Exclusive article by China's well-off network
Text: "Xiaokang", China Xiaokang Network, Sun Yuanyuan
The advantages of IP, supply chain and consumption potential have built the cornerstone of the rapid rise of the trendy toy market in mainland China. At present, Pop Mart has gone international and has become a representative enterprise in the field of global trendy toys.
Photo courtesy / interviewee
Recently, Bubble Mart, the "first stock of trendy toys", released its 2023 financial report, showing that revenue and net profit have reached a record high. For the whole year of 2023, Pop Mart will achieve revenue of 6.301 billion yuan, a year-on-year increase of 36.5%; The adjusted net profit was 1.19 billion yuan, a year-on-year increase of 107.6%.
With the development of parks, games, animation and other businesses, Pop Mart, which has grown up with "Generation Z", is stepping out of the definition of "trendy toys" and gradually growing into an IP operation group with strong influence.
At the Central Economic Work Conference held in December 2023, domestic "trendy products" have become an important starting point for actively cultivating new consumption growth points. According to the relevant parties, efforts will be made to expand domestic demand, and actively cultivate new consumption growth points such as smart homes, cultural and entertainment tourism, sports events, and domestic "trendy products". In March 2024, the "Government Work Report" issued by the National People's Congress and the National People's Congress was reaffirmed again.
As an important source of residents' consumption increment, domestic "trendy products" are highly valued, and the trendy toy market has broad prospects. According to the "Toy Industry Development Report (2023)", the global market size of toy is expected to reach nearly US$40 billion in 2023 and US$44.8 billion in 2024. In mainland China, the compound annual growth rate of the industry is expected to reach 24% from 2022 to 2026, and retail sales will reach 110.1 billion yuan in 2026.
The per capita GDP of the mainland has exceeded 12,000 US dollars, and it has entered the stage of cultural and entertainment explosion. From the big data, it can be seen that from 2016 to 2022, the absolute value of the operating income of the mainland's cultural and related industries increased from 8,031.4 billion yuan to 165502 billion yuan, and the pan-entertainment market size exceeded 1 trillion yuan, and is expected to exceed 2 trillion yuan in 2025, with CGAR reaching 14.6%. This has undoubtedly led to the rapid rise and growth of Chinese trendy toys on the international stage. The trendy toy industry in mainland China is entering the ranks of 100 billion industries.
What is the expansion strategy of Pop Mart in the international market? What are the main market layouts and future development priorities? "Xiaokang" magazine and China Xiaokang Network interviewed Mr. Wen Deyi, President of Bubble Mart's international business, to decipher the traffic password of Pop Mart's internationalization.
Multi-channel operation and group development
With the passage of time, the trendy toy culture has gradually broken the circle, and the market demand detonated by blind boxes has continued to grow, and more trendy toy stores have sprung up. These stores not only cover cute pets, e-sports, theme parks, etc., but also extend to advanced manufacturing and other fields.
Wen Deyi said that the improvement of Pop Mart's brand recognition is a core part of the internationalization strategy. Since 2018, with the deepening of the overseas strategy and diversified marketing activities, Pop Mart's global awareness has increased significantly. In particular, through strategies such as social media marketing, cross-border cooperation, and participation in and holding international exhibitions, we have successfully promoted Chinese trendy toy culture to all over the world.
In terms of the strategy of opening up new markets, Pop Mart has taken a more systematic and multi-layered approach than before. This includes market research to gain insight into consumer needs and local market conditions, big data analytics to anticipate market trends, and building brand reputation through digital marketing and social media presence. "Compared with before, Pop Mart pays more attention to the integration of local culture and the innovation of consumer experience when opening up new markets. This change is reflected not only in sales strategies and marketing tools, but also in the adaptive improvement of product development and service models. Wende said.
Compared with the hot scene of "everything can be blind box" in the previous two years, today's trendy toy manufacturers are trying to "borrow" IP stories and offline parks to retain more young people. Behind the "racking of brains" of trendy toy stories, the market is becoming more and more volatile. The offline business of the tide toy business representative will feed back the online business, which is an important part of the company's realization of the closed loop of traffic.
In September 2023, Bubble Mart Park landed in Chaoyang Park in Beijing, and this breakthrough transformed the IP of Bubble Mart from a static toy to a dynamic image. According to reports, Bubble Mart City Park received nearly 100,000 visitors in the first month of its opening, of which 47% were 18~34 years old. The average time of visitors in the park reaches 4.32 hours, of which 14:00~16:00 is the peak time of the whole day, and the "Gathering Event" puppet show staged at 16:00 every day has become a "must-check" item for most tourists.
