Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Okay, so let's see we're down on beat you now
Speaker 2: of K eleven. I think it's right around the corner.
Speaker 2: On a recent Wednesday afternoon, I headed to a mall
Speaker 2: in downtown Hong Kong to drop by one of the
Speaker 2: hottest shops in town. Oh good, there it is PopMart.
Speaker 2: PopMart is a toy store. It sells figurines, stuffed animals,
Speaker 2: and plush dolls. It was packed with shoppers who were
Speaker 2: there to buy one thing, a mystery box with a
Speaker 2: surprise toy in it, also known as a blind box toy.
Speaker 2: And as I was looking around the store, I saw
Speaker 2: a woman standing by a display shaking a box with
Speaker 2: one hand. I saw you shaking a box. What's that
Speaker 2: all about?
Speaker 1: It's about the feeling. For example, this one. I want
Speaker 1: to get this one right.
Speaker 2: Chasel Torres is visiting Hong Kong from a cow. She's
Speaker 2: shaking the box to try to figure out which character
Speaker 2: is inside. By the sound of it.
Speaker 1: Oh guys, this one is small, right, so mostly when
Speaker 1: you shake it it's like shakeable. And then if you
Speaker 1: get those big one, it's like they won't shake that munch.
Speaker 2: Chas Ol told me her fifteen year old daughter first
Speaker 2: started collecting PopMart dolls last year and now she's the
Speaker 2: one who's gotten addicted to blind box toys. Exactly what
Speaker 2: chase Ol weighs the blind boxes in her hand, and
Speaker 2: after shaking several of them, she settles on one.
Speaker 1: Oh no, I actually got this one A ready got repeat,
Speaker 1: So sounds like you're gonna have to get another one
Speaker 1: not today.
Speaker 2: Popmart's blind box toys, including its most famous one, the
Speaker 2: Labuboo doll, have become a global phenomenon in the last
Speaker 2: few years. In the US and Australia, fans line up
Speaker 2: for hours, times in the middle of the night for
Speaker 2: new releases. But even some of Popmart's biggest fans might
Speaker 2: not be aware that the brand is from China. Bloomberg
Speaker 2: Opinion columnist Shuley Wren says that could work to the
Speaker 2: company's advantage Popmarked.
Speaker 3: If you just look at the name, you wouldn't know
Speaker 3: it's Chinese. La Buopoo looks nothing Chinese at all, So
Speaker 3: I think for Chinese companies to be more successful overseas,
Speaker 3: they cannot be to Chinese.
Speaker 2: And even though China has been the target of a
Speaker 2: rising tide of US tariffs. Since Trump's first term in
Speaker 2: twenty eighteen, PopMart has become hugely popular both with consumers
Speaker 2: and investors.
Speaker 3: In twenty twenty four, its sales more than doubled. And
Speaker 3: if you look at this stock, they went public in
Speaker 3: late twenty twenty and it has been up two hundred
Speaker 3: and fifty percent. This stock is up more than forty
Speaker 3: percent this year. Despite Trump's trade wars, the demand for
Speaker 3: its dolls are very inelastic. It's recession proof and terror proof.
Speaker 2: Tariff proof that will be the test. Welcome to the
Speaker 2: Big Take Asia from Bloomberg News. I'm Wanha. Every week
Speaker 2: we take you inside some of the world's biggest and
Speaker 2: most powerful economies and the markets, tycoons and businesses that
Speaker 2: drive this ever shifting region. Today in the show, the
Speaker 2: praise for China's blind box toys, can figurines and plushies
Speaker 2: stokenough demand for Popmart's products to outlast the trade war,
Speaker 2: And what can other Chinese companies learn from its success
Speaker 2: as a country braces for escalating tariffs. PopMart was founded
Speaker 2: in twenty ten as a variety store. Today, it sells
Speaker 2: toys and figurines in about a dozen collections, but the
Speaker 2: top seller is the Lebubu doll. Created in twenty fifteen.
