"Chan (ちゃん) is a form of san used to refer to children and female family members, close friends and lovers. The change from san to chan is a kind of "baby talk" in Japanese where "sh" sounds are turned into "ch" sounds, such as chitchai for chiisai, "small".Chan is also used for adults who are considered to be kawaii (cute or loveable). For example, Arnold Schwarzenegger gained the nickname Shuwa-chan (シュワちゃん).
Chan is sometimes applied to male children if the name does not fit with the kun suffix. For example, a boy called Tetsuya may be nicknamed Tetchan rather than Tekkun for reasons more to do with phonetics than anything else."