Pop Mart — China’s Disney, or a manipulated hype? China’s New Consumption #2
Seriously, what on earth is Labubu?
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While investors continue to question the strength of Chinese consumption amid lingering deflationary pressures, it's ironic that some of the best-performing stocks in the past year have been in so-called “new consumption” — discretionary consumer brands that resonate deeply with Gen Z and younger demographics.
They’ve even outshone China’s media darlings of 2024 — the “Six little dragons,” a group of Hangzhou-based AI startups led by DeepSeek. But in the secondary market, the real winners are arguably the “Three sisters”: a trio of such new consumption brands that have surged on the Hong Kong Exchange — Mixue, Pop Mart, and today’s spotlight, Laopu Gold. (We’ve written about every one of them over the past year.)
This is exactly why “new consumption” deserves attention — not as a macro beta play, but as a hunt for alpha. It’s about finding those rare, structurally advantaged opportunities that can deliver outsized returns and long-term growth in China. And that’s what this newsletter series is about.
Today, let's talk about Pop Mart -- but not through a DCF model. To understand the billion-dollar secret behind Pop Mart, you don’t need a calculator—you need to understand the strange, obsessive psychology that drives a global frenzy for a mischievous, buck-toothed creature named Labubu, a toy that has A-listers like BLACKPINK's Lisa, Rihanna, and even the Beckham family clamoring for more.
The company's rise began quietly back in 2024, while most headlines were still focused on China’s “gloomy macro.” Suddenly, Pop Mart became one of the best-performing Chinese stocks, and more surprisingly, one of China’s most successful “going global” stories. At one point, some even called it the next Disney. In the face of that ambitious goal, the CEO answered with an even bolder vision: "We hope that people don't call us China's Disney, but one day, the world's Pop Mart."
Since we first spotlighted it in our newsletter last August, Pop Mart has jumped over 590%. But when any stock moves that fast, skepticism kicks in. Investors — myself included — began to question the business model. After all, how can a company selling plastic toys with no backstory command this kind of market attention?
What is Pop Mart
Calling Pop Mart a plastic toy company, like aforementioned, is probably unfair.
Last week, I wrote about Laopu Gold, another rising star among China's "new consumption" brands, and explained why it's not a real luxury brand, despite comparisons to China's Hermès.
In contrast, Pop Mart looks much more like the real thing. Its margins were ~60% in 2023 and ~67% in 2024 — right in line with international luxury houses like Hermès (~70%) or LVMH (~67–68%).
And yet, it sells plastic toys, not precious metals.
So how does Pop Mart achieve luxury-like margins?
Pop Mart sells mystery boxes, or blind boxes — a type of product where the buyer doesn’t know which figurine they’ll get until they open the box. That Schrödinger mix of surprise and disappointment is the secret that hooks consumers. It keeps them coming back, again and again, to complete a set, or to chase that one favorite design edition.
Pop Mart has rallied more than 200% year-to-date, but debates are swirling: is this another short-lived bubble, or the real deal — a sustainable, global brand in the making?
Three debates & possible misconceptions
People just buy out of curiosity for the mystery box model. That novelty will fade.
The business model isn’t new. Pop Mart didn’t invent the blind box — it originated in Japan and has been popular for decades in China.
Most Chinese born in the '80s and '90s remember collecting cards or badges from Japanese anime. Just like Pop Mart, those collections had hidden rares that kept people buying repeatedly. (Even if one wasn't personally into it, chances are one had a classmate who was obsessed). For many, it was like how the previous generation born in the 60s and 50s in China collected stamps or commemorative coins — not just for fun, but with obsessive dedication.
Pop Mart's core product is hardly new, but the 87s-born CEO has grown up to make Pop Mart the first public company that has pushed such a model to extreme success. This sets it apart from numerous other private companies that have been pursuing similar models for the past decade, though none of these rivals have become as renowned as Pop Mart.
Pop Mart has been selling to a consumer base that has largely been present.
