How Pop Mart Became a Bright Spot for China’s Economy
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There's no business like small business. Hiscox Small Business Insurance. Bloomberg Audio Studios. Podcasts. Radio. News. Okay, so let's see. We're down on B2 now of K11. I think it's right around the corner. On a recent Wednesday afternoon, I headed to a mall in downtown Hong Kong to drop by one of the hottest shops in town. Oh, good. There it is. Pop Mart.

Pop Mart is a toy store. It sells figurines, stuffed animals, and plush dolls. It was packed with shoppers who were there to buy one thing, a mystery box with a surprise toy in it, also known as a blind box toy.

And as I was looking around the store, I saw a woman standing by a display, shaking a box with one hand. I saw you shaking a box. What's that all about? It's about the feeling. For example, this one. I want to get this one right. Chaisel Torres is visiting Hong Kong from Macau.

She's shaking the box to try to figure out which character is inside by the sound of it. Oh, because this one is small, right? So mostly when you shake it, it's like shakable. And then if you get those big ones, it's like they won't shake that much.

Chesil told me her 15-year-old daughter first started collecting Pop Mart dolls last year. And now she's the one who's gotten addicted to blind box toys. Exactly. Chesil weighs the blind boxes in her hand, and after shaking several of them, she settles on one. Oh, no. I actually got this one already. I got repeat. So sounds like you're going to have to get another one. Not today.

PopMart's blind box toys, including its most famous one, the Labubu doll, have become a global phenomenon in the last few years. In the US and Australia, fans line up for hours, sometimes in the middle of the night, for new releases. But even some of PopMart's biggest fans might not be aware that the brand is from China.

Bloomberg Opinion columnist Shuli Ren says that could work to the company's advantage. PopMart, if you just look at the name, you wouldn't know it's Chinese. Labubu looks nothing Chinese at all. So I think for Chinese companies to be more successful overseas, they cannot be too Chinese.

And even though China has been the target of a rising tide of U.S. tariffs since Trump's first term in 2018, PopMart has become hugely popular, both with consumers and investors. In 2024, its sales more than doubled. And if you look at this stock, they went public in late 2020, and it has been up 250%.

This stock is up more than 40% this year despite Trump's trade wars. The demand for its stocks are very inelastic. It's recession-proof and tariff-proof. Tariff-proof. That will be the test. Welcome to the Big Tech Asia from Bloomberg News. I'm Wan Ha. Every week, we take you inside some of the world's biggest and most powerful economies and the markets, tycoons, and businesses that drive this ever-shifting region.

Today on the show, the craze for China's blind box toys. Can figurines and plushies stoke enough demand for PopMart's products to outlast the trade war? And what can other Chinese companies learn from its success as a country braces for escalating tariffs? ♪

Pop Mart was founded in 2010 as a variety store. Today, it sells toys and figurines in about a dozen collections. But the top seller is the Labubu doll, created in 2015. Labubu is a small, toothy, fierce-looking creature that looks like a cross between an elf and a rabbit.

It's so popular that Pop Mart now sells more than 300 variations of the character. And they're often sold out in stores everywhere, from Manila to New York. And key to the frenzy is the surprise customers get when they open the blind boxes. Come on, give me something good, something juicy, something wonderful. And open up. There are tons of these unboxing videos on social media. I got my first Labubu. It cost $50. Uh-oh!

Wow! It's so fugly that I guess it makes it kind of cute. Pop Mart's success with La Boo Boo is largely thanks to Blackpink's Lisa, the lead rapper of the popular K-pop band.

After she shared her collection on Instagram last year, fans rushed out to buy the figures. Lisa also gushed about the dolls in a Vanity Fair interview in November. So when this guy has a tail, they call Simomo. If she doesn't have tail, we call her Labubu.

Lisa admitted online that she was obsessed with the Lububu. She said she didn't get what the big deal was, but once she had one, she wanted a second one. I spend all my money. I go to Pop Mart everywhere. If I fly to New York, I go to Miami. I try to find Pop Mart there. Paris, you know, everywhere.

The blind boxes can cost from $15 each to more than $250 for limited editions. And while selling merchandise with surprise toys is nothing new — think about the mystery toys in Kinder Chocolates or Cracker Jacks Popcorn — Shuley says it's been essential to Pop Mart's explosive growth.

This blind box thing, basically, it's their biggest marketing wing. I think everyone likes to open Christmas gifts, right? Like, you don't know what's inside, and this kind of surprise factor that adds a little bit thrill. Labubu blind boxes are sold in limited quantities online, and they sell out fast, meaning people have to go into stores or buy them from vending machines. This hard-to-find element creates a sense of exclusivity that drives the hype.

If you go to a Chinese store, you cannot get Labubu because of scalpers. The more common ones, you can get them online from scalpers at perhaps 20% premium. But some of them, the more limited edition ones, they are very, very hard to find. This mania for Labubu and other PopMart blind box toys has translated into colossal success for the company.

Its sales revenue hit nearly $2 billion in 2024, more than double from the year before. The company went public on the Hong Kong Stock Exchange in late 2020 and since has become one of the best performing stocks.

If you look at this stock, it has been up 250%. This stock has really become an investor's darling. It's trading at over 50 times earnings. And by comparison, Disney is trading at only 17 times. Hello Kitty Sanrio is trading at about 40 times. It's tremendous success. And it's founded, he owns almost half of the company. And this company is worth $23 billion. So go figure. ♪

PopMart may be a toy store, but its main customers are young adults between 15 to 35. That's according to a market research firm. This group of grown-ups are sometimes referred to as kidults, adults who enjoy doing or buying things usually intended for children. Shuli says PopMart is making a lot of money by tapping into this kidult market because that sector of the population is struggling in China right now.

