Pop Mart’s Big Play: How a “Blind Box” Maker is Redefining China’s Toy Economy

An airport transfer in Kuala Lumpur is not usually seen as an opportunity to pick up a full set of the latest release from a toy company, but it was for Jacob Danzi, an avid collector of Pop Mart’s mischievous elf-like Labubu dolls. “When a friend was in Bangkok, they saw the set on sale and knew that I wanted them,” says Danzi. “He is from KL and I knew I was transferring there a few weeks later, so I could pick them up while I was on my way through.”

Stories of people going out of their way to collect the dolls are why Beijing-based and Hong Kong-listed art toy company Pop Mart is considered to be one of China’s most compelling consumer success stories of the last decade.

What began as a niche purveyor of designer figurines has exploded into a cultural phenomenon, drawing a passionate base of collectors, producing celebrity-backed viral IPs like Labubu, and is now eyeing global expansion. The company sells its figures in a “blind box” format, where buyers don’t know which figurine they’ll get until after the purchase, and this has played a key role in its growth.

“Pop Mart tapped into something simple but powerful: the thrill of surprise,” says Alberto Vettoretti, Managing Partner at Dezan Shira & Associates. “The blind box format made buying toys feel like an experience, not just a transaction. That sense of discovery, paired with strong in-house IP development and a savvy retail strategy—including vending machines and vibrant store displays—turned toys into lifestyle products.”

But with China’s growing economic headwinds and increasingly fickle consumers, how sustainable is Pop Mart’s success?

Popping off: Pop Mart’s meteoric rise

Pop Mart’s financial growth has been nothing short of remarkable. In 2017, after launching its first original IP and artist-designed toys, the company reported revenues of ¥158 million ($22 million). This figure more than tripled a year later to ¥514 million and continued its rapid climb to ¥1.68 billion by 2019.

The company went public on the Hong Kong Stock Exchange in 2020, accelerating its expansion both domestically and internationally. In 2024, Pop Mart’s revenue reached an all-time high of RMB 13.04 billion—representing a 106.9% year-over-year increase—and has further increased in H1 2025, driven by booming global demand for its collectible figures and plush toys, especially the Labubu-led “THE MONSTERS” IP line.

The Mainland China market provides around 60% of the company’s sales, drawing in ¥7.97 billion in 2024, but Pop Mart’s influence in international markets is expanding, and quickly. Last year saw the company’s non-China market revenues surge by 375%, and these sales now account for 38.9% of the company’s total.

“Since its IPO, Pop Mart has remained focused on two consistent strategic pillars: international expansion and IP-driven group transformation,” says Lisa Zhang, Project Leader at Daxue Consulting. “These long-term priorities have helped it weather domestic market fluctuations while continuing to build a scalable brand ecosystem.”

Pop Mart has several key IP offerings, the biggest currently being THE MONSTERS, which includes the now ubiquitous plush toy monster elves Labubu. This line generated around ¥3.04 billion in revenue in 2024—up 726.6% year-on-year—and now accounts for just under a quarter of the company’s total income. Other key IP lines are MOLLY, a young girl figurine, SKULLPANDA, a “universal symbiont,” and CRYBABY, a childlike crying plush toy.

Pop Mart has a total of 401 brick-and-mortar stores in China, as well as 2,300 so-called Roboshops—vending machines—which sell the now-famous blind boxes. Outside of China, by the end of 2024, there were around 130 traditional retail stores and 192 Roboshops across 100 different countries, including flagship boutiques at locations including the Louvre in Paris, Oxford Street in London and Sun World Ba Na Hills in Vietnam.

While Pop Mart’s topline growth is striking, profitability metrics tell a more nuanced story. In 2023, Pop Mart’s net profit margin stood at 13.4%, compared to 15.2% at competitors Funko and 7.3% at Hasbro, all according to their company reports. Pop Mart’s operating cash flow has also shown volatility, dipping into negative territory during heavy expansion phases.

Meanwhile, the recent sell-off by Borchid Capital and other early investors highlights market uncertainty. This could be due to the large upfront costs of international store openings which can pressure margins for several years before breaking even. Investors will have to watch closely whether the company can maintain healthy free cash flow as it scales globally.

Talking strategy: scarcity and omnichannel sales

Pop Mart’s ascent is often attributed to its unique fusion of commerce, community and culture. By turning art toys into “emotional luxury” items, the brand tapped into a powerful generational desire for identity and healing through consumer expression. The blind box model also adds both scarcity and gamification to the experience, creating something of a retail lottery.

“The innovative blind box model can trigger collection and gambling-related instincts,” says Samuel Yan, Director, Client Development and Insights at Circana. “Some of the boxes have a hidden item rate of less than 1%, and this helps to generate feelings of both randomness and scarcity, which encourage repeat purchases.”

But it wasn’t just the element of surprise that set Pop Mart apart. The company embraced an omnichannel strategy from the start: flagship stores, mall kiosks and Roboshops across China created high-visibility retail moments, while online launches and fan communities amplified hype. Emotional storytelling was core to the appeal, especially with IPs like LABUBU and SKULLPANDA—characters seen not merely as toys but as extensions of personal identity.

