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Author | Feixue

Editor | Ji Ran

Pop Mart is creating another Pop Mart overseas.

On August 21, at the half-year performance briefing of Pop Mart International Group Co., Ltd., Wang Ning, chairman and CEO of Pop Mart, mentioned that last year Pop Mart expressed at the performance briefing that it hoped to create another Pop Mart overseas, "We have achieved this goal several months ahead of schedule."

On August 20, Pop Mart released its semi-annual report, with revenue of 4.56 billion yuan (RMB, the same below) in the first half of the year, a year-on-year increase of 62.0%, and adjusted net profit of 1.02 billion yuan, a year-on-year increase of 90.1%. Among them, the revenue of the Chinese mainland market was 3.21 billion yuan, a year-on-year increase of 31.5%;Overseas market development and localized operations drove its revenue to 1.35 billion yuan, a year-on-year increase of 259.6%, accounting for nearly 30% of its revenue.

Pop Mart also disclosed its overseas performance and revenue share for the first time. Among them, the Southeast Asian market achieved revenue of 560 million yuan, accounting for 41.1% of overseas market revenue, a year-on-year increase of 478.3%; East Asia, Hong Kong, Macao and Taiwan achieved revenue of 480 million yuan, accounting for 35.4% of revenue, a year-on-year increase of 153.7%; North American market achieved revenue of 180 million yuan, accounting for 13.2% of revenue, a year-on-year increase of 377.7%; Europe, Australia and other markets achieved revenue of 140 million yuan, accounting for 10.3% of revenue, a year-on-year increase of 158.8%, and the growth rate of the four major regions was three-digit growth.

Pop Mart’s latest move in Europe is the opening of a store in the Louvre on July 27th. It is just a few steps away from the secondary exit of the Louvre Museum and the glass pyramid. It also became the first Chinese trendy toy brand to enter the Louvre.Currently, Pop Mart has 4 stores in France.

In addition to France, Pop Mart has opened stores in the UK, Italy and the Netherlands in Europe. Earlier on July 13, the first stores in the capitals of Milan, Italy and Amsterdam, the Netherlands, opened on the same day. In the second half of this year, Pop Mart will also open more offline stores in Europe.

The blind box craze in China has been going on for many years. Many players have lost interest in expensive and uncertain blind boxes. Coupled with the increasing involution in the field of blind boxes, trendy toy brands have to use more new ways to create new growth points.Either they can deepen their presence in the domestic market and enhance their innovation capabilities in IP trendy toy derivative products, or they can go overseas and create a second growth curve in the Southeast Asian and even European and American markets.

The opening scene of Pop Mart Louvre store. Source: Screenshot of Pop Mart video

The competition for trendy toys going overseas is also fierce.As a leader in the field of trendy toys, Pop Mart, which has expanded overseas and opened multiple flagship stores in Europe, is the first one to expand overseas and go the furthest.

Relying on overseas market income, Pop Mart has successfully increased its revenue. There are also things worth learning from its overseas expansion process, but there are still many problems that need to be solved: in the sales and transportation links, Pop Mart has problems such as fewer overseas product types, insufficient supply chain construction, and slow logistics. But more importantly,Pop Mart’s core IP still lacks competitiveness.

Overseas markets have become the largest growth area for Chinese trendy toys

As early as the 1990s, the prototype of blind boxes appeared in China. The most famous one was the Water Margin cards in the Little Raccoon instant noodles. Eating instant noodles crazily in order to collect a set of cards was a childhood memory for many people born in the 1990s.

In 2012, blind boxes containing random doll toys began to appear in China, but the blind box market has been lukewarm for a long time.It was not until 2019 that capital began to be invested in the blind box industry under the wave of consumption upgrading, and the blind box economy began to set off a boom. According to a survey, in 2019, the market size of the domestic blind box industry was about 7.4 billion yuan.

As a company that started operating trendy toys in 2010, Pop Mart keenly seized the business opportunity of blind boxes and incubated its first self-owned IP, Molly. Since then, Pop Mart has been unstoppable and officially listed on the Hong Kong Stock Exchange on December 11, 2020, becoming the first blind box trendy toy stock.

After Pop Mart went public, it began to face difficulties.The blind box craze has begun to fade, and a considerable number of consumers have begun to become rational, no longer pursuing the excitement of opening the box, and hoping to draw out extremely scarce "hidden models" that can be sold for hundreds of thousands of yuan in the second-hand market.Instead, they are more pragmatic and think that the blind box gimmick is too much and the price is unreasonable, so many players choose to "quit".

The "quitting tide" of players has led to a decline in Pop Mart's repurchase rate. Pop Mart's 2021 financial report shows that the repurchase rate has dropped from 58% in 2019 to 56.5% in 2021. At the same time, although Pop Mart's revenue and profits increased, its gross profit margin fell by 2%.

At the same time, competitors such as TOP TOY and 52TOY have appeared one after another, and Alibaba Pictures also established a trendy toy brand focusing on film and television IP in May 2021"Koi Fun", Pop Mart faces greater competitive pressure.

