• News
• 2024-06-06

Pop Mart's Bittersweet International Journey

At the sound of a command, countless Thai people piled up outside the mall rushed to the entrance like starving tigers pouncing on their prey, heading straight for the Pop Mart store inside, just to snap up their favorite trendy toys.

Recalling this scene she experienced while traveling in Bangkok, Thailand in June this year, He Li is still greatly shocked. "When they came out, almost everyone had a big shopping bag in hand," she said. Out of curiosity, she asked a Thai guy who had just finished checking out and learned that he had spent his last month's salary on blind boxes, and he shrugged his shoulders, indicating that it was normal.

Not only in Bangkok, but later when He Li traveled to Jakarta, the capital of Indonesia, and passed by the Pop Mart store, she also witnessed the crowded scene. "Local mall gold shops even attract customers with the gimmick of winning LABUBU gold foil in a lottery."

What's more, some people have traveled thousands of miles from Southeast Asia to China just to buy Pop Mart products that are out of stock locally. Their surging consumer enthusiasm has not only temporarily helped Pop Mart return to a market value of hundreds of billions of Hong Kong dollars, but also helped it achieve its small goal of "replicating Pop Mart overseas" several months in advance, that is, overseas business revenue exceeding the group's revenue in 2019 by 2024.

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Financial report data shows that since the beginning of this year, Pop Mart's overseas business revenue has been soaring. The revenue in the third quarter of this year increased by 440%-445% year-on-year, and the proportion of total revenue has risen from 16.9% in 2023 to over 45% in September 2024.

In less than a year, how did Pop Mart achieve a counterattack overseas?

Blind boxes sweep Thailand

Southeast Asia should be credited first.

According to financial report data, as of June 30, 2024, Pop Mart's overseas market revenue reached 1.35 billion yuan, a year-on-year increase of 259.6%, accounting for nearly 30% of total revenue. Among them, the Southeast Asian region topped the list with a revenue of 560 million yuan, accounting for more than 40%.

Among the countries in Southeast Asia, Thailand is the most obsessed. One of Pop Mart's IPs, LABUBU, is now as popular in Thailand as a top stream. Not only does the Thai princess hang it on her carry-on bag, but the Thai Tourism Bureau also officially awarded it the title of "Magical Thailand Experience Officer" in July this year. In the queue mentioned above, many Thai people also went for LABUBU.A person involved stated that after returning to her country, she often encountered individuals with distinct Southeast Asian features while visiting Pop Mart stores, saying, "It feels like going back to four or five years ago when locals were crazy about Pop Mart."

How has Pop Mart become so popular in Southeast Asia? It relies on two main factors: the expansion of physical stores and localized IP operations.

Looking back at Pop Mart's overseas journey, it is evident that their initial pace of expanding into foreign markets was not particularly fast. They only established their first overseas store in Seoul, South Korea in September 2020, and by the end of 2021, they had only seven stores and nine robot stores in the entire overseas region.

The turning point came in 2022 when Pop Mart began to focus on overseas markets, accelerating the construction of physical stores. To date, Pop Mart has more than a hundred stores overseas, with over ten stores in the Southeast Asian region, covering countries such as Singapore, Malaysia, Thailand, and Indonesia.

It is worth noting that Pop Mart officially entered the Thai market in May last year, with its first store opening in September 2023, and now there are already six stores.

The good performance in Southeast Asia, in the view of entertainment industry analyst Zhang Shule, is due to Pop Mart's four "new" strategies in IP operations: new markets, new channels, new categories, and new trends.

New markets and new channels refer to Pop Mart's expansion into overseas markets and exploration of diversified businesses in the past two years. New categories mean their expansion from hard collectibles like figures to plush toys, such as the popular LABUBU vinyl face series of blind boxes this year. The new trend is that when they enter new markets, they redesign products in line with local consumer needs and preferences, launch limited edition products in conjunction with local culture and festivals, creating differentiation.

"In addition, there is a key factor, which is leveraging the Chinese market and manufacturing to enter Southeast Asia, which is akin to a dimensional attack," said Zhang Shule.