Speaker 2: Le Bubu is a small, toothy, fierce looking creature that
Speaker 2: looks like a cross between an l and a rabbit.
Speaker 2: It's so popular that PopMart now sells more than three
Speaker 2: hundred variations of the character, and they're often sold out
Speaker 2: in stores everywhere from Manila to New York. And Key
Speaker 2: to the frenzy is the surprise customers get when they
Speaker 2: open the blind boxes.
Speaker 3: Something's something good, something juicy, something wonderful, cool and open up.
Speaker 2: There are tons of these unboxing videos on social media.
Speaker 1: I got my first Labooboo. It costs dollars. It's so
Speaker 1: fuggy that I guess it makes the K cute.
Speaker 2: Popmart's success with La Boo Boo is largely thanks to
Speaker 2: Black Pink's Lisa, the lead rapper of the popular K
Speaker 2: pop band. After she shared her collection on Instagram last year,
Speaker 2: fans rushed out to buy the figures. Lisa also gushed
Speaker 2: about the dolls in a Vanity Fair interview in November.
Speaker 1: So when this guy has a tail, they call Simobo.
Speaker 1: If she doesn't have tell, we call her La Boo.
Speaker 3: Boo Lisa admitted online that she was obsessed with the
Speaker 3: Labuo Boo. She says she didn't get what the big
Speaker 3: deal was, but once she had one, she wanted a
Speaker 3: second one.
Speaker 1: I spent all my money. I go PopMart everywhere. If
Speaker 1: I fly to New York, I go to Miami, I
Speaker 1: try to find PopMart there, Paris, you know, everywhere.
Speaker 2: The blind boxes can cost from fifteen dollars each to
Speaker 2: more than two hundred and fifty dollars for limited editions.
Speaker 2: And while selling merchandise with surprise toys is nothing new,
Speaker 2: think about the mystery toys and kinder chocolates or cracker jacks.
Speaker 2: Popcorn Truly says it's been essential to Popmark's explosive growth.
Speaker 3: This blind box thing. Basically it's their biggest marketing wing.
Speaker 3: I think everyone likes to open Christmas gifts right like
Speaker 3: you don't know what's inside, and that this kind of
Speaker 3: surprise factor that adds a little bit thrilled.
Speaker 2: La booboo. Blind boxes or old and limited quantities online
Speaker 2: and they sell out fast, meaning people have to go
Speaker 2: into stores or buy them from vending machines. This hard
Speaker 2: to find element creates a sense of exclusivity that drives
Speaker 2: the hype.
Speaker 3: If you go to a Chinese store, you cannot get
Speaker 3: Labubu because of scalpers. The more common ones you can
Speaker 3: get them online from scalpers at perhaps twenty percent premium,
Speaker 3: but some of them, the more limited edition ones, they
Speaker 3: are very very hard to find.
Speaker 2: This mania for La Buobu and other Popmarke blind box
Speaker 2: toys has translated into colossal success for the company. It's
Speaker 2: sales revenue hit nearly two billion dollars in twenty twenty four,
Speaker 2: more than double from the year before. The company went
Speaker 2: public on the Hong Kong Stock Exchange in late twenty
Speaker 2: twenty and since has become one of the best performing stocks.
Speaker 3: If you look at this stock that has been up
Speaker 3: two hundred and fifty percent, this stock has really become
Speaker 3: an investor Darling. It's trading at over fifty time times earnings,
Speaker 3: and by comparison, Disney is trading at only seventeen times.
Speaker 3: Hello Kitty Sanrio is trading at about forty times. It's
Speaker 3: tremendous success. And it's found that he owns almost half
Speaker 3: of the company and this company is worth twenty three
Speaker 3: billion dollars. So go figure.
