- Government concern: On June 20, China’s state-run People’s Daily warned about the addictive nature of “blind-box” toys (like Labubu) and collectible card products aimed at children under eight years old.
- Proposed rules: Requirements under discussion include:
- Age verification at point of sale
- Parental consent for online purchases by minors
- Why it matters for Pop Mart: Although the editorial didn’t name Pop Mart specifically, it clearly targeted brands using scarcity and randomness to sell products—exactly the model behind Pop Mart’s blind-box strategy.
- Market reaction: Pop Mart stocks dropped 12.1% in the week ending June 20—their worst weekly loss since late 2023—wiping out much of a prior 600% rally. They have since rebounded near all‑time highs.
- Analysts’ take:
- Limited impact anticipated, as Pop Mart’s core customer base consists of adult Millennials and Gen Z consumers with purchasing power.
- The company has also diversified beyond China: in 2024, about 39% of revenue came from Hong Kong, Macau, Taiwan, Asia, and North America. It now operates 90 physical stores and vending machines in the U.S., and North American revenue surged over 550% year‑on‑year.
- HSBC forecasts international sales to more than double in 2025 to ¥14 billion, potentially making overseas markets the majority of Pop Mart’s revenue.
- Challenges ahead:
- Delivery delays caused public apologies.
- Counterfeiting remains a problem—over one million fake Labubu dolls were seized at the port of Ningbo in the first half of 2025.
- Long-term strategy: To retain relevance, Pop Mart is expanding its intellectual property portfolio, launching pop‑up stores, animation studios, and even exploring theme-park experiences—ambitious moves requiring heavy investment and new capabilities.
China’s proposal to regulate blind-box toys signals possible tighter domestic scrutiny, which briefly rattled Pop Mart’s shares. But analysts believe the impact will be limited—thanks to a strong adult collector base and rapid international expansion. Still, Pop Mart faces operational obstacles like delays and knockoffs, and is responding with broader strategic diversification.