The park focuses on scene-based consumption, and its core value is "companionship", which stimulates the resonance of consumers through the creation of environment and atmosphere, so that consumers can feel the IP immersive experience of "emotional resonance" in the purchase process. At present, the proportion of match-2 in Bubble Mart City Park has reached 72%, mainly from shops and restaurants. The sales of IP derivatives in the park accounted for 5 times that of stores, and the most popular plush and backpack styles were out of stock in just a few days. Among the top 10 products sold in the park, LABUBU's single IP SKU accounts for as much as 50%, which is significantly higher than that of stores. According to the communication data of the whole platform, affected by the opening of the park and other factors, the amount of discussion on LABUBU has doubled compared with before, and LABUBU has become a star on social platforms.
Although Pop Mart has established a high level of brand awareness, brand science is still an important step to enter new markets. This involves educating dealers on brand training, market positioning, and consumer preferences to ensure that brand values and product characteristics are effectively communicated.
"At the moment we are not in a hurry to make a profit, but it seems that the profitability is okay right now, and the size of the park's revenue, at least the first park project, will not have a particularly significant proportion of the overall group's revenue scale," Wendeyi said. The value of the park to Bubble Mart should be viewed in a longer time dimension. At first, it was generally believed that offline was going downhill, online was the future, and investing in parks was a heavy asset. Why do we care about offline? In our opinion, offline is actually a very good cultural space. A truly excellent brand must not only be limited to selling goods, but must also convey a certain culture. This culture must be very three-dimensional to be better - including lighting, environment, services, products, etc. ”
International Journey Wen Deyi, President of Pop Mart International, believes that no matter how far "going to sea", the profound cultural heritage is always the confidence of Chinese brands. Photo courtesy / interviewee
Overseas business revenue exceeded 1 billion yuan
Starting from the first half of 2022, Pop Mart's overseas strategy has shifted from To B to DTC mode. DTC stands for Direct To Customer. If DTC is just a pre-tentious charge to test the market, then the creation of overseas independent stations is the second step of Pop Mart's internationalization, using offline immersive business experience to cultivate enough cognition and consumers, and reaching more effective users and consumers through online business, so as to complete the cycle.
According to the "first look" rule, the industrial design and aesthetic expression of IP and products must resonate emotionally within the first three seconds of the consumer's sight of the product. Therefore, Pop Mart focuses on creating an excellent offline store atmosphere and providing a friendly, immersive shopping experience. The exhibition is upgraded on the basis of opening a store, and creating a large amount of consumer demand by holding exhibitions and activities. The successful holding of the first overseas PTS International Trend Toy Fair in Singapore has laid the foundation for its expansion in the international market and brought more international exposure and attention.
In terms of opening up new markets, Pop Mart is very clearly positioned in the two keywords of "high potential and high growth", and adheres to the concept of "thinking localization, action localization" to continuously accelerate and promote global business. "Our expansion strategy is the result of data insights, which are developed in combination with external market insights and internal sales data analysis. In terms of the external environment, we will take into account the economic strength, culture and language, consumption habits, laws and regulations, business policies, size and competitive landscape of the target market. Through internal data, including TOB business and e-commerce business data, we can determine which countries we will focus on developing next. At the same time, we pay close attention to the voice of customers on overseas social media, and after the news of new products or new channels, we often see that many consumers want to open stores in their own cities, which is a very important market signal. Wendeyi said.
After establishing a foothold in Singapore, Pop Mart chose South Korea, which has a strong "gene" of trendy toys, and quickly opened two offline stores. Driven by the Singapore and South Korean markets, the brand influence of Pop Mart soon radiated to the entire Southeast Asian region, attracting partners from Indonesia, Malaysia, Thailand and other places to visit and sign contracts.
In 2023, PopMart will open 55 new offline stores in Chinese mainland, increasing the number of stores to 363; 123 new robot stores were established, increasing the number of robot stores from 2,067 to 2,190. In addition, Pop Mart continued the momentum of rapid development in Hong Kong, Macao, Taiwan and foreign markets by continuously expanding new markets and in-depth promotion of localized operations, with an annual revenue of 1.066 billion yuan, accounting for 16.9% of revenue, which is one step closer to the goal of rebuilding a "Pop Mart" overseas.
In the same year, Pop Mart offline stores entered France, Malaysia, Thailand and the Netherlands for the first time, and the single-day sales record of global stores was set several times. By the end of 2023, there will be 80 stores in Hong Kong, Macao, Taiwan and foreign countries (including joint ventures), and 159 robot stores (including joint ventures and franchises).