Speaker 2: PopMart may be a toy store, but its main customers
Speaker 2: are young adults between fifteen to thirty five. That's according
Speaker 2: to a market research firm. This group of grown ups
Speaker 2: are sometimes referred to as kiddolts, adults who enjoy doing
Speaker 2: or buying things usually intended for children. Truly, says, PopMart
Speaker 2: is making a lot of money by tapping into this
Speaker 2: kidd old market because that sector of the population is
Speaker 2: struggling in China right now.
Speaker 3: The Chinese economy is not doing very well right like
Speaker 3: young people of this generation, unemployment rate is very high.
Speaker 3: A lot of young educated people, they don't see that
Speaker 3: how they can climb the MIDI class leader like their
Speaker 3: parents did. And I think La Bubu gives them a
Speaker 3: sense of a mental serenity or comfort, you know, like
Speaker 3: the so called lipstick effect in the economic session, or
Speaker 3: if you are having a bad time, women will go
Speaker 3: out to buy lipstick. It's fifteen twenty US dollars and
Speaker 3: then you put on lipstick and you just feel a
Speaker 3: little bit better. Right, But these days, instead of lipstick,
Speaker 3: I think the young men and the women they like
Speaker 3: to go for those fluffy toys.
Speaker 2: That accounts for the demand in China, but overseas Popmart's
Speaker 2: appeal is now facing some big headwinds.
Speaker 3: Now, the White House says, tariffs on Chinea are now,
Speaker 3: get this, one hundred and forty five percent.
Speaker 2: The President acknowledging the Trump administration has imposed hefty tariffs
Speaker 2: on all Chinese goods going to the US, where the
Speaker 2: company wants to expand. Can PopMart strategy survive the trade
Speaker 2: war and can other Chinese brands successfully It's secret sauce
Speaker 2: that's after the break. Popmart's blind box strategy has helped
Speaker 2: it succeed well beyond China. City Group analysts said in
Speaker 2: December they expect Popmart's global revenue to account for half
Speaker 2: of total sales this year as a company looks to
Speaker 2: expand to North America and Europe. As of December, the
Speaker 2: company had one hundred and thirty physical stores outside China,
Speaker 2: and despite the US and China being caught in an
Speaker 2: increasingly escalating trade war Bloomberg Opinions Truly Wren expects that
Speaker 2: PopMart Toys will be able to ride out the tariffs
Speaker 2: for now.
Speaker 3: When we talk about tariffs, we say, oh, Americans are
Speaker 3: not going to buy goods from Timo or Seeing because
Speaker 3: they're just going to be one hundred percent more expensive, right,
Speaker 3: But with Labubu demand, it's just that in elastic right now,
Speaker 3: people are willing to spend more some of buying from
Speaker 3: skull right. Even if you wanted to pay more, you
Speaker 3: cannot have it. It's more about supply. That's why people
Speaker 3: think PopMart at its current stage is teriff proof.
Speaker 2: Earlier this month, PopMart shares did see some volatility, following
Speaker 2: as much as twenty percent in Hong Kong. That's after
Speaker 2: Trump's tariff whiplash caused financial markets to go on a
Speaker 2: roller coaster ride. For now, the stock is adding gains
Speaker 2: again and truly says other companies are already trying to
Speaker 2: replicate parts of Popmart's formula for success when they're expanding abroad.
Speaker 3: Chinese companies all want to go overseas. Overseas profit margins
Speaker 3: are just much higher compared to China, and there is
Speaker 3: no price wars in big markets like the US and
Speaker 3: the European Union and the infact, you start to see
Speaker 3: this brand called Miniso, the Chinese version of muchI, if
Speaker 3: I may use that analogy, and they are also selling toys,
Speaker 3: cheap lipstick, houseware, etc. Right, and that they are trying
Speaker 3: to to do what popmar is doing going overseas, and
Speaker 3: they are also starting to use this so called blind
Speaker 3: box strategy to jazz things up.
Speaker 2: And they're being another key aspect of PopMart strategy.