Why would anyone buy a toy with no story behind it? Isn’t that just mindless hype that will die down?
This was my biggest hesitation with Pop Mart last year. I couldn’t sympathize with people who would spend so much on a doll with no backstory.
Then, early this year, a good friend challenged me: “Weren’t you obsessed with Lina Bell too? How were you different from the people you claimed to be completely out of their minds?” (Lina Bell, Disney's pink fox IP, became hugely popular in China. The character was so sought-after that during pandemic lockdowns, people anecdotally traded food for Lina Bell dolls.)
She had a point. LinaBell, the pink Disney fox with the persona of a "curious detective," went viral in China, but has absolutely no movie, no show, no books — just vibes. I’ve always considered myself rational enough to resist commercialism, yet I bought 20 LinaBells. That’s when I immediately realized: just because we can’t relate to someone else’s pleasure — which is inherently subjective — doesn’t mean their affection isn’t real.
The same goes for BE@RBRICK, the Japanese-designed figurines with bear-like heads and modular bodies. No storyline, yet collectors in China went wild over limited editions, paying thousands of dollars. At one point, these collectibles were even seen as a symbol of affluence, just like a luxury Chanel or Hermès bag.
There are plenty of other examples. IPs with no storylines have been trending in China for years.
I came to realize that for many buyers, a storyline isn’t necessary. In fact, the absence of one might make these characters even more appealing. You can project anything onto them — your personality, your mood, your values. It will never go out of its character (unlike many human idols who might one day upset their fans).
Labubu, Pop Mart’s current superstar IP, is a perfect example. Our friend Yaling Jiang wrote an excellent piece in her newsletter Following the Yuan that explains this phenomenon: Labubu is intentionally ambiguous — genderless, raceless, expressionless. You can’t tell if it’s happy, sad, cheeky, angry — or even what animal it’s supposed to be. That ambiguity makes it universally relatable. With no fixed identity, anyone can see themselves in it.
Labubu’s resale prices are insane — this must be a Ponzi.
It does look wild: some Labubu figures now resell at 30x their original price on second-hand platforms.
The most extreme case was a recent auction at Yongle on June 10 — China’s premier auction house specializing in classical and contemporary Chinese art — where a minty green Labubu sold for a whopping 1.08 million RMB.
So it’s reasonable to ask: Is this only hype around manufactured scarcity?
Even if the affection is understandable, spending 30 times the original price to get one on the second-hand market? The utility just doesn’t add up. (This was my second hesitation with Pop Mart.)
At one point, I wondered if people were only buying them out of a sense of vanity driven by perceived scarcity. That may be true for some. But when you actually observe how people engage with these toys, you start to see something different.
For instance, last night, after dinner with a friend, we accompanied her little sister—who just turned 19—to wander around a shopping mall. She ended up buying seven mystery boxes in one evening (not Pop Mart, though). When she opened the one with her favorite figure (I thought it was a penguin with blue hair; I'm too old to tell), the smile on her face was so genuine that I realized I hadn’t seen that kind of joy in a while, at least not among people in my own circle (unfortunately).
After leaving the mystery box store, I saw around twenty young girls sitting just outside the mall, sorting through their purchases and hoping to trade the figurines they didn’t like for ones they preferred. When they spotted my friend’s little sister, they casually said hi and asked if she wanted to trade. What followed was a cheerful exchange of thoughts on why each of them loved—or didn’t love—a particular character.
That was the moment I understood: while the appeal of collecting figurines may not resonate with me personally, it offers genuine joy to its enthusiasts. In a nation of 1.4 billion, it only takes one "compulsive collector" per thousand people to create a formidable consumer market the size of a small country.
I chatted with her a bit. She owns a sizable collection of limited-edition figurines (which is also common among her friends), and some have tripled or even quadrupled in price since she bought them, but she never considered selling. Utility was never part of the equation.
