Pop Mart Navigates Regulatory Scrutiny Amidst Global Expansion

Beijing, China – Pop Mart International, The Force Behind The Hugely Popular Labubu Dolls, Is Expected To Remain A Dominant Consumer Brand in China Despite Potential Regulatory Headwinds. Concerns Have Been Raised Regarding The Sale Of “Blind Box” Toys To Young Children, Prompting Calls For stricter Oversight.

State Media Calls for Increased regulation

Earlier This month, State Media Outlet People’s Daily Published An Editorial advocating For More Stringent Regulations On the Sale Of Blind-Box Toys And Trading Cards To Children Under Eight Years Old. the Editorial Highlighted The need For Age Verification Upon Purchase And Parental Consent For Online Transactions. While The Paper Did Not Directly Name Pop Mart, The Criticism Was Clearly Aimed At Business Models That Rely On The Allure Of Mystery Boxes, Which Is Central To Pop Mart’s Strategy.

Following The Editorial, Pop Mart’s Stock Experienced A Significant Drop, Plummeting 12.1% In The Week Ending June 20 – The Steepest Decline Since Late 2023. However, The Stock Has Since Recovered, Nearing All-Time Highs Reached In Mid-June.

This Situation Is Reminiscent Of Past Regulatory Actions Against The Video game Industry, Were Concerns About Addiction And Unsupervised Purchases By Minors Led To Strict Limitations On Gameplay Time. Such Measures Previously Resulted In Billions Of Dollars Being Erased From The Valuations Of Major Chinese Gaming Companies.

Analysts Downplay Regulatory Impact

Despite Concerns, Some Analysts Believe the Fears Of Regulatory Impact Are Overstated. Alfredo montufar-Helu, Senior Advisor For The China Center At The Conference Board, Argues That Pop Mart’s Primary Demographic Is Gen Z And Millennials, Who Possess Greater Purchasing Power. He Suggests That Pop Mart Will Likely Be Insulated From The Full force Of Any New Regulations Due To Its Focus On young Adults.

Jeff Zhang, Equity Analyst At Morningstar, Adds That Pop Mart’s Growing Overseas Sales Will Further Mitigate The Impact Of Domestic Regulations. He Projects That Within The Next Decade, Revenue From China Will Account For Only About 30% Of The Company’s Total Revenue.

Did You Know? Pop Mart’s Overseas Sales In 2024 Exceeded Its Total Sales In 2021.

Global Expansion Cushions Regulatory Concerns

Pop Mart Has Been Aggressively Expanding Its Presence Globally, Particularly In southeast Asia And North America. In 2024, Approximately 61% Of Its Revenue Came From Mainland China, With The Remainder Primarily From Southeast And East Asia, Hong Kong, Macau, And Taiwan. Notably, Sales In North America Skyrocketed By Over 550% Last Year. The Company Currently Operates 90 Physical Stores And Vending Machine Locations Across the united States.

HSBC Bank Predicts That Pop Mart’s Overseas Revenue Will More Than Double In 2025, Reaching 14 Billion yuan ($1.95 Billion usd), Driven By Strong Sales Of “Labubu 3.0,” Which Launched In April. This Would Represent More Than Half Of The Company’s Projected revenue For the Year, A Significant Increase From 39% In 2024. In The Previous Year, Pop Mart’s Revenue More Than Doubled To 13.04 Billion Yuan, And Profits Nearly Tripled.

Pro Tip: Keep An Eye On Pop Mart’s Expansion In Emerging Markets, As This Is Where Significant Growth Is Expected In The Coming Years.

The “Dopamine Economy” And Collectible Toys

The Surge In Popularity Of These Toys, Frequently enough Described As “Ugly-Cute,” Stands in contrast To The Overall Sluggish Consumer Spending In China, Where Many Consumers Are Becoming More Frugal Due To The Economic Slowdown. Montufar-Helu Explains That younger Chinese Consumers Desire To Build Toy Collections Because It Provides A Sense Of “Affordable Exclusivity.” The Chance To Acquire A Special Edition Item At A Reasonable Price Appeals to Their Desire For Uniqueness And Status.

Pop Mart’s Blind-Boxed Toys Range In Price from 59 Yuan To 5,999 Yuan. Collectors Frequently Spend Hundreds Or Thousands Of Yuan, And Rare Models Can Fetch Six-Figure Sums At Second-Hand Auctions.

Chris Wong, A Senior Clinical Psychologist At Singapore-Based Resilienz Clinic, Explains The Psychological Appeal Of Blind Boxes: “The Vrey Point About Blind Boxes Is The Unknown, The Uncertainty.There is some Inherent Curiosity About What Someone’s Gonna Get… That Brings About A Certain Degree Of Excitement When People Are Buying Blind Boxes.” He Adds That Resolving This Uncertainty Often Leads To Pleasant Emotions Like Fun, Surprise, And Delight, Which Reinforces The Behavior. The Impact Is Amplified When People Share Their experiences On Social Media, Fulfilling The human Need For Social Connection.

Challenges Beyond Regulation

Despite The Continued Popularity Of Labubu And Other Characters, Pop Mart Faces Several Challenges That Could Impede Its Growth.One Key Concern Is The Longevity Of Its Intellectual Property.As Jeff Zhang Notes, “While Pop Mart’s Major Ips, Such As Labubu… Have Received Some Global Popularity Over The Past Two years… There Is No Guarantee That What Is Popular Now Will Stay Relevant Over The Next Five To Ten Years.”

Other Risks Include The Company’s Capacity To adapt To Fluctuating Demand, As Well As The Prevalence Of Scalping, Which Could Drive Genuine Consumers Away From The Market, According To HSBC Analysts. In The previous Month, Pop Mart Issued An Apology Due To Delivery Delays Caused By A Surge In Orders, With Customers Complaining About Not Receiving Their Purchases Weeks After Placing Them.

Counterfeit Toys Also Pose A Significant Threat To Pop Mart’s Reputation, Both Domestically And Internationally. Despite Government Efforts To Enhance Scrutiny At Export Checkpoints, A Large Number Of Counterfeit Labubu Dolls Have Been Seized. Customs Officials At The Ningbo Port, One Of China’s Busiest, Confiscated Over A Million Counterfeit Dolls In The First Six Months of This Year Due To Intellectual Property Violations And Smuggling Concerns.

Expanding The Brand: Theme Parks And Film Studios

To Maintain Brand Freshness, Pop Mart Is Emulating Disney By Diversifying Its Ip Portfolio And Ventures. The Company Has launched Pop-Up Stores, A Film Studio, And A Theme Park.Wang Ning, pop Mart’s Founder, Has Expressed His Ambition To Transform The Company Into “China’s Disney.” however,These Expansions Come At A Significant Cost.

Echo Gong, An Autonomous Retail Consumption Consultant Based In Shanghai, Notes That “Animation Production Requires A Strong Storytelling Team That Can Consistently Deliver Compelling Narratives.” Managing A Theme Park, She Adds, “Also Demands An Entirely Different Skillset And Far Greater Investment Than Simply Selling toys.”

Pop Mart’s Key Metrics

What Are Your Thoughts On The Growing Popularity Of Collectible Toys? Do You Think Regulatory Measures Are Necessary to Protect Young Consumers? Share Your Opinions In The Comments Below!