POP MART's ambitions go beyond trendy toys

Author | Zheng Qiao

Editor | Zhou Zhiyu

POP MART is expanding its business from trendy toys to a broader market.

According to insiders at POP MART, CEO Wang Ning stated at the annual meeting that the company plans to launch various derivative products in the future, including the LABUBU refrigerator.

He emphasized that the company has been transforming, from its initial grocery store model to toys, and may venture into more fields in the future, but its determination to become a world-class company remains unchanged.

In recent years, POP MART has been expanding the boundaries of its IP. Not long ago, POP MART launched its jewelry brand "POPOP," introducing multiple series including necklaces, rings, and bracelets, and opened offline pop-up stores in January this year, with product prices ranging from 249 yuan to 2,699 yuan.

Although many consumers jokingly say this imitates Pandora, for POP MART fans, Pandora's beads are just beads, while POPOP's beads are their wildly popular IP.

As an "IP incubation company," POP MART has a vast number of IPs and SKUs, with insiders revealing that the company launches at least four new SKUs every week.

Imagine when popular IPs like MOLLY, Xiaoye, SKULL PANDA, and LABUBU directly transform into rings, necklaces, and bracelets, the emotional value for consumers is instantly maximized.

This is not the first time POP MART has ventured into the jewelry field. Previously, through a collaboration with the Chow Sang Sang brand, POP MART accumulated a certain reputation in the jewelry industry.

In May 2023, POP MART launched a co-branded gold jewelry line with Chow Sang Sang; in December 2024, they introduced six themed pure gold pendants and the Charme bead series under the theme "Traveling through Dream," with co-branded products selling extremely well.

Image source: Captured by Wall Street Insight

This cross-industry move by POP MART may not just be about simply making money from jewelry, but rather hopes to achieve a breakthrough through this approach.

POP MART CEO Wang Ning has mentioned that the biggest strategy for POP MART in recent years is globalization and group development centered around IP.

He pointed out that the core of business lies in effectively managing productivity, production relationships, and production materials. China's manufacturing industry has achieved efficient and low-cost production, but there is limited room for further improvement. Therefore, the key in the future lies in flexibly managing production relationships and production materials, such as through cross-industry collaborations between IPs and launching derivative products (like the LABUBU refrigerator), to further expand the commercial value of IP.

Indeed, trends are fleeting, but style endures. Only by successfully creating IP culture can one transcend the changes of trends In this regard, Wang Ning, the founder of POP MART, has deep insights. After all, POP MART has experienced a "roller coaster" market performance.

In December 2020, POP MART, as the "first stock of China's trendy toys," landed on the Hong Kong Stock Exchange, and its market value once soared to HKD 104.24 billion. In February 2021, its stock price reached an all-time high of HKD 107.6, with a market value exceeding HKD 150 billion.

However, POP MART's high growth did not last. After a few years of the blind box economy booming, blind enthusiasm, speculation, and doubts about its quality began to emerge, leading to a gradual decline in POP MART's popularity in China. After 2021, POP MART's performance growth began to slow down, and its stock price also saw a significant drop.

In the first half of 2022, POP MART's revenue growth rate fell from 78.7% in 2021 to 33.1%, and net profit decreased by 7.2% year-on-year. By October 2022, its market value had once fallen below HKD 20 billion, with the stock price dropping to a low of HKD 9.5.

However, going overseas has brought new growth momentum to POP MART.

Last year, POP MART's popularity in Thailand exceeded the imagination of the Chinese. To purchase a monster doll named LABUBU, many Thai consumers queued overnight to buy it, even hiring people to buy it at high prices from China.

This trend also swept through China, and under the heat, POP MART's market value rose again, returning to HKD 100 billion, setting a new high for the stage.

The success of going overseas allowed POP MART to present an impressive financial report. The report showed that by June 2024, POP MART achieved revenue of RMB 560 million in Southeast Asia, a year-on-year increase of 478.3%, accounting for 41.1% of total overseas revenue. During the same period, revenue in East Asia and Hong Kong, Macau, and Taiwan was RMB 480 million, North America revenue was RMB 180 million, and Europe, Australia, and other regions revenue was RMB 140 million.

POP MART has opened offline stores in South Korea, Italy, the Netherlands, Indonesia, France, and the United States. However, from the perspective of overseas market share, POP MART's overseas performance mainly relies on Southeast Asia, especially Thailand.

Image source: Wall Street Insight

POP MART's resurgence in Southeast Asia has also led the market to re-examine this unique trend and the imagination space behind it.

Frankly speaking, the threshold for trendy toys is not high. Competitors like TOP TOY and 52 TOYS are accelerating their internationalization efforts, hoping to carve out a share of the Southeast Asian market. Ye Guofu, the founder of Miniso, has also seen opportunities overseas, making blind boxes and toys of well-known IPs in Europe and the United States the core products of overseas stores.

Currently, one of POP MART's focuses is to expand into more overseas markets. However, if POP MART wants to replicate its success in Southeast Asia and become a globally enduring IP like Pokémon, Disney, or Marvel, it faces significant challenges.

Yin He, head of Asian consumer industry research at JP Morgan, told Wall Street Insight that creating a brand or product that meets local aesthetics while having cost advantages is not an easy task In his view, there are significant differences between American IP and that of Japan, South Korea, and Europe, which stem from the vast cultural, value, and consumer preference disparities among these markets. The differences in consumer profiles pose a major challenge for brand product lines entering local markets.

Yin He pointed out that for high-fashion risk products, it may be more feasible to initially promote them in Southeast Asian markets, as the local market competition is not as fierce as in the domestic market, and the aesthetics and habits are closer to those of the domestic market. However, entering the European and American markets will face entirely different challenges.

POP MART has been making a series of attempts. Wang Ning has repeatedly emphasized that POP MART is shaping its own development model, with Disney as a target.

In 2023, POP MART's urban theme park, POP LAND, officially opened, offering visitors park-exclusive trendy toys, performances, interactive participation, and gaming experiences. This has also shown that, in addition to the sales revenue generated by the dolls themselves, POP MART has demonstrated its own IP value.

In addition to urban theme parks, POP MART is also making attempts in various fields such as film and television and mobile games. Wang Ning has stated that the biggest advantage of the IP industry is its high extensibility, as it can connect to many industries, and the real value of POP MART lies in the industrial value of its IP.

By collaborating with multiple brands such as Coca-Cola, Uniqlo, and L'Oréal, POP MART's products are not limited to blind boxes but have expanded into various fields including food, fast-moving consumer goods, and beauty.

Today, POP MART is continuously broadening its business scope and incubating more new businesses. For it, exploring incremental markets beyond the toy market is particularly important.

After all, in POP MART's grand layout, trendy toys are just the starting point; its true ambition is to build a diversified business empire centered around IP. However, this path is not smooth, and POP MART needs to further expand its market, create a more robust IP industry ecosystem, and continuously seek a second growth curve for the company