Hello Kitty teaches business to Pugad Baboy

Hello Kitty's guide to business success
By Michael Kanellos
http://news.com.com/Hello+Kittys+guide+to+business+success/2100-1041_3-5756324.html Story last modified Tue Jun 21 14:53:00 PDT 2005

Who would have guessed that Hello Kitty was a teen rebel?

The cartoon icon--which has festooned everything from laptops, cell phones and USB hubs to $2 thermoses and a $40,000 Airstream trailer recently on sale at eBay--became a success in part because it came out in the mid-'70s. At that time, it was a fad among teenage girls to act younger than they were, according to Ken Belson, co-author of "Hello Kitty: The Remarkable Story of Sanrio and the Billion Dollar Feline Phenomenon."

"They'd speak in really high voices, write in curlicues. It was the kind of stuff that made parents say, 'Act your age," Belson told an audience at the Japan Society of Northern California on Monday. "Kitty morphed into this symbol of rebellion."

Since then, of course, the feline has gone corporate and played a big part in Japan's surge in design and entertainment. Sanrio pulls in about half of its $1 billion a year in revenue from the character. At any given time, the silent cat can be found on 22,000 different products worldwide. Every month, 600 new Hello Kitty products come out and 600 others are extinguished.

Sanrio makes approximately 6,000 of these products itself, but the rest come from manufacturers that license the image. A winery, for instance, has sold a Hello Kitty beaujolais. Mitsubishi sold a champagne pink minicar for $600 for six years in Japan.

"There is also a samurai Kitty," Belson said.

Sanrio was founded by Shintaro Tsuji, a frustrated bureaucrat whose political connections helped him start a silk company in 1960. Later, Tsuji got the right to distribute Snoopy items in Japan--and Barbie, too. Then, said Belson, "he figured out that animals were big."

Tsuji also realized that making the products cheap--for a few dollars--would allow kids to buy them on their own. A few characters came and went before Kitty came out in 1974, first showing up on a petite purse. Sales at Sanrio doubled for three years in a row.

Over the past three decades, and under the guidance of three separate designers, the character has remained stable. Subtle changes, however, do occur. For a while, the company replaced the hair bow with flowers. "I was tired of it, and if I was tired of it, she must have been tired of it too," one of the designers explained to Belson. Contrary to popular belief, the cat also has a mouth. "It is just buried under the fur," the designer said. (Other little known Kitty tidbits: She lives in London and her weight is equal to that of three apples.)

Hello Kitty's success has tended to overshadow the company's more than 400 other characters.
Cinnamoroll the dog and Chococat are a distant second and third.

Sanrio faces other challenges, as well. Eighty-five percent of Hello Kitty revenue comes from Japan, and Japan's population growth is almost at zero. Piracy is also a huge problem--nearly $800 million worth of counterfeits, mostly from China. TV shows and theme parks have been
only sporadically successful.

There are also detractors who see the character as an embodiment of crass commercialism, antifeminism and Japanese aggression.

Still, the merchandise mill keeps churning out new wares. Last November, when Kitty officially turned 30, one company produced 200,000 commemorative coin sets. Another made $30,000 solid platinum statues, and all 12 were sold, said Belson. In Singapore, McDonalds' customers rioted while waiting in line for Happy Meals featuring Kitty and Dear Daniel, her often absent companion.

"Sanrio will stick Kitty on practically anything," Belson said.

The only three products Kitty won't grace are tobacco, alcohol (except the beaujolais) and firearms, though Sanrio did make a keychain on which she holds a skeet-shooting rifle. It even produced the infamous Hello Kitty vibrator. ("They called it a personal massager," Belson explained.)

What is the secret of the success? "Her eyes are very wide apart, which is safe for kids. Her nose is not beady," Belson said. "When Mickey Mouse came out, he looked more like a rat, but they softened him up."

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