More and more brands are joining this market. At the same time, the domestic market ceiling is obvious.All brands have thought of tapping into overseas markets to create a second growth curve.

2022 is known as the "first year of blind box going overseas."This year, in addition to Jinli Naqu, which mainly promotes domestic entertainment IP, other trendy toy brands have accelerated their pace of going overseas.Pop Mart opened its first store in the UK; 52TOYS opened its first pop-up store overseas and expanded into e-commerce; TOP TOYS did not open a physical store immediately, but it can make its products reach consumers around the world through MINISO.

The results of various brands speeding up their overseas expansion are obvious. As of the end of 2022, 52TOYS's overseas sales increased by 246% year-on-year, with Australia's performance increasing by 1,468%.Pop Mart's overseas revenue and share have steadily increased. In 2023, Pop Mart's overseas business revenue exceeded 1 billion, a year-on-year increase of 134.9%, and its revenue share also increased to 16.9%.

This year, as domestic consumers remain rational and cautious, various trendy toy brands still need to seek growth overseas.

Pop Mart already has 80 stores and 159 robot stores in countries and regions outside mainland China. Its recent entry into the Louvre also shows thatPop Mart hopes to have greater influence in the European and American markets.52TOYS announced the launch of the "Overseas 100 Stores Plan" at the beginning of the year, expanding into the North American and Southeast Asian markets, promoting the construction of a store system including brand flagship stores, brand standard stores, and unmanned retail stores, and reaching more overseas users.

Replicating China’s path in Southeast Asia

Among many trendy toy brands, Pop Mart went overseas relatively early and currently has the most stores in overseas markets and is also highly well-known.

Looking back at Pop Mart’s overseas expansion journey, the most important experience is finding the right point for rapid growth.It has become a popular and well-known trendy toy brand in Southeast Asian countries, which has greatly increased Pop Mart's overseas revenue.

As early as 2018, Pop Mart began to sell products overseas through the B2B model. In 2019, Pop Mart began to set up an overseas business team and established a joint venture overseas, shifting from "to B" to "to C".

Pop Mart chose South Korea as its first overseas destination, and later expanded to Japan, Singapore and Thailand.

Trendy toys are different from food, beverages and electronic products. They are non-essential spiritual and cultural upgrade products that require support from high-income middle-class groups and mature culture.

South Korean young people are willing to accept new and trendy things, which has a driving effect on trends in other Asian countries. Japan's two-dimensional culture has a broad foundation, and the market for figures and trendy toys is mature.Pop Mart has accumulated overseas market experience by conducting localized operations in the Japanese and Korean markets by launching limited products, collaborating with world-renowned IPs and local famous toy magazines, and so on.

but,Japan and South Korea have strong local cultures, so it is difficult for Pop Mart to become a local star brand.So far, Pop Mart’s fastest-growing and most popular overseas market is still Southeast Asia, represented by Thailand.

Wen Deyi, president of Pop Mart's international business, once said in a conference call that Southeast Asia, especially Thailand, is the fastest-growing region in 2023. By the end of 2023, the number of Pop Mart's offline stores in Southeast Asia will reach 15.

In recent years, Southeast Asia has experienced rapid economic development and a relatively young population, which has provided a foundation for the popularity of trendy toys. At the same time, there are many Chinese communities in Southeast Asia, which are greatly influenced by China's new consumption trends and have similar culture and consumption habits.

In September 2023, Pop Mart officially entered Thailand and chose to open its first store in Central World Bangkok. Central World Bangkok is not only the largest department store in Bangkok, but also the second largest shopping mall in Southeast Asia. On the opening day, Thai fans flocked to the store, and people lined up from the early morning. The sales on the first day exceeded 2 million RMB.

Until this year, Pop Mart is still very popular in Thailand.On February 9 this year, Pop Mart opened its third store in Bangkok’s Central Shopping Center and held a signing event for CRYBABY artist Molly. The first store’s sales exceeded 5 million on the first day. The sixth offline store that was recently opened had a turnover of more than 10 million RMB on the first day.

The most popular item for Thai fans is the LABUBU series created by Long Sheng, a contracted artist of Pop Mart.The LABUBU blind box, which is worth 99 yuan in China, was once sold at a maximum price of 2,500 baht (about 500 yuan) in Thailand.There is even a business of purchasing Pop Mart from China to Thailand. In popular tourist areas such as the Grand Palace, Chinese people have also seen vendors selling Pop Mart dolls, with Molly and LABUBU printed on the boxes of goods.

In Malaysia, many local influencers will shoot videos of Pop Mart blind box unboxing. In the video, they admit that this is a money-burning hobby, but they still can't help but buy it in the hope of winning hidden products.

Wang Ning, the founder of Pop Mart, once proposed in 2023 that he was confident that the overseas revenue in 2024 would exceed the entire group's revenue of 1.683 billion yuan before its IPO in 2019.At present, it is still unknown whether Pop Mart can achieve its goal in 2024, but its development in Southeast Asia has replicated the path that Pop Mart took in China: relying on the surprise and decompression of blind box draws, the instinctive desire to collect, and the expectation of high premiums to gain a large number of young "fans."

