Pop Mart Did Not Export a Character. It Exported a Way Around Your Retail Buyer.
The Labubu story is told as a Chinese brand winning the West with cute IP. That reading is wrong twice over, and the second error is the expensive one: Pop Mart's transferable asset is a distribution format that never needed a Western retailer's permission.
Annie Chan··13 min read
The most instructive day in the Pop Mart story is not a day it won. It is March 25, 2026, when the company reported 2025 revenue of 37.12 billion yuan, up 184.7 percent, net profit of 13.01 billion yuan, up 293.3 percent, gross margin expanded to 72.1 percent from 66.8 percent, and the stock fell more than 22 percent.
Those results would be career-defining almost anywhere. The market's response was to knock a fifth off the company in a session, leaving the shares roughly half their August 2025 peak of HK$339.80. The stated reason, repeated across coverage from CNBC to the South China Morning Post, was concentration risk: The Monsters, the IP family that contains Labubu, had grown to 38 percent of 2025 revenue from 23 percent in 2024.
The market was pricing Pop Mart as an IP company that got lucky with one character. That is the same misreading Western brand teams are making, and it is why they are drawing the wrong lesson from the most important China-to-West brand case of the decade.
Pop Mart's durable asset is not Labubu. It is a distribution format that let a Chinese company reach American consumers at full margin without ever asking a Western retail buyer for permission. That format is copyable, it is being copied, and it is a live threat to categories that have nothing to do with vinyl figures.
The number everyone quoted, and the number that mattered
The figure that travelled was the Americas growth rate: revenue up 748.4 percent to 6.81 billion yuan in 2025, 18.3 percent of the group total. Overseas revenue overall rose 291.9 percent to 16.27 billion yuan, against 134.7 percent growth in China to 20.85 billion yuan. Asia-Pacific outside China grew 157.6 percent and Europe and other regions grew more than fivefold.
A 748 percent growth rate is a headline, and headlines are how this story got mis-taught. The number that actually explains the outcome is the gross margin: 72.1 percent, up from 66.8 percent, in a physical consumer goods business, during a year of aggressive international expansion.
Physical consumer products expanding into a new continent normally see margins compress. You pay for freight, for duties, for a distributor's cut, for retailer margin, for trade promotion, for the returns a buyer negotiates when the product underperforms. Pop Mart's margin went the other way, and that single fact tells you more about the model than any amount of commentary about the appeal of the character.
"A margin that expands during international expansion is the signature of a company that owns its own point of sale. Everything else in the Pop Mart story follows from that."
What Pop Mart actually exported
Strip out the character design and the format has four components. None of them require the product to be cute, collectible, or Chinese.
Component one: they never asked for shelf space
The default route for a foreign consumer brand entering the US is to convince a category buyer at a national retailer. That buyer controls whether you exist, decides your price, takes 40 to 50 points of margin, charges for placement, holds you responsible for sell-through, and drops you after two soft quarters. The buyer is also, structurally, a conservative filter: their job is to reduce variance, and an unfamiliar foreign brand with an unfamiliar product format is variance.
Pop Mart bypassed the filter entirely by opening its own stores and its own unattended vending units, the Robo Shops. By January 2026 it was operating in the region of 43 to 45 US retail locations, with reported plans to add more than 20 further stores at Simon malls and outlet centres during 2026, including King of Prussia. Store counts from third-party trackers vary by a couple of units depending on whether Robo Shops and temporary sites are counted, so treat the exact figure as approximate. The direction is not ambiguous.
The consequence is not just margin. It is that no American gatekeeper ever got to say no. There was no buyer meeting where a category manager decided that a blind-boxed vinyl monster from a Chinese company was not right for the American consumer, which is very likely what would have happened had the meeting occurred.
Component two: a price point that removes the decision
The standard blind box sits at a price where a consumer does not perform a purchase evaluation. There is no comparison shopping, no review reading, no considered choice between this and an alternative. The purchase is closer to a vending machine transaction than a retail one, which is precisely why the vending machine format works for it.
This is the underrated defence of the model. A product cheap enough to buy without deliberation is a product that cannot be beaten by a cheaper substitute, because price was never the axis of the decision. Contrast a Chinese entrant attacking a 200 dollar category on price: they win share and immediately face the next entrant doing the same to them.
Component three: scarcity that generates a secondary market
Randomised contents plus limited runs produce a resale market. The resale market does three things for the brand at zero cost: it advertises continuously, it establishes a reference price above retail which makes the retail price feel like a bargain, and it converts buyers into people with a financial stake in the brand's continued relevance.
It also produces the failure mode. Resale prices are a leading indicator that runs in both directions, and by early 2026 they were falling. Search interest for Labubu figurines, on Google Trends' relative index, went from a peak of 66 in August 2025 to 6 by March 2026. That index is relative, not a count of anything, but the shape is the shape.
Component four: first-party demand data
Because Pop Mart owns the transaction, it knows which characters sell in which US cities, at what rate, to whom, at what repeat interval. A brand selling through Target knows what Target reorders. That difference compounds into everything downstream: which IP to develop, where to open next, what to produce.
