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Pop Mart: Hot money or the future market?

Michelle Liang

March 15, 2021

Photo by Pop Mart

Pop Mart, a leading designer toy (or art toy) brand from China, IPO-ed in Hong Kong on 11 December 2020. Pop Mart had originally priced its shares at HK$38.50 (US$ 4.97) per share, but its share price quickly doubled to HK$77.10 (US$9.95). By end of the trading day, its market value reached at least US$14 billion and broke the record as the best-performing debutant for deals over US$500 million in HongKong.

Pop Mart store (Photo by China Daily)

The “blind box”

Pop Mart’s unique selling point is its “blind” toy boxes, which look the same on the outside but contains different toy figurines from popular artists and designers around the world. The feeling of uncertainty, delight from discovering the unique design of their figurine, and desire for collection stimulate customers to buy the blind box again and again.

PopMart Molly Series (Photo by Pop Mart)

What’s Pop Mart’s secret?

Founded in 2010, it was not easy for Pop Mart to grow from a niche market to mainstream pop culture. Before 2015, Pop Mart was a toy retailer, and had no real competitive advantage. In 2015, a partnership with Sonny Angel, a popular Japanese pop toy maker, inspired CEO Wang Ning to transform the company to an IP owner, and more importantly, kickstarted its journey of creating an art toy ecosystem.

According to global asset ranking firm Hurun, PopMart's capacity in building its own intellectual property supply chain (IPsourcing, IP operation, production and customer access) has contributed to its sudden surge in the retail and entertainment sectors. It cooperates with famous artists and designers around the world to acquire and operate their IPs. ByJune 2020, the company had a total of 93 IPs, comprising 12 proprietary IPs, 25 exclusively licensed IPs, and 56 non-exclusively licensed ones.

Pop Mart’s Own IPs (Photo by Huxiu)

In terms of the customer access, they offer both offline (retail stores, online shops and vending machine) and online platforms (PC Retail platform and Mobile App). To build brand awareness, Pop Mart also holds toy shows in Beijing and Shanghai, where they showcase international arttoy brands and artists, and also facilitate their collaborations. For fans, it has become a good opportunity to meet beloved artists and purchase special designer toys.

ShanghaiToy Show (Photo by Toyshow China)

Will this success continue?

Pop Mart currently dominates the toy market in China with its integrated platform covering the entire industry chain. According to Frost & Sullivan, the designer toy industry increased rapidly in the past five years and the total market size is estimated to reach US$44.8 billion in 2024, with 17.7% CAGR from 2019 – 2024.

Global designer toy market size from 2015 – 2024 (billion US dollars), Photo by Hua Chuang Securities

However, with more designer toy competitors and imitators expected in the next five years, can Pop Mart still win with its IP creationand operation capabilities? How they ensure they source and commercialize the right and new IPs to meet customers’ increasing expectations will be key. Whether the current interest in their shares is simply hot money, or if it represents the future of the consumer market is anyone’s guess. Even Pop Mart itself is trying to find the next “Molly” (their most popular IP). Customers trends come and go, and players in the designer toy market will have to continuously find novel ways to keep existing designer toys fan engaged and attract new customers.

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