The road to Chinese fashion in Europe and America is not easy

In Southeast Asia, Pop Mart has become quite popular by copying its domestic strategies. Its performance in Japan, South Korea, Hong Kong, Macao and Taiwan is also acceptable. Relying on the revenue earned from these countries and regions, Pop Mart has the confidence and capital to expand into the more distant European and American markets.

In July this year, Pop Mart opened its third store on Oxford Street in London and its fourth store in the Louvre in France. Together with the first stores in the Netherlands and Italy, Pop Mart now has 9 stores in Europe. In the United States, Pop Mart has 11 stores since it opened its first store in New Jersey on October 20, 2023. The newest one opened in the San Francisco Bay Area on July 27 this year.

However, in the European and American markets, Pop Mart has been relatively unpopular - although Pop Mart's offline stores in Europe and the United States are also located in core business districts, and even entered world-renowned attractions such as the Louvre, it is difficult to replicate the spectacle of crowds of people in Southeast Asia.

The blind boxes promoted by Pop Mart are not well received in Europe and the United States. In East Asia, especially Japan and South Korea, there have long been blind box games such as "gachapon" or "lucky bags". China also had the prototype of blind boxes in the 1990s. Therefore, this game is also suitable for transplantation to Southeast Asian countries that are deeply influenced by Chinese, Japanese and Korean culture. But in Europe and the United States, consumers are more inclined to pay for "certainty".

Product selection is equally important.Due to cultural differences, aesthetic tastes vary from place to place, and popular products are also different.For example, the forest concert series of products based on the "The Monsters" IP, in which the Tycoco skeleton image is popular in Mexico, which has a culture of the dead, but has hit a wall in Europe because Europe prefers elves and animal dolls.

More importantly,Pop Mart’s IP lacks content background, which is also a problem existing in most trendy toys in China.

At present, Chinese trendy toy brands are still mainly based on the model of licensing cooperation with popular overseas IPs. For example, MINISO cooperated with Disney to launch a series of Disney Princess blind boxes, and Pop Mart jointly launched a series of blind boxes including the Sorcerer's Stone, Chamber of Secrets, Prisoner of Azkaban, and Hogwarts Express with Harry Potter.

In addition to cooperating with internationally renowned head IPs, another effective localization approach is to collaborate with local artists.However, this means the "one IP per location" model, that is, when Pop Mart enters any new country, it needs to select local artists and develop new IPs.It greatly increases marketing costs and disperses the influence of existing top IPs.

Faced with the current situation of being unpopular in Europe and the United States and cooling down in China, Pop Mart's strategy is to launch more IPs, open more stores, and gradually introduce large-scale dolls to "de-blind boxes", while expanding products such as animation and theme parks to maintain popularity.

Last September, the Chaoyang Park in BeijingPop Mart City ParkThe park is officially open, and the second phase will be planned later. This is Pop Mart's first attempt at a theme park. The entertainment facilities are mainly small games suitable for parents and children and couples. The highlights include the park's "passport" and sticker check-in collection, park-limited peripherals and performances, parent-child services, etc.In the Molly Banquet Hall on the third floor of the park, visitors can see various Molly decorations and buy coffee printed with Molly's image.

However, Pop Mart Park has not been able to arouse much response in China - even for domestic tourists, if they are not fans of Pop Mart's own IP, the cost-effectiveness of checking in Pop Mart City Park is not high. Some netizens said that Pop Mart Park is "expensive and small" and "only suitable for scalpers".

A poll conducted by Sina Technology shows that78% of consumers do not approve of Pop Mart Park and bluntly said they are not interested and will not go there. 6% of consumers said they have been there but will not go again, and only 16% of consumers said they can go there frequently in the future.

Under such circumstances, it can be predicted that even if the second phase of Pop Mart Theme Park can be built and opened as scheduled, it still cannot be compared with large amusement parks with well-known IPs such as Disney and Universal Studios, and it is even more impossible to bring this kind of asset-heavy and highly likely low-return gameplay overseas.

In terms of story, Pop Mart is still a little weak.

Initially, founder Wang Ning ignored the story of the IP and said in an interview that "trendy IP has no story." He also mentioned in a conversation that the logic of Molly is "there are 100 Hamlets in the hearts of 100 people...you can put your soul in it."

As time went on, Pop Mart began to give some background stories to the new series, such asThe 2019 Dimoo is a little boy who enters a fantasy world in his dream. The emotional IP Hirono Ono is a strange kid with an unhappy and lonely face. A new TVC "To the Weird Us" was launched for Hirono.

However, these simple characters and short videos seem too thin compared to the long-lasting IPs such as Harry Potter and Disney Princess. They do not have a complete story and are difficult to gain cross-cultural recognition.

For Pop Mart, conquering European and American players and going further in overseas markets is bound to be extremely difficult:Whether it is cooperating with local artists to develop new IPs or increasing the cultural heritage of IPs by producing animations, it takes a lot of time and money. Compared with Southeast Asia, Pop Mart's road to Europe and the United States is destined to be difficult.