Company history

Sanrio began in 1960 not as a toy company but as a prefectural side venture. Shintaro Tsuji, an official of the Yamanashi prefectural government, set up Yamanashi Silk Center that August with capital of $2,778 (¥1m) — its backers including the governor and vice-governor — to widen the market for the region’s silk. Almost at once a silk-export deal to Korea saddled him with a $13,889 (¥5m) dishonoured bill, five times the company’s capital, and pushed it to the edge of failure. Tsuji cleared the debt in three months by selling sundries directly at department-store entrances, pocketing the roughly threefold gap between wholesale and retail. The episode left him two convictions that would outlast the silk: that the way and the place of selling generate more profit than the goods themselves, and that a product chosen as a gift carries an added premium.

On those lessons Sanrio swapped its founding trade for gift merchandise. It began planning gift goods in 1962, moved into publishing in 1967 with small “Gift Book” picture books, and opened a directly run Gift Gate store in Shinjuku in 1971 that grew at 350% a year even through the oil shock — the “San-Rio whirlwind.” The company took the name Sanrio in April 1973. Licensing America’s Snoopy taught Tsuji the ceiling of depending on characters owned by others, and he turned the firm toward developing intellectual property of its own.

In 1974 a designer in her twenties created Hello Kitty. Tsuji himself judged the kitten short on charm, yet the small goods it adorned sold far better than expected. From 1976 Sanrio began licensing its own characters to other makers and opened a San Jose subsidiary to sell abroad. At the April 1982 listing on the Tokyo Stock Exchange, royalty income was still only about 2% of sales — but the seed of a business that could outgrow physical goods had already been planted, and theme-park investment would surface as the next theme almost immediately after.

Promoted to the TSE First Section in January 1984, Sanrio pushed its characters into physical experience. It opened Sanrio Puroland in Tama, Tokyo in December 1990 and Harmonyland in Oita the following April, adding theme parks as a third pillar beside goods and licensing. But Puroland opened at the worst possible moment — just as Japan’s asset bubble burst.

On top of the heavy capital spending, losses from bubble-era share investments — zaiteku financial engineering — bore down hard, and Sanrio kept holding on for a rebound that never came, missing its chance to sell. Net losses ran for eight straight years from the year ended March 1991, a cumulative $771.6M (¥101bn), and the equity ratio fell to just 3% — the brink of insolvency. The operating profit of the character business simply could not absorb the financial hole.

What rescued the company was the very thing that also exposed its weakness. A redesigned Hello Kitty became a craze among high-school girls from 1998 to 2000, lifting sales sharply and pulling the equity ratio back off 3% — proof of one character’s pull, and of the danger of leaning on a single one. Subsidiaries in Taiwan (1992) and Korea (1998) built an Asian base for that popularity. But the boom cooled after 2000, leaving excess inventory and price erosion in the goods channel — and pointing Sanrio toward a different model.

Through the 2000s and 2010s Sanrio bet on expanding Hello Kitty’s overseas licensing. It entered China through a Shanghai subsidiary in 2003, consolidated Asian supply in Hong Kong in 2005, and in 2011 acquired Britain’s Mister Men to broaden its European character portfolio. In North America, royalty licensing through Sanrio, Inc. grew, lifting the share of income that carried no inventory. The move to a model that holds no stock was the flip side of repairing a balance sheet scarred by the speculation years — earnings recentred on royalties rather than the burden of goods.

By the mid-2010s, though, licensing revenue in the United States and Europe stalled and the overseas push reached a plateau. Rehito Hatoyama, who had driven the global expansion, left in 2016, and as the Tsuji family reasserted control the momentum abroad dimmed. At home, Sanrio Puroland recovered from the late 2010s on character awareness spread through social media and a rising tide of inbound tourists, restoring the theme park as a place to step inside the character world — even as its attendance stayed hostage to the economy and the seasons.

Shintaro Tsuji had run Sanrio from the front for sixty years. In June 2020 his grandson Tomokuni Tsuji became president at thirty-five — among the youngest heads of any listed Japanese company — while the founder moved up to chairman, the first change of president since 1960. Tomokuni raised the banner of a “second founding” and set about restructuring the character business; in 2022 Shintaro, at ninety-four, stepped back to honorary chairman.

The core of the reform was to break Sanrio’s concentration on Hello Kitty and spread its bets across characters — reviving Cinnamoroll, Pompompurin and others, and using an annual character-ranking vote to build a two-way bond with fans. Hello Kitty’s share of the merchandise mix fell from about 75% a decade earlier to 30%, with Kuromi, My Melody and Cinnamoroll now sharing the load. Inventory-free overseas royalties widened across North America, Europe and Asia, and a Puroland revived by social media and inbound visitors stood beside them.

In 2024 Sanrio published its first integrated report since founding, setting out a four-business structure — goods, licensing, theme parks and new ventures — and a ten-year vision, “One World, Connecting Smiles.” Revenue then climbed steeply out of the pandemic trough to record highs as the grandson’s expansion framework took hold — a recovery built, deliberately, on more than one cat.