Speaker 3: I think for Chinese companies to be more successful overseas,
Speaker 3: they cannot be two Chinese popmarked. If you just look
Speaker 3: at the name, you wouldn't know it's Chinese. Labooo looks
Speaker 3: nothing Chinese at all. Actually the artist was born in
Speaker 3: Hong Kong. He grew up and spent a big chunk
Speaker 3: over his time in the Netherlands and he got the
Speaker 3: inspiration reading about Nordic fairy tales. That's why Labou Boo
Speaker 3: doesn't look quite Chinese. You know. She looks like where
Speaker 3: the wild things are. She has a boyfriend called Taikoko,
Speaker 3: and she has buddies. They all look a little bit
Speaker 3: Nordic and international, and I think that's quite important. Like
Speaker 3: of course all the Chinese companies, they want to create
Speaker 3: new markets overseas. Miniso has done very well as well.
Speaker 3: Minis doesn't look Chinese at all.
Speaker 2: In fact, most people think it's Japanese exactly.
Speaker 3: Certain brands like shell Me for instance, there electual Vehicles
Speaker 3: U seven looks like a Porsche.
Speaker 2: Just as importantly, PopMart is challenging the idea that China
Speaker 2: is just a place where cheap, knockoff goods are made.
Speaker 3: President Donald Trump keeps on railing against China, saying China
Speaker 3: is flooding cheap goods and products into the US. But
Speaker 3: that's not necessarily true. I think some of the mailing
Speaker 3: China products are getting quite cool, right because Palmer is
Speaker 3: coming up with new intellectual properties like La Bubu. Right
Speaker 3: in order to earn customer loyalty, they have to make
Speaker 3: quality goods that are fairly inexpensive, but they also have
Speaker 3: to tease and come up with new innovations. It's not
Speaker 3: so different from like Japan in the nineteen nineties. Right
Speaker 3: back then, Japan's asset bubble already went bust, and the
Speaker 3: Japanese companies are coming up with pretty interesting innovations. Uniclo
Speaker 3: came up then, right, and then there was muchI, And
Speaker 3: then suddenly the world says, oh wow, Japanese design is
Speaker 3: great and the people around the world love them. And
Speaker 3: I think that's what China wants to be like. They
Speaker 3: want to be seen as a place where interesting designs
Speaker 3: can also come.
Speaker 2: From whether demand for Labubu can continue to survive economic
Speaker 2: challenges in China and the trade war with the US
Speaker 2: remains to be seen. Blind box toys tend to be
Speaker 2: passing fads and PopMart aspires the hook consumers beyond La
Speaker 2: Buoboo dolls.
Speaker 3: Right now, Palmer is at early stage, so at this
Speaker 3: point it feels like it's a fad and perhaps investors
Speaker 3: are as betting that the Palmer can grow for another
Speaker 3: say five ten years. Right now, Palmer is doing great
Speaker 3: right the stock prices up. But going forward they have
Speaker 3: their challenges. The key challenge is how to keep its
Speaker 3: toys hip, how to have influencers still wear them and
Speaker 3: showcase them on Instagram. That means that they have to
Speaker 3: keep hung, innovating and the coming up with new intellectual
Speaker 3: properties to keep young people on the hook.
Speaker 2: This is the Big Take Asia from Bloomberg News.
Speaker 3: I'm wan Ha.
Speaker 2: This episode was produced by Noomi Um and Young Young.
Speaker 2: It was edited by Grace Jennings, ed Tquist, Patty Hirsch and
Speaker 2: Dong Lu. It was fact checked by Eddie Dun and
Speaker 2: mixed and sound designed by Taka Yasuzawa. Our senior producer
Speaker 2: is Nami Shaven. Our senior editor is Elizabeth Ponzo. Our
Speaker 2: deputy executive producer is Julia Weaver. Our executive producer is
Speaker 2: Nicole Beamster Bower. Sage Bauman is Bloomberg's head of podcasts.
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Speaker 3: H