello Kitty quickly became as ubiquitous a cartoon icon as Mickey Mouse in Japan. With Hello Kitty, Sanrio had tapped into the Japanese mania for “kawai” or cuteness, a quality that sometimes sufficed as a product’s primary marketing tool. But Sanrio also was to find the Hello Kitty image easily exportable, particularly in the United States, where the vagaries of trendiness were to legitimize the cat for a whole new generation of teenagers and even older consumers.

While Hello Kitty came to represent half of Sanrio’s annual sales, the company continued to produce new characters and new products, as well as to branch out into other industries. In 1974, Sanrio created a subsidiary in the United States, Sanrio Communications, Inc., which began producing animated films for the U.S. market, as well as handling distribution of Sanrio’s products. In 1975, the company launched a new magazine, Strawberry News. That same year, the company released its first commercial animated feature film, called Little Jumbo.

Until the mid-1970s, Sanrio’s characters were featured on products manufactured by Sanrio itself. In 1976, however, Sanrio began to build on the success of the Hello Kitty character, signing the first of a long series of licensing agreements to add Hello Kitty and many of its other characters to products such as credit cards and toys included in McDonald’s children’s meals. In that year, also, the company set up a new subsidiary, Sanrio, Inc., based in San Jose, California, to oversee its U.S. development. The Sanrio Communications company was reorganized as a subsidiary under Sanrio, Inc. The company later moved its U.S. headquarters to San Francisco. Meanwhile, Sanrio also was achieving recognition for its film production, winning the Academy Award for Best Documentary Film for 1978 for the Sanrio-produced Who Are the Debolts and Where Did They Get 19 Kids? The company also released the film The Glacier Fox in 1978.

Expansion in the 1990s

Sanrio continued to produce new characters and the products and toys to feature them. In 1975, the world met such characters as My Melody, Robby Rabbit, and Little Twin Stars. The end of that decade saw the appearance of Giga Chibiko Gang (the Milky Way Gang) and Sanrio’s own version of the Snow White crew, Seven Silly Dwarfs. The early 1980s brought a host of new characters as Sanrio stepped up the pace of its launches, with such names as Mellotune in 1981, Zashikibuta in 1983, and Dachonosuke and Little Wonder Story in 1985.

Sanrio also followed the somewhat standard approach to international growth established by many Japanese companies. After building up its first overseas business in the U.S. market, the company next turned to the European market, more difficult to master because of the different languages and cultures. The company first moved into Europe in 1980, opening up a branch office in western Germany to prepare the company’s introduction into the European market. Then, in 1983, Sanrio set up a full-fledged European subsidiary, choosing Hamburg, Germany, to form Sanrio GmbH. Back in the United States, meanwhile, Hello Kitty’s popularity reached still greater heights when it was named UNICEF’s child ambassador to the United States. In that year, also, the company began to produce and sell videos, as the new media began to go mainstream in technology-hungry Japan.

In the late 1980s and early 1990s, Sanrio pursued further international expansion. The company started up a subsidiary for the vast Latin America market in Brazil in 1987. At the beginning of the 1990s, Sanrio’s expansion target widened to include the huge and dynamic Asian market. In 1990, the company established the subsidiary Sanrio Far East Co., Ltd. Two other subsidiaries were opened in the first half of the 1990s, in Taiwan in 1992 and in Hong Kong in 1994. If older generations in many of the Asian countries had been somewhat hostile to Japanese culture in the previous 50 years, new generations of children and teenagers eagerly embraced the country’s love of kawai, especially Hello Kitty.

Company Perspectives:

The “Social Communication” Business: Everybody wants to spend their days being happy. It is a common wish of just about anyone on the face of the Earth. But just what is happiness? As the old saying goes, “No man is an island.” Humans need each other. We help each other to survive, to live a meaningful life. We trust and depend on our companions. We strive to get along with one another. Perhaps that is what happiness is… And who are our “companions”? For a start, there are those closest to home: Mother, father, children, brother, sister, lover. … Then, there are our schoolmates, our work mates … If one looks broadly enough, our circle of companions encompasses all of humankind. In order to get along with one another, we need to respect and to love. And the expression of respect and love is the basis of Sanrio’s “Social Communication” business. Ever since Sanrio’s establishment in I960, this philosophy has been the core of our business, which ranges from the design and sale of social communications gifts and greeting cards, to publishing, production and distribution of the Strawberry Newspaper, to the planning and operation of theme parks. The common thread running through all our various businesses is the idea of giving “from the heart” and “of the heart.” Whether one is sad, down, happy, or whatever. … We want to help people share these important feelings with one another. This is the reason for our business. And it is a business of which we are very proud.