Timing is also crucial. Wen Deyi, President of Pop Mart's international business, once stated in a public interview that if Pop Mart had entered the Thai market two or three years ago, it might not have achieved the current results, "Thailand focuses on tourism, which was hit very hard during the pandemic."

Another indispensable figure is the star Lisa, who is the most popular center member of the South Korean girl group BLACKPINK and also the most well-known Thai person on the international stage. Her every move is closely watched, so when the image of LABUBU frequently appears on her social media, it greatly fuels the enthusiasm of Thai fans.While the aforementioned factors are undoubtedly significant, an unnamed industry insider believes that the core reason lies in the fact that Southeast Asian people have not yet experienced the blind box playstyle that stimulates consumption, making it difficult for them to resist this "addictive" sensation.

Overseas Expansion Concerns

Having experienced the fervor of Pop Mart in China, He Li feels a sense of temporal dislocation when looking back at the current craze in Southeast Asia. She too followed the trend and bought many blind boxes, but later, due to moving and lack of space, she sold most of her trendy toys, keeping only a few favorite dolls.

Will Southeast Asia follow China's footsteps and eventually lose interest?

This is also a question in the minds of many who are watching Pop Mart cautiously. The aforementioned industry insider told 'Xin Entropy' that, for now, the popularity of LABUBU in Thailand is significantly influenced by star power, and it is hard to judge how long it will last, which ultimately tests Pop Mart's subsequent IP operation capabilities.

Comparing the situation in China at the time, with long queues, hard-to-find dolls, and scalpers dominating, He Li recalls that as the supply of blind boxes continued to increase, many common dolls depreciated severely. Coupled with rumors of plagiarism surrounding Pop Mart and the new blind box series being "the same medicine in a different bottle," her motivation to buy blind boxes gradually weakened.

According to financial reports, Pop Mart's member repurchase rate dropped from 58% in the first half of 2021 to 43.9% in the first half of 2024.

As the market gradually returns to rationality and consumers regain their senses, consumption driven by impulse ceases to exist. He Li believes that if Pop Mart does not learn from these experiences and avoid them overseas, it is very likely to repeat the same mistakes.

In terms of product quality, Pop Mart still has a lot of room for improvement. 'Xin Entropy' found through searches on major social media platforms that there are many users complaining about the unstable quality control of Pop Mart's products. Taking the recently popular LABUBU vinyl doll as an example, some netizens received two genuine products manufactured by different factories, but upon comparison, they found that one factory's production process was relatively rough, and in some aspects, it was not even as good as the quality of some counterfeit products.

Another area Pop Mart needs to pay attention to is competition within the industry. For instance, 52TOYS also opened its first store in Thailand in December 2023 and proposed an overseas plan of a hundred stores this year, accelerating its layout in the Southeast Asian market. Additionally, the trendy toy brand TOP TOY under Miniso recently officially opened its first store in Thailand.Despite Pop Mart's initial brand effect in the Southeast Asian market, insufficient production capacity is a significant pain point. As other domestic trend toy companies successively venture overseas, users have more options, and Pop Mart will also face the issue of losing freshness and user attrition.

The trend toy practitioner also pointed out that although people are accustomed to treating Southeast Asia as a whole, the 11 countries actually differ in terms of local customs and religious beliefs. Pop Mart's explosive popularity in Thailand does not necessarily mean that other countries will buy into it. "After all, trend toys are essentially an emotional business. Consumers are willing to spend money on products that resonate with them in terms of design and image. Without these, they are just a pile of plastic trash."

To support Pop Mart's greater ambitions and instill more confidence in the market, beyond Southeast Asia, Pop Mart needs to win the favor of more markets, such as Europe, America, Japan, and Korea. However, this also raises concerns about whether consumers in these markets will buy into it.

Consumer industry investor Huang Hai mentioned that when he visited Tokyo in June and July this year, he found that the Pop Mart store in Shibuya Parco was nearly deserted, while the nearby Pokémon authorized store had a queue for more than ten minutes to check out. This may be because for consumers in developed countries, their own IP industry is sufficiently developed. Pop Mart mainly promotes new IPs that are unknown locally, which is difficult to arouse their desire to purchase.