And going back to Labubu, I tried to put myself in the shoes of those who love it — and honestly, why not? To some, it might look “ugly” in a harmless, almost goofy way. But those who love it, love it unconditionally — without needing a reason or utility to justify it. Isn’t that exactly the kind of emotional value many grown-ups are missing in today’s society?
It’s also become a form of self-expression. There's now a whole new "industry" around making clothes for Labubu — and it's actually a profitable niche in China. On Red Note, tons of creators handcraft outfits for it and sell them for premium prices.
As I see it, Pop Mart taps into what psychologists call simple pleasures — small, immediate sources of joy that give us emotional relief in an otherwise stressful, hyper-performative world. Our lives today are overly curated, too polished. We’re constantly managing impressions and optimizing outcomes. But Labubu, with its “rough beauty” — a face many say is ugly — offers a kind of freedom. It’s weird, unapologetic, and doesn’t ask to be understood. That in itself is relaxing. It lets people project their quirks, moods, even frustrations onto it.
(But of course, this is me trying to rationalize others' affection. I would love to hear what my audience genuinely feels about Labubu, especially the non-Chinese consumers.)
Even if, at the end of the day, it’s just the pursuit of vanity — isn’t that still a genuine emotional need of being human that can be monetized?
Signs of overheated hype
That said, there are definitely signs of overheating.
At this point, quite a lot of opportunists have already made a living by selling second-hand Labubu figures online. Scalpers are pulling all-nighters to wait for the store's opening, and using technology, like automated scripts, to secure products immediately upon release. They’re just hype riders, acting purely out of speculation.
Others don’t even like it but buy it as a safe gift option — a kind of social currency, especially after celebrities started posing with Labubu next to their luxury bags.
Yesterday, I noticed that all the second-hand luxury stores in my neighborhood had replaced their Hermès and LV displays with Labubu figures in their storefront windows. Later that evening, I passed a Pop Mart vending machine where two guys were being pulled apart by security — one of them looked like a scalper trying to hoard the last boxes of Labubu, except they were already sold out.
So yes, it’s overheated.
These are hype chasers — and they’ll be the first to exit when the buzz dies down. What’s more concerning is that hype chasers are starting to outnumber the genuine fans, creating artificial scarcity in the market.
How is Pop Mart doing so far? A look at our tracked sales data
The real question isn't whether the mystery box model or IP monetization is sustainable — it likely is, because these business models have existed for decades. What really matters is whether Pop Mart can continue launching new hit IPs in the long run — or even expand into content creation and develop stories that deeply resonate with people, like Disney did.
Some claim Pop Mart is nothing more than a capital-manipulated scam, which is bound to fade eventually. And sure, that’s not entirely wrong. But to some extent, every idol—whether human or virtual—is some combination of creativity and capital operation. Most will fade eventually. But that doesn't mean they can’t bring genuine joy to fans (and return on investment) in the meantime.
In many ways, Pop Mart operates just like an idol agency in the entertainment industry. Each figurine has a limited lifespan, and the company needs to constantly scout and “train” the next superstar.
From that perspective, Pop Mart’s model isn’t new. It blends three well-established concepts: mystery box mechanics, IP fandom, and heavy marketing. What is new is that Pop Mart is the first company to successfully package this model for the capital markets — a space where, percentage-wise, more people follow an analytical mindset and tend to prioritize rationality and utility. That’s precisely why some may have initially overlooked Pop Mart’s rally — myself included.
Earlier this year, I seriously considered shorting Pop Mart. But if your short thesis hinges on the idea that people will eventually wake up and realize they're paying for "plastic with no value," you might want to think twice.
My personal view is that I wouldn’t go long Pop Mart right now — it’s too clear to assume that the company can sustainably produce IPs as successful as Labubu going forward. At current prices, the risk-reward just isn’t compelling.
To be honest, I still don’t personally buy into this business model for the long run (if no further product/content innovation)— it could end up like another BE@RBRICK or celebrity-backed NFT. That said, shorting it outright is risky too, because the hype doesn’t seem to be dying down anytime soon.
According to our tracked offline sales data: