Small toys are big business in China.
So big, in fact, that they propelled a Beijing-based company to a staggering $6.3 billion valuation and made its founder a billionaire three times over.
Pop Mart, founded in 2010 by Wang Ning, now 37, launched a mystery toy boom in China. The company’s “blind boxes” conceal a figure’s exact design until it is opened. Shoppers choose between colorful boxes promising one of 12 designs on offer and, based on what they find inside, return for more.
In 2021, blind boxes overtook assembly toys to become the largest pop toy segment in China, according to a Statist analysis. The craze for blind boxes has even pushed the Chinese government to regulate them: Retailers are prohibited from setting the price of an individual blind box at more than 200 yuan ($31.46) and selling blind boxes to children under the age of eight without the consent of a guardian.
“A lot of kids love our products, but that’s not the majority of our customers,” said Larry Lu, Pop Mart’s head of North America. Fortune.
Instead, the company’s biggest fans in China and the United States are “children» – adults whose consumption habits mirror those of children – aged 20 to 35.
Pop Mart’s 2023 global revenue was $871 million, a year-over-year increase of 36.5%. Globally, Pop Mart operates more than 450 retail stores and more than 2,300 Robo Shops, vending machines.
Now, Pop Mart is betting that its “designer toys” will take off in the West. The brand has eight retail stores and 15 Robo Shops across the United States, where its blind boxes typically cost $14.99 each, while special 30-inch figures cost up to $1,399.90.
Whether Pop Mart can replicate its Asian success in the West remains a mystery waiting to be solved. But if the growing popularity in the United States of Japanese blind-box toys such as Sonny Angels, Calico Critters and Smiskis is any indicator, there’s still plenty of room to grow.
Pop Art
Pop Mart started in 2010 as a variety store in Beijing, when founder and CEO Wang Ning was a student. The store sold a range of trinkets and toys, and the Japanese brand Sonny Angels was among the most popular.
Sonny Angels – three-inch-tall naked cherubs displayed in blind boxes – hovered in Wang’s mind. He was inspired to get into the blind box game, but with a designer twist. In 2015, Pop Mart collected ideas from its customers, polling them on the social media platform Weibo what characters they would like to see.
“Molly, Molly, Molly,” the comments read, Lu said.
Molly, the brainchild of designer Kenny Wong, is a girl character with emerald eyes and a permanent pout. Wang flew to Hong Kong in 2016 to meet Wong and signed him as Pop Mart’s first artist. Pop Mart gained exclusive rights to Molly through this deal.
“We push designers and artists forward, without hiding them behind characters,” Lu said.
Wong was also pushed to become a shareholder in Pop Mart. In 2019, CEO Wang sold a 2% stake in the company to Wong, worth about $127 million today. But other artists at Pop Mart are typically paid a percentage of sales or a commission rate, Lu said.
After signing Wong, Pop Mart bolstered its portfolio with even more emerging artists to introduce new characters, such as Dimoo the perplexed little boy, Skullpanda the nervous humanoid, and Duckoo the costumed duck.
The company listed on the Hong Kong Stock Exchange in 2020 and today has a market capitalization of approximately $6.4 billion. Forbes puts Wang’s net worth at around $3 billion.
Pop Mart’s forward-thinking philosophy has resonated with fans in Asia. The brand has held meet-and-greet events for fans to get their items signed by artists — and fans go “crazy” at these events, Lu said.
“Loyal fans know that Kenny is the creator of Molly,” Lu said. “Do you know who the creator of Mickey (Mouse) is? No one knows. And who is the designer of Kung Fu Panda? No one knows.
Courtesy of Pop Mart
Bubble Pop?
Although the majority of its revenue comes from product sales, Pop Mart also licenses its original characters to other companies for use in products or advertisements. For example, a Crocs collaboration featured Pop Mart characters like Jibbitz, and a collection with Uniqlo saw Molly and others adorning the Japanese fashion brand’s graphic tees.
These licensing agreements go both ways. Pop Mart has produced figurines in collaboration with major entertainment brands such as DC Comics, SpongeBob SquarePants, Harry Potter and The Big Bang Theory. But these licensed IP products accounted for only 16.5% of Pop Mart’s revenue in 2023, while original artist products accounted for 76.5%.
Repurchase rates for Pop Mart products in China are very high, according to Lu.
“If you’re in a store, you’ll find there are a lot of customers finishing payment, then they’ll unwrap the package and check it, then they’ll come back and choose another one to buy,” he said .
But while social media posts from fans showing rooms full of Pop Mart merchandise are an affirmation of the brand’s power, they’re also a cause for concern.
“If their room is full of products, are they buying more? » said Lu. “We’re not sure.”
This is why Pop Mart is diversifying its sources of income through games, animation and theme park projects. Pop Mart launched an official mobile game in May 2023 and opened the doors to its Pop Land amusement park in Beijing in October.
Pop psychology
Pop Mart fandom is on the rise in the United States. One of Pop Mart’s “kid” fans is Alyssa Tan, 23, based in San Francisco. content creator which specializes in unboxing videos. (Tan received giveaways from Pop Mart in addition to purchasing them herself.)
“With everyday life, from nine to five, life is a bit boring sometimes,” Tan said. “But I get a burst of dopamine every time I open (a blind box.)”
Shortly after Pop Mart opened its first U.S. store in Santa Clara, California, Tan took an hour Uber trip from San Francisco to go shopping.
“Everyone and their mothers were there,” she said. “It was packed.”
Tan, who owns about 30 Pop Mart items, said she could feel the care that went into the design of each figurine, as well as their sturdy quality. She also turned unboxing the blind boxes into a social experience with her friends, sometimes buying and opening them together.
“It almost brings out the child in me that I can’t express right now,” she said. “So I express it by unwrapping them.”
Economists have long theorized about lipstick effect…the idea that consumer spending on indulgences like lipstick increases during recessions. For Tan, Pop Mart figurines have a similar effect: a bit of luxury for times of monotony or uncertainty.
“It’s just a little fun,” she said. “It’s not too much, but it gives you the dopamine you need.”