“Pop Mart has been increasingly focusing on the products and types of entertainment that can provide younger generations with psychological and emotional comfort as well as emotional value,” says Jeff Zhang, Equity Analyst at Morningstar. “Many of the toys deliver an impression of both cuteness and mischief/rebellion, which resonates with people all over the world.”

Lisa Zhang adds that “Pop Mart tapped into an underdeveloped niche in China: the intersection of toys, art and self-expression.”

Pop Mart’s retail innovation stands out in both physical and digital realms. Physically, the company’s Roboshops have enabled low-cost, rapid deployment into new markets, often as a precursor to flagship stores. The placement of these machines also adds a level of spontaneity to shopping, making the brand present in potentially unexpected areas of urban life.

Digitally, Pop Mart is no less sophisticated. The company has utilized China’s social media platforms—in particular Xiaohongshu, Weibo and Douyin—for hype generation, unboxings and fan culture.

“Pop Mart is a master of digital-native brand building,” says Lisa Zhang. “It uses multiple platforms to foster anticipation around new drops, while gamifying the experience through blind box openings, trading groups and reward programs. The brand has even launched its own app to centralize community features and purchase tracking, turning buying into an ongoing journey rather than a one-time transaction.”

Unlike traditional toy companies that rely heavily on either licensed characters or functional play value, Pop Mart operates more like a lifestyle ecosystem. Its business model includes vertical IP integration, community building and a multi-format retail footprint. This allows it to nurture brand affinity in a way more akin to Apple than Hasbro.

Another of Pop Mart’s key achievements has been balancing mass-market accessibility with the cachet of collectible culture. Most blind boxes are affordably priced between ¥59–99, making them appealing as small indulgences even in tight economic conditions. Meanwhile, limited-edition releases and the low hidden item probabilities preserve scarcity, driving resale value and fan obsession.

This “lipstick effect” strategy—affordable luxuries in uncertain economic times—has paid off. As youth spending power shrinks, emotionally resonant and social media-friendly purchases have remained resilient.

“In economic downturns, people switch to more affordable luxury; they still want luxuries, but they just take different forms compared to traditional luxury items like LV or Gucci,” says Jeff Zhang. “While they might become expensive in secondary markets, Pop Mart’s major products are not so expensive in the primary market and are therefore still affordable for individuals.”

Pop Mart also avoided cannibalization by developing products for different customer segments: mass-market toys for casual buyers and larger, high-end figures or co-branded releases for serious collectors.

Labubu: the rise of “ugly-cute”

No IP exemplifies Pop Mart’s cultural clout more than Labubu. The mischievous, snaggle-toothed elven creature has become a symbol of China’s embrace of “ugly-cute”—where authenticity and quirkiness trump conventional beauty. And while large swathes of the popularity come from the country’s Gen Z population, there is a growing “kidult” trend in the market that toy producers are seeking to take advantage of.

“The popularity of Labubu shows that China’s toy market is changing fast and kidult has become a very important part of the industry and will continue to drive growth,” says Yan. “This rising trend illustrates that consumers prioritize ‌emotional healing and identity expression‌ over functionality.”

Labubu’s success is also a case study in the emotionalization of consumer products. Buyers describe their collections not in terms of utility, but in terms of stress relief, belonging and emotional identification.

“There has been a shift in young Chinese consumers’ values, moving away from polished perfection toward individuality, emotional complexity and “ugly-cute” aesthetics,” says Daxue’s Zhang. “Characters like Labubu embody a more nuanced sense of identity, resonating with Gen Z’s desire for authenticity and emotional storytelling rather than surface-level beauty.”

The IP question: one and done?

Pop Mart’s current reliance on LABUBU—like its earlier dependency on its MOLLY line—does raise questions about the durability of any one intellectual property in a fast-moving consumer market. Short product cycles, cultural fatigue and counterfeit erosion are very real risks.

“Single-IP success can be risky, but Pop Mart mitigates this with a wide and rotating portfolio,” says Vettoretti. “While Labubu is a current breakout hit, the company actively develops new characters through artist partnerships and fan feedback. They’re constantly testing the waters with trial releases and limited drops. Of course, there’s still the risk of fatigue, especially if the core fan base starts to feel oversaturated—but so far, their pace of innovation has kept things fresh.”

Pop Mart has ramped up investments in emerging IPs, both through internal design teams and external collaborations. The company reportedly aims to launch at least 4–5 new IPs annually, while enhancing potential across different forms of media through animation, mobile games and even theme parks.

“Because they are aware of the limited lifespan of certain products with a boom and fade cycle, they already have over 100 different IPs and several products in the pipeline,” says Jeff Zhang. “Arguably, the company’s biggest sellers can already be considered legacy products, but quantity is what is going to keep them going until they hit the next big thing. The IP industry features a lot of longtail income streams, some products are blockbusters and others contribute just a bit here and there.”

