Tiny toys are big business in China.
So big, in fact, that they boosted one Beijing company to a staggering $6.3 billion valuation and made its founder a three-time billionaire.
Founded in 2010 by 37-year-old Wang Ning, Pop Mart ushered in a boom in mystery toys in China. The company’s “blind boxes” hide the exact design of the figure until it is opened. Shoppers choose between colorful boxes promising one of 12 designs, and depending on what they find inside, they return for more.
Blind boxes have overtaken assembly toys to become the largest pop toy segment in China in 2021, according to a study. Statistics analysis. The blind box craze has even pushed the Chinese government to regulate Retailers are prohibited from setting the price of an individual blind box above 200 yuan ($31.46) and from selling blind boxes to children under eight years of age without the consent of a guardian.
“A lot of kids like our products, but that’s not the majority of our customers,” said Larry Lu, head of Pop Mart North America. Luck.
Instead, the company’s biggest fans in both China and the U.S. are “kids”—adults whose spending habits mirror those of children—ages 20 to 35.
Pop Mart’s global revenue in 2023 was $871 million, up 36.5% year-over-year. Pop Mart operates more than 450 retail stores and more than 2,300 robotic vending machines worldwide.
Now Pop Mart is betting that its “designer toys” will be in demand in the West. The brand has eight retail stores and 15 robot stores across the US, where blind boxes typically sell for $14.99 each and special 30-inch figures sell for up to $1,399.90.
Whether Pop Mart can replicate its success in Asia in the West is still a mystery yet to be unpacked. But if the growing popularity in the U.S. of Japanese blind toys like Sonny Angels, Calico Critters and Smiskis is any indication, there’s plenty of room for growth here.
Pop Art
Pop Mart started in 2010 as a department store in Beijing when founder and CEO Wang Ning was a college student. The store sold a wide selection of trinkets and toys, and the Japanese brand Sonny Angels was one of the most popular.
Sonny’s angels—three-inch-tall naked cherubs that appear in blank boxes—hovered in Van’s mind. He was inspired by blind play, but with a “designer” approach. In 2015, Pop Mart collected ideas from its customers by asking on social network Weibo which characters they would like to see.
“Molly, Molly, Molly,” Lou’s comments read.
Molly, the brainchild of designer Kenny Wong, is a girlish character with emerald eyes and a permanent pout. In 2016, Wang flew to Hong Kong to meet Wong and signed him as Pop Mart’s first artist. As a result of the deal, Pop Mart received exclusive rights to Molly.
“We push designers and artists forward, rather than hiding them behind characters,” Lu said.
Wong was also nominated as a shareholder in Pop Mart. In 2019, CEO Wang sold Wong got 2% of the company’s shares, which is worth about $127 million today. But other Pop Mart artists typically receive compensation in the form of a percentage of sales or commissions, Lu says.
Since signing Wong, Pop Mart has expanded its portfolio with even more up-and-coming artists, introducing new characters such as the confused little boy Dimo, the edgy humanoid Skullpanda, and the costumed duck Daku.
The company listed on the Hong Kong Stock Exchange in 2020 and today has a market capitalization of approximately $6.4 billion. Forbes estimates Wang’s wealth at approximately $3 billion.
Pop Mart’s artist-centric idea has resonated with fans in Asia. The brand has organized meet-and-greets for fans to have their items signed by artists, and fans go crazy at these events, Lu said.
“Loyal fans know that Kenny is Molly’s designer,” Lu said. “Do you know who the designer of Mickey is? [Mouse]? Nobody knows. Who is the designer of Kung Fu Panda? Nobody knows.”
Courtesy of Pop-Mart
Bubble Pop?
While most of the revenue comes from product sales, Pop Mart also licenses other companies to use their original characters in products or advertising. For example, the Crocs collaboration featured Pop Mart characters as Jibbits, while the Uniqlo collection featured Molly and others emblazoned on the Japanese fashion brand’s graphic T-shirts.
These license agreements go both ways. Pop Mart produces action figures in collaboration with major entertainment brands such as DC Comics, SpongeBob SquarePants, Harry Potter and The Big Bang Theory. But in 2023, these licensed IPs accounted for only 16.5% of Pop Mart’s revenue, while original artist productions accounted for 76.5%.
According to Lu, the repurchase rate of Pop Mart products in China is very high.
“If you’re standing in a store, you’ll find that there are a lot of customers there who finish paying, then unpack it and check it out, and then come back to pick another one and buy it,” he said.
But while fans’ social media posts showing rooms full of Pop Mart products are a testament to the brand’s strength, it’s also a cause for concern.
“If their room is full of food, do they buy more?” – Lou said. “We are not sure”.
That’s why Pop Mart is diversifying its revenue streams into games, animation and theme parks. Pop Mart launched an official mobile game in May 2023 and opened the doors of its Pop Land amusement park in Beijing in October.
Pop psychology
Pop Mart fandom is growing in the US. One of Pop Mart’s “childish” fans is 23-year-old Alyssa Tan, a resident of San Francisco. content creator which specializes in video unpacking. (Tan received promotional gifts from Pop Mart in addition to purchasing them herself.)
“In everyday life, nine to five, life can be boring sometimes,” Tan said. “But I get a rush 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-long Uber ride from San Francisco to shop there.
“There were all the people and their mothers,” she said. “It was packed.”
Tan, who owns about 30 Pop Mart items, said she can feel the care put into the design of each figure, as well as its durable quality. She also turned blind unboxing into socializing with her friends, sometimes purchasing and opening them together.
“It almost brings out the child in me that I can’t express right now,” she said. “So I express that by unpacking them.”
Economists have long theorized about the lipstick effect—the idea that consumer spending on small indulgences like lipstick increases during recessions. According to Tan, Pop Mart’s numbers have a similar effect: a little luxury in a time of monotony and uncertainty.
“It’s just a little pleasure,” she said. “It’s not too much, but it gives you that dopamine you need.”