This is mainly because the competition in these markets is more intense. For example, Japan's capsule toy culture has a long history and is well-developed, with consumers having higher requirements and more choices for such products. In the fields of card and other two-dimensional products, competition in Europe, America, Japan, and Korea is extremely fierce, and the market saturation is relatively high. "Winning the favor of consumers in Europe, America, Japan, and Korea is not an easy task. At least from the IP itself, there are certain problems. Its style is somewhat heavily influenced by Japanese and Korean styles, lacking distinctive and clear characteristics." Zhang Shule analyzed.

In this regard, although Pop Mart has achieved phased success overseas, it still faces many challenges.

Chasing Disney

On many public occasions, Pop Mart founder Wang Ning has repeatedly mentioned "Disney." He said that after Pop Mart gradually formed its own unique development model and characteristic language, it realized that it should not be limited to benchmarking against Lego, but should take Disney as the development direction and strive to build a more grand commercial blueprint.

However, Disney has built its own huge IP cultural system with movie content and theme parks, and many of its IPs have vivid and fascinating stories. In contrast, Pop Mart, which is benchmarked against Disney, is often questioned. Its IP products are often criticized as "having form but no spirit." The IPs themselves are somewhat thin due to the lack of stories, and their lifecycle sustainability is also doubted.

As He Li said, no matter how good the image is, it will become tired after a while. The impulse that starts with appearance is too direct and too short, and it is difficult to maintain long-term market heat and consumer loyalty.Perhaps recognizing this key issue, Pop Mart has started to try to increase the storytelling of its IPs through various means over the past two years, such as holding themed art exhibitions, developing games for user-generated content, opening themed parks, and launching IP-related videos.

In Zhang Shule's view, these initiatives have a positive significance for Pop Mart to deepen the connotation of its IPs, but also emphasizes the need for continuous innovation, actively engaging in deep interaction and co-creation with fans, and requiring a considerable amount of time for accumulation and sedimentation to achieve significant results.

In response to previous doubts about Pop Mart's over-reliance on a single IP, Pop Mart has made a strong response with excellent financial data. According to Pop Mart's semi-annual report data for 2024, there are currently seven IPs under Pop Mart with sales exceeding 100 million yuan, and their artist IP revenue share has increased from 76.9% in the first half of 2023 to 81.0% in the first half of 2024. This indicates that Pop Mart has made significant progress in the diversification of IP development.

Disney has a vast derivative system and cultural content. Although Pop Mart aspires to expand in the IP business field like Disney, for now, Pop Mart's IPs have a certain gap compared to brands like Disney and Bandai that have been deeply involved in the industry for many years. Its IP genes are relatively weak, its capabilities in film and television creation are still insufficient, and the derivative product chain needs further improvement.

However, Pop Mart can create trends by innovating and trying in multiple scenarios. "Pop Mart is now actually striving to create a trend culture, not just limited to the traditional trend toy field. Its development path of first establishing IP images and then gradually enriching story content is feasible, such as the successful cases of Mattel's Barbie and Disney's Lina Belle." He said.

Pop Mart seems to be following the popularity route of Lina Belle. Recently, a video of ZIMOMO (the leader of the LABUBU family) dancing in its themed park has been widely spread on social platforms such as TikTok. Due to its energetic and distinctive dance movements, netizens joked that it was like a college graduate, which to some extent increased the popularity and topic degree of ZIMOMO.

To achieve the goal of becoming a Disney-like enterprise, Pop Mart needs to continue to work hard in building the IP system, and it also faces more severe challenges in the process of global layout. As mentioned earlier, Pop Mart's store opening situation in the European and American, Japanese, and Korean markets is far from as popular as it is in the Southeast Asian region.

Zhang Shule believes that if Pop Mart wants to truly grow into an international enterprise, it must strive to create top IPs, carefully accumulate rich story connotations, and effectively enhance the influence of IPs. In this process, it can highlight the elements of the national trend, form a distinct competitive advantage by integrating Chinese traditional culture with modern trend elements, and form a distinct competitive advantage compared to other brands.

At the same time, if Pop Mart wants to become a Disney-like enterprise, it is not only about learning and imitating the business model, but more importantly, whether it has the determination and long-term plan to become a century-old shop.