Despite being cute and quirky, Pop Mart blind box toys have become popular in the late stages of the pandemic. However, Chinese state media suddenly issued a statement calling for strengthened supervision of blind box toys, causing Pop Mart’s stock price to plummet by over 5%. Experts have analyzed the reasons behind this development.
Pop Mart, officially known as Beijing Pop Mart Cultural Creativity Co., Ltd., primarily produces IP dolls and blind box toys. The randomness and uncertainty of blind boxes increase consumers’ anticipation when opening them, making it easy for consumers to become addicted to collecting such items.
IP refers to intellectual property based on specific characters or images. These characters usually come from animations, comics, games, etc., with unique designs and story backgrounds.
On June 14, CCTV, the Chinese state broadcaster, issued an article titled “LABUBU in high demand! Chinese trendy toys, how are they trending globally?” The article highlighted Pop Mart’s IP doll Labubu as a popular blind box toy, reflecting global recognition of “Made in China.” The article praised Labubu for its multiple enabling qualities that are driving its rapid international success, branding it as a pioneer of Chinese brands going global.
However, on June 19, the Chinese Communist Party’s official newspaper, People’s Daily, published an article with a significantly changed tone, criticizing the obsession with blind box cards and the irrational consumption behavior among children. The article pointed out that some children spend hundreds or even thousands of RMB on rare cards, falling into the “commercial trap” of blind box cards which have become a form of social currency.
Though the article did not directly name Pop Mart, the criticism from state media towards the phenomenon of blind boxes, followed by a call for enhanced supervision, led to a more than 5% drop in Pop Mart’s stock price in Hong Kong on the 20th, continuing the previous day’s 5.3% decline.
The news has sparked discussions online. Netizens commented that “once criticized by state media, it’s bound to face losses. Scalpers who hoarded Pop Mart products are now suffering heavy losses. Nowadays, supporting something doesn’t necessarily lead to growth, but being criticized definitely results in a decline.”
Previously, the Chinese government had a mixed stance on blind boxes. In 2019, official articles mentioned the trend of these toys as an industry going global, entering various countries.
Pop Mart’s toy sales overseas soared in 2024. The company reported that its total sales in 2021 (mainly domestic) amounted to 4.49 billion RMB (624.6 million USD). In 2024, overseas sales alone exceeded 5.1 billion RMB, marking a 373% increase from the same period the previous year, while mainland China’s sales rose to 7.97 billion RMB.
By the end of last year, Pop Mart had established 130 physical stores abroad, including in the North American market. The North American market accounted for 14% of its international revenue last year but is rapidly becoming a key market. In the first quarter of this year, the US market revenue increased by nine times, surpassing growth rates in other regions. The company plans to double its number of US stores to over 40 by the end of the year.
Political commentator Li Lin believes that the Chinese policy towards Pop Mart toys is contradictory. While the government criticizes blind boxes, claiming to protect minors, why are these products freely exported? Many minors in Western countries are also purchasing them. During the Wuhan outbreak, flights from Wuhan within China were suspended, but flights to other countries were not, revealing similar inconsistencies.
Li Lin also suggests that the recent crackdown on blind boxes and cards under the guise of protecting Chinese children may have ulterior motives. To genuinely benefit these children, the Chinese government should invest more in various policies for them, such as subsidies for education and entertainment. However, such measures are currently lacking.
“In essence, one reason behind the crackdown on Pop Mart is that industries like blind boxes are not what the Chinese government desires at the moment. China is busy competing with the US in high technology, requiring support for chip and manufacturing industries. Apart from these specific industries, the emergence of other sectors could divert private investment attention, which the Chinese government aims to avoid.”
Xu Zhen, a senior figure in the Chinese capital market, mentioned in an interview with Dajiyuan that IP dolls incorporate second-dimensional culture, attracting children to purchase them. However, this culture contradicts the indoctrination by the Chinese government. When such a trend forms among children, it deviates from the government’s indoctrination requirements and poses risks to businesses.
It’s worth noting that the recent crackdown doesn’t only target Pop Mart but also other entities like Maotai liquor. In May, the Chinese government issued a new liquor ban to crack down on the so-called “eating and drinking wind.” According to Xu Zhen, people in China cannot engage in eating, drinking, or entertainment without restrictions.
“From birth to death, the Chinese government wants to control everything.”
Xu Zhen believes that this reflects a deeper decline in the Chinese economy amid ongoing deflation. Therefore, the government advocates for people to endure hardships, refrain from extravagant consumption like drinking, and just ensure basic needs are met. The government is preemptively setting up this framework.
Wang He, a columnist for Dajiyuan, also points out that China suffers from insufficient overall consumption. Normal consumption and investments in areas like education and culture are low, whereas there is excessive consumption in certain sectors such as Maotai liquor and children’s products.
Wang He believes that the Chinese government’s stringent policies against such industries will likely cause significant losses for many businesses and consumers. The government occasionally creates economic hotspots to attract substantial capital. For business operators in China, it’s essential to access diverse information and understand the Chinese government’s policy layout.