Hello Kitty packs her bags for China
At the age of 37, Hello Kitty is losing her cool in her home market of Japan.
However, the mouthless cartoon cat with a red bow is still popular among the youth in China, where Hello Kitty branding opportunities abound.
That's good news for KT Licensing, a member of Hong Kong's trading firm Li & Fung. This month the company secured master licensing rights to Hello Kitty and more than 200 other cartoon characters from Japanese brand owner, Sanrio.
KT now hopes to get more Chinese consumers to know and love the cartoon kitty, and spend their money on branded products.
Lee Sang Kil, KT general manager, said the company would open more Hello Kitty-themed shops, especially in second- and third-tier mainland cities.
It's also set to take advantage of Li & Fung's strength in sourcing, trading and retailing to offer a wider range of products, and adjust its pricing strategy to expand the customer base. Another plan is organising more activities that allow Hello Kitty fans to meet up with their idol.
'There's tremendous growth potential for Hello Kitty products in China, considering the high popularity of the little cat and the relatively low penetration of the products in this market,' said Lee. 'I don't think Chinese consumers will grow tired of this brand for at least 10 years.'
Created by designer Yuko Shimizu in 1974, Hello Kitty has been a global marketing phenomenon over the past three decades. Its parent company Sanrio has licensed the use of the Hello Kitty image in Japan and other countries, and the character now appears on products from stationery and kitchenware to diamond jewellery - even an Airbus owned by Taiwanese airline Eva Airways.
Sanrio amassed an operating profit of 21.1 billion yen (HK$2.1 billion) in the 2010 financial year, and 80 per cent of its revenue came from Hello Kitty licensing fees.
However, after decades of developing the wildly popular icon, the appeal in Japan has started to wane, and sales of Hello Kitty-branded products have begun to slow.
In a ranking of Japan's most popular characters based on sales data by the Tokyo-based research firm Character Databank, Hello Kitty lost her long-held spot as Japan's top-grossing character in 2002 and has never recovered, Bloomberg reported.
But the picture in China is different. Sanrio, which formally entered China in 2003, has about 100 local licensees running businesses like gift shops, groceries, clothing, publishing and financial services. Latest projects include a themed restaurant that opened in Beijing last Christmas, and a near-100,000 square metre amusement park, which is expected to open in Anji County, Zhejiang, in the heart of Yangtze River Delta, in 2014.
CYF China, the only Sanrio licensee with rights to open branded gift shops on the mainland, said revenues from its stores in Beijing and Tianjin jumped 30 per cent last year, and there was double-digit growth in other major cities.
'Our fans are increasing very fast,' said Daisy Dai, general manager of CYF. The retailer has about 150,000 regular customers, and nearly a third of them joined last year. Similar to Japan, about 80 per cent of consumers were female and most are students and so-called office ladies, she said.
'Some are attracted by Kitty's cuteness, purity and innocence; some are nostalgic about Kitty, which hearkens back to a time in their childhood; and some simply adore Japanese pop culture,' said Dai. She added that bags, wallets, figurines and watches were the most sought-after items.
One evening last week, in one of Beijing's Vivitix gift shops - a Sanrio retailing brand targeting young girls - Li Mingjing, 26, was struggling to choose between a dozen make-up bags featuring the cartoon feline in different designs.
'I started to love Hello Kitty when I was in primary school. At that time, stationery was the only Kitty products I could find,' said the flight attendant.
Last year, she spent more than 5,000 yuan (HK$6,000) buying a set of Hello Kitty accessories for her car's interior, so far her biggest spending on Kitty.
'I think my love for Kitty will not change. If I have a daughter someday, I'm pretty sure she would become a fan as well,' she said, before leaving the shop with two make-up bags that cost her 428 yuan.
Encouraged by strong sales performance, CYF plans to open 100 to 150 stores annually on top of its existing 120 outlets in the next two years. Most of the new stores would be franchises in lower-tier cities. Lower priced items would also be available in this market.
Meanwhile, it is also trying to diversify its portfolio and promote other characters popular in Japan, including My Melody, a rabbit born in the forest of Mari Land; and Little Twin Stars, a pair of angelic siblings.
The cartoon industry has been a fast-growing sector supported by the Chinese government in recent years. The trend is particularly strong among the young generation because of increasing wealth and influence of animation culture.
Other characters that are linked to animated films may give Hello Kitty some competition. Walt Disney, owner of brands such as Mickey Mouse and Winnie the Pooh, is on track to open its first store in China this autumn, and is committed to opening 25 to 40 stores in the next three years.
Pleasant Goat, a cartoon character created by a Guangdong animation company, has met huge success in the China market. Its related products could fetch up to 1 billion yuan for the company and its licensees.