Shintaro Tsuji (辻信太郎)

A defenceless Sugarbunny, all floppy ears and anxious eyes, sits to the left of Shintaro Tsuji, the 82-year-old founder and president of Sanrio, watching over this rare interview.

The Sugarbunnies are just some of the characters in the Sanrio pantheon – from My Melody to the Strawberry King – over which Mr Tsuji reigns. Hello Kitty, a white bobtail cat who wears a red bow, is his queen.

On this stable of more than 450 cartoon characters – some world famous, such as Kitty, and others more obscure – rests a Y70bn ($770m, €569m, £500m) business that has expanded from gifts and greetings cards to licensing its characters for everything from towels to toasters.

Mr Tsuji is wearing a Hello Kitty tie, wristwatch and cufflinks. In spite of them he retains an authoritative air, helped by a smart suit, perfectly slicked hair, and the sense of morality that pervades his answers.

In 1960, aged 32, Mr Tsuji quit his secure job as a Yamanashi prefecture bureaucrat and, with some capital from local dignitaries, set out to found his own company. In an austere postwar era, he wanted to create a product that was more than just useful or convenient.

“I wanted to think of a business that would promote friendship. That led to the idea of a gifts business – gifts make people happy,” he says. Mr Tsuji created Sanrio and has led the company throughout its 50 years of existence.

As Japan’s economy began to take off, competitors appeared, but Mr Tsuji countered them with an important change to his business model. “To prevent imitators our principle was to get copyrights: a patent lasted for 15 years [now 20 years] but copyright lasted for 50,” he says.

That pursuit of copyrights led to Sanrio’s first character, Strawberry, and in 1976 to Hello Kitty. Sanrio tapped into Japan’s custom of reciprocal gift-giving and led a cultural boom in cute, which by the 1990s had made it acceptable for adults, as well as little girls, to buy Kitty.

Unlike cartoon rivals from Mickey Mouse to Winnie-the-Pooh, Sanrio’s characters were not spun off from stories but designed to convey a message – something Mr Tsuji says is vital to their durability and global appeal. An example is Hello Kitty’s three characteristics.

“The first is kawaii [cuteness] so she is loved by everyone. The second is her ribbon – a ribbon is something that joins people together, so it means friendship. The third is that Kitty-chan has no mouth – she has to take your hand and help you. Cuteness, friendship, helping each other: that is Kitty’s message,” Mr Tsuji says.

That message mirrors Mr Tsuji’s values and those of Sanrio: the company tries to avoid hostility in all of its dealings, even when others take advantage, such as Hello Kitty counterfeiters in China. “We are a friendly company, so even though there has been lots of piracy in China, it hasn’t been too much of a problem,” Mr Tsuji says. Sanrio has tried to stop the fakes but has not sued the offenders.

That stance is about to change, and Mr Tsuji has set the arbitrary deadline of this October, when the Shanghai Expo ends. Mr Tsuji sees the Expo as a symbol that China has grown up, can design its own products, and needs to take more responsibility towards those of others. “Once it is over we will start to sue and we have been making that clear,” he says.

Even without the counterfeits, Kitty gets almost everywhere, and Mr Tsuji is sent a copy of whatever Sanrio’s licensees produce. The strangest product he owns? “I have a Hello Kitty bed,” he says. Does he ever get sick of her? “I have things that aren’t Hello Kitty as well, you know,” he insists.

Hello Kitty’s ability to charm from Istanbul to Beijing – and yet not wear out her welcome – is the current source of Sanrio’s growth. Last year, 24 per cent of sales but more than half of operating profit came from outside Japan.

At home, Sanrio’s business may not be growing but it is resilient. Whereas the recession has hurt most lines sold by Japanese department stores, Sanrio products continue to sell well, because, Mr Tsuji says, they are gifts.

“Uniqlo [the discount clothing store run by Fast Retailing] is cheap, but if I bought something from Uniqlo and gave it to a girl, she’d say: ‘How cheap.’ Sanrio’s products are expensive,” he says.

The mystery of Sanrio is that in spite of this business model – the cost of putting Kitty on a lunchbox is tiny but the revenues large and protected by copyright – it hardly makes any money.

This year, Sanrio forecasts an operating profit of Y6.1bn on revenues of Y69bn: the margins of a manufacturer. Its net profit forecast is Y2.7bn. The reason is two theme parks – Puroland and Harmonyland – that Mr Tsuji opened in 1990 and 1991 just as Japan’s bubble burst.

Puroland is a kitsch Kitty temple in the western Tokyo suburb of Tama. Every day it stages a lavish live show (a princess Kitty descends from the ceiling) to the delight of small children and the many Chinese tourists who visit.

“If you go to Puroland then you can meet Kitty, but it makes a loss,” says Mr Tsuji, although from next year, he says, that loss will get much smaller as depreciation of the 20-year-old parks is almost complete.

He will not simply close Puroland and Harmonyland because, in his words, “profit is not about money”. Whereas many companies talk about putting the customer first and actually favour their shareholders, at Sanrio the order is different.

“Our staff are most important, next are all our partner manufacturers, then the customers who buy our products, then shareholders: that is the order,” Mr Tsuji says.

He also shows his disdain for those whose priority is wealth rather than what their company does. “I don’t take a gigantic salary like American financiers because it’s better for everyone to be friends,” Mr Tsuji says.

Not many chief executives of publicly listed companies think that way and Mr Tsuji is cagey about how Sanrio will preserve its culture once he is no longer at the helm. At 82, he is still in charge but easing back, while his son has a senior role in the business.

If there is a succession plan in place, the company is tight-lipped. “Even after I pass away, I hope that the values of friendship, cuteness and caring for each other will endure and appeal all around the world.” Mr Tsuji pauses. “I don’t know about al-Qaeda people but maybe the friendliness will not fit for them,” he says.

Passing out through Mr Tsuji’s office, however, filled with beautifully hand-crafted cards that each section of the company makes to celebrate his birthday or to thank him for their bonuses, it is hard to believe that anyone will be able to avoid Kitty’s spell.

Source: https://www.ft.com/content/370f5306-230c-11df-a25f-00144feab49a