The Chinese economy is not doing very well, right? Like young people of this generation, unemployment rate is very high.

A lot of young, educated people, they don't see that how they can climb the middle class ladder like their parents did. And I think the boo-boo gives them a sense of a mental serenity or comfort, you know, like the so-called lipstick effect. In the economic recession or if you are having a bad time, women will go out to buy lipstick. It's

It's 15, 20 U.S. dollars, and you put on lipstick and you just feel a little bit better, right? But these days, instead of lipstick, I think young men and women, they like to go for those fluffy toys. That accounts for the demand in China. But overseas, PopMart's appeal is now facing some big headwinds.

Now, the White House says tariffs on China are now, get this, 145 percent. The Trump administration has imposed hefty tariffs on all Chinese goods going to the U.S., where the company wants to expand. Can PopMart's strategy survive the trade war? And can other Chinese brands successfully emulate its secret sauce? That's after the break.

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Growing and innovating your business is your job. Microsoft helps you achieve that with innovative AI tools and experiences to guide you confidently into the future. Whatever change comes next, let Microsoft help you keep pushing forward. For more details, visit Microsoft.com slash challengers. PopMart's blind box strategy has helped it succeed well beyond China.

Citigroup analysts said in December they expect PopMart's global revenue to account for half of total sales this year, as the company looks to expand to North America and Europe. As of December, the company had 130 physical stores outside China. And despite the U.S. and China being caught in an increasingly escalating trade war, Bloomberg Opinion's Shuli Ren expects that PopMart Toys will be able to ride out the tariffs. For now.

When we talk about tariffs, we say, oh, Americans are not going to buy goods from Timo or Shein because they're just going to be 100% more expensive, right? But with Labubu, demand is just that inelastic. Right now, people are willing to spend more. Some are buying from scalpers, right? Even if you wanted to pay more, you cannot have it. It's more about supply. That's why people think Potmar at its current stage is tariff-proof.

Earlier this month, PopMart shares did see some volatility, falling as much as 20% in Hong Kong. That's after Trump's tariff whiplash caused financial markets to go on a rollercoaster ride. For now, the stock is adding gains again. And Shuley says other companies are already trying to replicate parts of PopMart's formula for success when they're expanding abroad.

Chinese companies all want to go overseas. Overseas profit margins are just much higher compared to China. And there is no price wars in big markets like the U.S. and the European Union. And in fact, you start to see this brand called Miniso, the Chinese version of Muji, if I may use that analogy. And they are also selling toys, cheap lipstick, houseware, etc., right? And that they are trying to do what PopMart is doing, going overseas.

And they are also starting to use this so-called blind box strategy to jazz things up. And they're copying another key aspect of PopMart's strategy.

I think for Chinese companies to be more successful overseas, they cannot be too Chinese. Pop Mart, if you just look at the name, you wouldn't know it's Chinese. Le Boubou looks nothing Chinese at all. Actually, the artist was born in Hong Kong. He grew up and spent a big chunk of his time in the Netherlands. And he got the inspiration reading about Nordic fairy tales. That's why Le Boubou doesn't look quite Chinese, you know. She looks like where the wild things are. She's a Chinese artist.

She has a boyfriend called Taikoko and she has buddies. They all look a little bit Nordic and international. And I think that's quite important. Like, of course, all the Chinese companies, they want to create new markets overseas. Miniso has done very well as well. Miniso doesn't look Chinese at all. In fact, most people think it's Japanese. Exactly. Certain brands like Xiaomi, for instance, their electric vehicle, SU7, looks like a Porsche.

Just as importantly, PopMart is challenging the idea that China's just a place where cheap knockoff goods are made.

President Donald Trump keeps on railing against China, saying China is flooding cheap goods and products into the U.S. But that's not necessarily true. I think some of the made-in-China products are getting quite cool, right? Because Walmart is coming up with new intellectual properties like Labubu, right? In order to earn customer loyalty, they have to make quality goods that are fairly inexpensive, but they also have to tease and come up with new innovations.

It's not so different from like Japan in the 1990s, right? Back then, Japan's asset bubble already went bust. And the Japanese companies are coming up with pretty interesting innovations. Uniqlo came up then, right? And then there was Muji. And then suddenly the world sees, oh, wow, Japanese design is great. And the people around the world love them. And I think that's what China wants to be. Like they want to be seen as a place where...

Interesting designs can also come from. Whether demand for Labubu can continue to survive economic challenges in China and the trade war with the U.S. remains to be seen. Blind box toys tend to be passing fads, and PopMart aspires to hook consumers beyond Labubu dolls.

Right now, Walmart is at early stage. So at this point, it feels like it's a fad and perhaps investors are just betting that the Walmart can grow for another, say, five, 10 years. Right now, Walmart is doing great, right? The stock price is up. But going forward, they have their challenges. The key challenge is how to keep customers

It's toys hip. How to have influencers still wear them and showcase them on Instagram. That means that they have to keep on innovating and coming up with new intellectual properties to keep young people on their hook. This is The Big Take Asia from Bloomberg News. I'm Wan Ha. This episode was produced by Naomi Ng and Yang Yang. It was edited by Grace Jennings-Edquist, Patty Hirsch and Dong Liu.

It was fact-checked by Eddie Duan and mixed and sound designed by Taka Yasuzawa. Our senior producer is Naomi Chavon. Our senior editor is Elizabeth Ponzo. Our deputy executive producer is Julia Weaver. Our executive producer is Nicole Beamster-Bower. Sage Bauman is Bloomberg's head of podcasts. If you liked this episode, make sure to subscribe and review The Big Tech Asia wherever you listen to podcasts. It really helps people find the show. Thanks for listening. See you next time.

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