Labubu's mega mark-ups make Pop Mart a $66 billion export giant

West Australian

2 days ago

Forget electric vehicles or fast fashion. The driver of some of China's biggest retail profit margins is a plush, pointy-eared, serrated-tooth monster called a Labubu.
Labubu, Beijing toymaker Pop Mart International Group's star character, is fuelling a global collectibles craze. The company posted a gross profit margin of nearly 67 per cent last year, among the highest of Chinese firms with major international reach.
By comparison, homegoods and toy retailer Miniso Group's margin was about 45 per cent, while consumer electronics maker Xiaomi and EV powerhouse BYD came in around 20 per cent.
What began as a niche toy obsession among young Chinese has exploded worldwide, with a human-sized Labubu auctioned for up to $US150,000 ($230,000) in Beijing and fans queuing for hours outside Pop Mart stores from Sydney to Los Angeles ahead of new releases.
Celebrities like reality star Kim Kardashian and Lisa, of K-Pop mega band Blackpink, have showcased their Labubus, only heightening the doll's cult status. Even actor Brad Pitt and the cast of his new film F1 The Movie filmed a TikTok video unwrapping the toys while promoting the project this month.
Morgan Stanley now calls Pop Mart one of the world's fastest-growing global brands on record, and it has a market value of about $US43 billion ($66b). Shares have soared 182 per cent so far this year. Overseas sales will exceed domestic in 2025, the brokerage says.
The phenomenon marks a rare mainstream breakthrough for Chinese pop culture in Western markets, long dominated by giants like Walt Disney and Hello Kitty owner Sanrio. Pop Mart is riding the global collectibles trend fuelled by social media toy 'hauls' and unboxings, while also flipping the traditional retail model: It keeps manufacturing costs low and sells mainly through its own stores, relying on a direct-to-consumer strategy that cuts out middlemen.
There's 'a growing tendency for consumers to seek fragmented, instant and affordable 'dopamine' — sources of happiness — in the age of mobile internet and social media,' said Chen Luo, head of China consumer research at BofA Global Research. 'We believe such trends are going to sustain in the mid-to-long term.'
Many toys are priced higher in Western markets than they are at home in China. Pop Mart can command margins of up to roughly 75 per cent in the US, even with tariffs, Morgan Stanley said, projecting that sales in North America will match China's by 2028-2029. Pop Mart's sales will rise to $US6b in 2027, a more than 500 per cent increase from 2023, the brokerage estimated.
Labubus come in various sizes and dozens of outfits and accessories, enticing fans to collect them all. Pop Mart sells many of its toys in so-called blind boxes, where buyers don't know which figure they're getting — leading to repeat purchases in pursuit of specific characters.
One keychain-sized Labubu blind box is currently offered online at 99 yuan ($21) in mainland China, compared to $US28 in the US.
Pop Mart's rapid success in the West stands out amid growing trade tensions, as it avoids export restrictions that have challenged Chinese firms like Huawei Technologies. While Chinese EV makers saw their first annual sales decline in Europe in 2024 due to trade friction, Pop Mart has expanded its global footprint with little political resistance.
Pop Mart didn't respond to an emailed request for comment.
Consumers across the US, Europe and Australia are lining up for the chance to flaunt their latest Labubu purchases on TikTok and Meta's Instagram. The craze is proving resilient despite rising living costs and trade tensions.
Pop Mart's Western expansion is capitalising on that demand, with more than 70 per cent of its sales in Europe and the US now coming from local consumers — rather than Chinese expats or tourists — according to a China Merchants Securities International note.
America revenue soared about 900 per cent year-on-year in the first quarter of 2025, while Europe surged by roughly 600 per cent in the same period — outpacing the approximately 100 per cent growth seen in mainland China, Pop Mart said in an April business update.
Overseas business is proving more profitable, too: Gross margins were about seven percentage points higher than those in mainland China. Markets outside the mainland accounted for nearly 39 per cent of the company's total revenue at the end of 2024.
By that point, the company had opened more than 100 stores outside the mainland, including an experiential outlet at Paris's Louvre Museum and a K-Pop-themed space in Seoul.
Pop Mart plans to open around 100 outlets outside the mainland in 2025, the company said on its official WeChat account in March.
Still, Pop Mart's reliance on Labubu could risk becoming a vulnerability. Its other characters have yet to generate the same global mania, raising questions about long-term sustainability. Chinese buyers are already contending with soaring resale prices and a flood of counterfeits.
Pop Mart's shares dropped in Hong Kong in June after China's state media called for tighter oversight of blind boxes, raising concerns over the Labubu business. And unlike legacy intellectual property giants like Disney and Sanrio, Pop Mart's characters lack enduring storylines that can span generations.
'Pop Mart's business model relies on constantly replicating hit products — and it is overly dependent on one or two viral products,' said Chen Da, founder of investment consulting firm Dante Research. 'You will never know if some celebrity endorsements will be able to successfully deliver another product that goes viral.'
Bloomberg