The company has begun experimenting with jewelry (Popop), gaming and immersive exhibitions, blurring the line between merchandise and experience. And this actually draws from its IP-forward model, which allows for scalability across categories, rather than limiting it to just toys.

“Pop Mart searches for global designers via toy expos and other art events while also leveraging its in-house team to use data to predict future trends and design potential IPs. The objective is to continue bringing freshness to consumers and to continuously refresh resonant experiences,” says Yan. “Some other potential measures to offset the risks of reliance on a single IP include co-creation with consumers, releasing TV shows or movies, collaboration with other industries such as mobile games, etc.”

Going global: beyond the China market

Facing a cooling domestic economy and rising competition, Pop Mart has begun to pursue overseas markets to continue its growth. The brand already operates more than 130 stores outside China, with plans to open 80–90 more across Southeast Asia, Japan, the US and Europe. Localization is key to this strategy. In some cases, that means tweaking product mixes or partnering with local artists. In others, it’s simply emphasizing universal themes—cuteness, nostalgia, rebellion—that resonate beyond China.

“Internationally, scaling requires strong localization—what works in China doesn’t always land abroad,” says Vettoretti. “They’ve been gradually expanding into key global markets through flagship stores and partnerships while navigating IP licensing rules and counterfeiting risks.”

Still, global expansion is fraught with challenges: different retail expectations, IP awareness gaps, and cultural sensitivities. There’s also increased scrutiny from regulators, especially around the perceived “gambling” nature of blind boxes.

In markets such as the UK, Belgium and the Netherlands, regulators have scrutinized or outright banned loot box mechanics—functionally digital blind boxes—in gaming, citing their resemblance to gambling and potential harm to younger consumers. A 2022 UK Government report found that 77% of young people in the country had been exposed to loot boxes, raising concerns about gambling-related behaviors. Should similar scrutiny extend to toys, Pop Mart could face restrictions on its signature model, raising questions about whether the blind box format is a durable innovation or a fad vulnerable to consumer backlash and tightening rules.

But despite these challenges, the demand for the products is clearly growing, evidenced by both rising international revenues and anecdotal stories.

“As recently as last week an Italian relative, having been randomly selected at an online raffle, drove for 3 hours to Milan at 5 AM, queued for a couple of hours together with an army of equally lucky winners, and finally managed to buy a few characters for a youngster who had been trying to get hold of one of the collectibles for months,” adds Vettoretti.

Challenges and competition: staying at the top

In an industry dominated by fleeting trends and fierce imitators, Pop Mart’s biggest moat is its fan base. Through limited-edition drops, loyalty programs, and community engagement, the brand cultivates not just consumers but collectors and communities. However, competition is rising fast. Upstarts like 52Toys and TopToy are replicating parts of Pop Mart’s model, and global giants like Sanrio and Disney are reasserting themselves in Asia. The barrier to entry is relatively low, making continual innovation essential.

“Domestically, saturation and blind box fatigue are real risks, especially as imitators flood the market,” says Lisa Zhang. “Moreover, it also faces operational challenges such as supply chain bottlenecks, scaling management systems and insufficient IT capacity.”

China produces more than 80% of the toys sold in the US, and while this concentration has historically offered cost advantages, it leaves Pop Mart vulnerable to supply disruptions from trade disputes, rising labor costs or geopolitical shocks. Any future decoupling between China and Western economies could complicate Pop Mart’s international ambitions, especially through the introduction of further tariffs or sanctions. Diversifying production bases—something Hasbro and Lego have both pursued by expanding in Vietnam and Mexico—may be necessary to ensure resilience.

The company also faces the risk of growing regulation at home, with Chinese state media in June reporting on potential tightening of blind box regulations, due to gambling associations.

There are also concerns over why, in recent months, some of the company’s founding shareholders have sold their stakes in the company. In May, Borchid Capital sold its 11.91 million shares for around HK$2.2 billion ($280 million). There are arguments to say that they may have chosen to divest given the massive profit they have made—almost quintupling their initial investment—but it also raises questions as to the firm’s longevity after the LABUBU wave subsides.

Looking ahead, Pop Mart aims to become more than a toy company. Analysts expect the company to evolve into a full-fledged entertainment IP player, leveraging content, gaming, fashion, and perhaps even AR/VR technologies.

“The other risk it faces is improperly handling its shift into other markets,” says Jeff Zhang. “Pop Mart is in a very initial stage of this transfer and it has to compete with legacy brands like Disney that also have some of the most popular IPs globally. It won’t be easy to succeed in certain markets where these giant brands are already present.”

Where to next?

For Pop Mart, success over the coming years will hinge on its ability to continuously refresh its IP portfolio, deepen emotional resonance with fans and expand globally without diluting brand identity.

“Its long-term success will depend on how well it balances creative innovation with operational scale, and how it localizes globally while staying culturally relevant in China,” says Lisa Zhang.

But for now, Pop Mart is holding onto its place at the top of China’s toy pyramid, and it absolutely has the opportunity to succeed.

“If they manage to maintain creativity and keep their community energized, the future looks promising,” says Vettoretti.