"In recent years, Pop Mart has always unswervingly implemented the two major strategies of globalization and collectivization, and in the face of the complex and volatile economic and social environment, it has maintained steady business progress, achieved revenue growth and sustained profitability, demonstrating strong organizational resilience. 2023 is a year in which the strategic achievements of Pop Mart have achieved initial results since its listing, and globalization and IP-centered collectivization have borne fruitful fruits: Pop Mart Park has landed in Chaoyang Park in Beijing, becoming the first immersive IP theme park in the trendy toy industry; The game business announced that it will be launched soon; Its youth contemporary art institution Inner Flow landed in Beijing's 798 Art District; The animation business is also in active preparation......"
He revealed that Pop Mart has been deployed in East Asia, Southeast Asia, Europe, America and Australia, and will continue to explore new overseas territories in the future. "For each market, we continue to improve our ability to communicate deeply with consumers and understand the market, which is the starting point for the team to set up different strategies in different regions. In order to adapt to and cooperate with the promotion of overseas business development strategies, the size of the overseas team has doubled compared with last year. At this stage, we mainly adopt the model of setting up subsidiaries and building localized teams overseas, responding to cultural differences according to local conditions, and at the same time combining IP, products, channels, brands and other departments to build a refined operation strategy in multiple dimensions to achieve performance growth. ”
Different from the development of the domestic market, the cost of trial and error for brands to "go overseas" is higher. For international business, "going overseas" is not simply copying domestic experience, but needs in-depth localization exploration to gain the recognition of overseas consumers step by step. In the future, the goal and strategy of Pop Mart will still be to rely on key IPs, tap high-potential artists at home and abroad, and assist its development around the international core strategy of "opening a good store", "running a good exhibition" and "producing good products".
In different countries and regions, how does Pop Mart adapt and integrate into the local culture? Wende mentioned that in September last year, the popularity of Pop Mart's first store in Thailand was eye-catching, but this success was not accidental, but the results and deployment of Pop Mart's internationalization strategy and deep cultivation in the local market, and also reflected the results of their in-depth research on the Southeast Asian market.
"This successful model is the result of our repeated implementation in various markets in Southeast Asia, as we achieved with our first overseas store in Seoul, South Korea. The Thai market's enthusiastic response to trendy toy culture represents a wide range of demand for trendy culture and innovative products in Southeast Asia. When entering a new market, Pop Mart not only attaches importance to product quality and design innovation, but also pays special attention to the culture and consumption habits of the local market. In Thailand, we have been able to advance the market through social media and partnerships with local influencers, which has generated a lot of consumer expectations. In addition, we take into account the local business environment and consumer preferences to create products that are culturally appropriate. This in-depth understanding of the market and the use of localization strategies are the key to the success of Pop Mart's first store in Thailand. Wen Deyi told "Xiaokang" magazine and China's Xiaokang Network.
From preparing to go to sea in 2018 to making small achievements in 2023, Bubble Mart International has completed the stage from 0 to 1, "the next stage from 1 to 100 will officially set sail." In 2024, we will explore more national markets, and increase the layout of offline stores, pop-up stores, robot stores and other retail formats to provide new and trendy products and services, so as to shorten the distance with global consumers." He revealed that Pop Mart will continue to develop around different cities in East Asia, Southeast Asia, the United States, Europe and Australia, the Middle East and other countries, such as Italy, Germany, the Netherlands, and Middle Eastern countries are all in the plan.
The profitability of core IP continues to increase
Pop Mart divides its own products into artist IP and licensed IP. On March 20, Pop Mart announced its 2023 financial report. ACCORDING TO THE FINANCIAL REPORT, THE REVENUE OF ARTIST IP ACCOUNTS FOR 76.5% AS A WHOLE, AND THE REVENUE IN 2023 WILL BE 4.822 BILLION YUAN, A YEAR-ON-YEAR INCREASE OF 32.5%, OF WHICH THE REVENUE OF SKULLPANDA AND MOLLY WILL BOTH EXCEED 1 BILLION YUAN, AND THE REVENUE OF SKULLPANDA WILL BE 1.025 BILLION YUAN, A YEAR-ON-YEAR INCREASE OF 20.3%; MOLLY's revenue was 1.02 billion yuan, a year-on-year increase of 27.2%; DIMOO's revenue was 738 million yuan, a year-on-year increase of 27.6%. The IPs launched by the Bubble Mart designer team PDC, such as Hirono Ono and PINO JELLY, have good revenue performance, with a year-on-year increase of more than 100%. The revenue of authorized IP in 2023 will be 1.036 billion yuan, a year-on-year increase of 88.2%.