Back home, however, Sanrio was building toward its, and Hello Kitty’s, biggest success. The company founded its own amusement park, Puroland, in 1990. Dedicated to Hello Kitty, the amusement park quickly began to attract surprising numbers of adults as the Hello Kitty phenomenon began to break out of the children’s market to become a cult icon throughout the whole of Japanese society. With the Japanese economy dipping into a deep recession for the first time in some 40 years, consumers eagerly adopted Hello Kitty and other Sanrio characters, perhaps in a mass display of nostalgia for a simpler, less stressful period in history. At the same time, Sanrio, which had counted young girls as its primary market, had its first crossover success with the introduction of its frog-shaped character Keroppi in 1988. That success inspired the company to create a series of other “gender-neutral” characters, helping the company gain increasing popularity in the young boys market as well.

Puroland was followed quickly by the opening of a second Sanrio-based theme park, Harmonyland, featuring characters from across the Sanrio spectrum, which opened in 1991. As the recession in Japan reached crisis proportions, Sanrio’s characters—and the products they were designed to support—helped boost the company to the top ranks in Japan. In 1994, Hello Kitty was named child ambassador for UNICEF for Japan, another diamond in the character’s crown. Although Sanrio faced competition from such new arrivals as Nintendo’s Mario Bros, and Bandai’s Pokemon characters, as well as such fads as the Tamagutchi virtual pets, Hello Kitty continued its long-running reign as queen of cuteness in that country. In the United States and other parts of the world, meanwhile, Hello Kitty also was transcending age barriers and generation gaps, being adopted—often tongue in cheek—as a fashion statement among teenagers and even older consumers.

The economic crisis in other parts of the Asian world also helped to spur on the Hello Kitty craze in such countries as Thailand, Singapore, and Taiwan (where riots broke out among people waiting in line for McDonalds’ Hello Kitty promotion). In the meantime, Japan and Sanrio geared up for the celebration of Hello Kitty’s 25th birthday, in 1999. That occasion was marked by the launch of two of the most unusual Hello Kitty licensed products. The first, offered by Daihatsu Motor Co., was a car featuring such “standard” equipment as Hello Kitty door locks, dashboard, and upholstered seats. The second was condominium apartments, sold by Itochu Housing, decorated according to the Hello Kitty theme. The Hello Kitty craze, which had only just begun to gather momentum in many parts of the world, promised Sanrio a leading role in the world’s cuteness market for the 21st century.

Principal Subsidiaries

Sanrio Communication World Co., Ltd.; Sanmare Co., Ltd.; Sanrio Far East Co., Ltd.; Sanrio Enterprise Co., Ltd.; Sanway Co., Ltd.; Kokoro Co., Ltd.; Harmonyland Co., Ltd.; Sanrio, Inc. (U.S.A.); Sanrio G.m.b.H. (Germany); Sanrio do Brasil Comerico e Representacoes Ltda.; Sanrio Taiwan; Sanrio [Hong Kong] Company Limited.

Principal Competitors

4Kids Entertainment, Inc.; Andrews McMeel Universal; Applause Enterprises, Inc.; Bandai Co., Ltd.; Hasbro, Inc.; Arvel Enterprises Inc.; Mattel, Inc.; Nintendo Co., Ltd.; Russ Berrie and Company, Inc.; The Walt Disney Company.

Key Dates:

1960:: Company is founded as Yamanashi Silk Center Co., Ltd.
1962:: Strawberry character is introduced.
1969:: Strawberry Shop is opened in San Francisco.
1971:: Company opens first Gift Gate store in Japan.
1974:: Company launches Hello Kitty; forms Sanrio Communications in Los Angeles.
1976:: Company begins licensing of characters; forms Sanrio Inc. in San Jose.
1983:: Company establishes West German subsidiary.
1987:: Company establishes Brazilian subsidiary.
1990:: Company opens Puroland theme park; establishes Sanrio Far East, Ltd.
1991:: Company opens Harmonyland theme park.
1992:: Company establishes Taipei subsidiary.
1994:: Company establishes Hong Kong subsidiary.
1999:: Hello Kitty celebrates 25th anniversary.