It is worth noting that the classic IP of Pop Mart has shown long-term vitality: MOLLY has been born for 17 years, and it will still reach sales of 1.02 billion yuan in 2023; The "Temperature" series launched by SKULLPANDA at the end of 2022 has been sold for a whole year, with a total of nearly 400,000 sets sold, and the sales of a single series have reached an astonishing 314 million yuan; LABUBU, THE CHARACTER IN THE MONSTERS, SUCCESSFULLY GOT OUT OF THE CIRCLE THROUGH PERFORMANCES IN THE CITY PARK, WITH AN INCOME OF 368 MILLION YUAN, A YEAR-ON-YEAR INCREASE OF 39.9%.
Talking about how Pop Mart excavates, cultivates and promotes IP in terms of IP operation, Wen Deyi said that Pop Mart's overseas product line covers a wealth of its own IP and well-known IPs at home and abroad. "Our own IP, as well as our IP products in collaboration with well-known brands and artists at home and abroad, together make up our rich and diverse global product portfolio. The layout of these products in overseas markets is designed to meet the diverse needs of global consumers for trendy toy culture. ”
In the process of product and IP selection, Pop Mart puts the cultural background and consumer preferences of the target country and region in the first place. "This is reflected not only in how we pick the right IP for a particular market, but also in how we adapt our product design to suit local culture and aesthetic preferences. The success of the original IP not only demonstrates the strong innovation and design strength of Pop Mart, but also proves that our brand and products have a wide range of attractiveness and competitiveness in the global market. At present, the ratio of Pop Mart's original IP in overseas markets to large copyright cooperation IP is about 7:3. ”
From a longer-term perspective, Pop Mart hopes to create a more international IP system, more multi-dimensional marketing and brand marketing, and a more refined operation strategy, presenting a diversified IP product portfolio and a brand mentality that touches the hearts of consumers on top of Made in China. Wendeyi insists that overseas expansion is its unswerving strategy, and becoming the world's leading pop culture and entertainment company is the brand vision of Pop Mart.
In the process of internationalization, how does Pop Mart inherit and promote traditional Chinese culture through its products and activities? In the process of internationalization, how to balance the relationship between tradition and modernity, local and international? Wendeyi feedback: With the active expansion of Bubble Mart in the global market, these products with rich Chinese cultural heritage have been widely welcomed, such as SKULLPANDA ink plum in front of the court, and the Dragon Yin Xianrui series launched in the New Year of the Dragon, which have become the most popular products overseas in the same period. These products not only demonstrate the aesthetic elements of Chinese culture, but also successfully attract the attention of global consumers and become an important carrier of Chinese cultural communication.
In the context of globalization, overseas markets with high acceptance of Chinese cultural elements and content mainly include countries and regions with strong interest in Asian culture, such as Japan, South Korea, Southeast Asian countries, and European and American countries that are open to cultural diversity. In addition to product design and sales, Pop Mart has also taken a variety of ways to help spread Chinese culture globally, including but not limited to content marketing on digital media and social networking platforms. "We will enhance the visibility and attractiveness of Chinese cultural elements products on a global scale through overseas KOLs and well-crafted content, such as the introduction of the story behind the scenes, the interpretation of cultural implications, etc. Through PTS International Trend Toy Fair and other platforms, we will display trendy toys with Chinese cultural characteristics, and directly show the charm of Chinese culture to overseas consumers. ”
Through these strategies and efforts, Pop Mart has not only promoted trendy toys with Chinese cultural elements in the global market, but also contributed to the international dissemination of Chinese culture. "We believe that through continuous innovation and diversified international market strategies, Pop Mart will further expand the influence of Chinese culture on a global scale."
It is not difficult to see from the data of various reports that China's trendy toy industry is in a stage of vigorous development on the world stage and occupies a prominent position. Trendy toys originally sprouted in the United States and Japan, as a derivative of Japanese comics and American comic movies, domestic trendy toys manufacturers mainly do foreign OEM, and have not formed a brand and scale, but as Chinese trendy toys enter the field of vision of more and more local players, the public's acceptance of China's local trendy toys is gradually rising. Nowadays, the volume of China's trendy toy market has surpassed that of Japan, and the offline PTS International Trendy Toy Exhibition held by Pop Mart has been internationally praised as "the industry's new trend benchmark".
"We use trendy toys to empower culture, help Chinese culture go overseas, and build cultural confidence and soft power that belongs to China. We hope to stand on the world stage to demonstrate the national and cultural self-confidence behind the popularity of trendy toys. Wendeyi further said.
("Xiaokang", exclusive article of China's well-off network)
This article was published in the late April 2024 issue of Xiaokang