Labubu is not Chinese intellectual property, and that is the most useful fact in the story
The dominant Western frame is that China has begun exporting its culture, and Labubu is the proof. The frame is wrong on the facts.
Labubu was created by Kasing Lung, an illustrator born in Hong Kong in 1972 who moved to the Netherlands as a child and drew on Nordic folklore for the world he built. The Monsters appeared as a picture book trilogy in 2015. Pop Mart's involvement began in 2019, with an exclusive licensing agreement to turn the characters into collectible figures.
So the sequence is: a Hong Kong-born, Netherlands-raised artist creates European-inflected characters, publishes them as books to modest commercial effect for four years, and then a Chinese retail operator licenses them and turns them into billions of dollars of revenue on three continents.
China did not export a character. A Chinese company licensed someone else's character and applied a commercialisation system to it. The system is the export. The character was the raw material, and it was available to anyone who wanted it between 2015 and 2019.
Sit with that for a moment if you run a brand with a back catalogue. Between 2015 and 2019, the rights to Labubu were purchasable. Every Western toy company, licensing group and lifestyle brand with a scouting function could have acquired them. None did, because the Western system for evaluating IP asks whether a property already has an audience, and the Pop Mart system asks whether a property can be manufactured, boxed, and placed in a store the company controls.
The practical implication is uncomfortable and specific: the dormant IP sitting in your archive is an asset that a Chinese operator can license and monetise better than you currently do. That is a transaction they can propose, and increasingly will.
Why the crash is evidence for the argument, not against it
The concentration critique is fair on its own terms. The Monsters at 38 percent of revenue, up from 23 percent, is a genuine dependency, and reported 2025 figures for the next tier of IP, Twinkle Twinkle at around 2.06 billion yuan and Hirono at around 1.74 billion yuan, are not yet at a scale that replaces it. Anyone who has watched a collectible category cycle knows what a demand peak looks like on the way down.
But notice the shape of the critique. It assumes the company's value is the character, so a fading character means a fading company. If instead the company's value is the machine, then the machine has now been demonstrated to work on an imported property, in a foreign market, at expanding margin. The relevant question becomes how many properties the machine can process and how fast, which is an operating question, not a cultural one.
I am not making a stock call, and there is a real bear case: hit-driven businesses often turn out to be one machine and one hit, and the second hit is where you find out which. The point for a Western brand operator is different and does not depend on how the stock resolves. Even if Pop Mart never produces another Labubu, the format has been proven and published. Every Chinese consumer company with export ambition has now watched a peer reach the American consumer at 72 percent gross margin without a single buyer meeting.
Three exposures this creates for Western brands
Exposure one: your category can be entered without your gatekeepers
Most Western brand defences assume the incumbent controls access. You have the retailer relationships, the planogram position, the trade terms, the distributor network. A new entrant has to get past all of that, which takes years and gives you warning.
The Pop Mart route does not touch any of it. Own store, own vending, own app, own resale ecosystem, plus a marketplace presence for reach. Your early warning system is looking at wholesale data and will see nothing until the competitor has an installed base of customers and a year of first-party data. By the time your category buyer mentions it, the entrant has a mall footprint.
The specific question worth asking in your next planning cycle: if a well-capitalised foreign competitor decided to enter our category tomorrow without ever approaching our retail partners, what exactly would stop them, and how long before we noticed?
Exposure two: your dormant IP is somebody else's operating asset
Most heritage consumer brands own characters, mascots, archives, and design languages they do not actively commercialise. The internal logic is that these assets have no proven demand, so investing in them is speculative.
Pop Mart's history says the demand test is the wrong test, because demand is manufactured by the distribution format rather than discovered in advance. If you hold IP you are not operating, you should assume someone will eventually offer to license it, and you should decide now whether the correct answer is a licence, a joint venture, or building the operating capability yourself. Making that decision under time pressure, with a term sheet in front of you, is how brands sign away the upside.
Exposure three: you have a DTC channel, they have a DTC format
Nearly every Western consumer brand now runs direct-to-consumer. Almost all of them run it as a channel: an additional place to buy the same product at the same price, competing with their own wholesale partners, judged on incremental revenue and quietly resented by the sales team.
Pop Mart runs direct as the format. The product is designed for the channel, the price point suits the channel, the scarcity mechanics require the channel, and the data flows back into product development. There is no wholesale conflict to manage because there is barely any wholesale.
The gap between those two postures is not a technology gap or a budget gap. It is a question of whether anyone is willing to design product for the channel rather than push existing product through it, and that decision sits above marketing.
What not to copy
The predictable wrong response to this case is a blind box. Several Western brands have already run one, and the mechanic travels badly for two reasons.
Randomised paid contents attract regulatory attention in several jurisdictions, and the tolerance is category-dependent and shifting. A mechanic that works for a company whose entire business is built around it is a poor bet as a bolt-on for a brand with other things to lose.
The blind box only works when the unit price is low enough to defeat deliberation. Bolted onto a considered-purchase brand, it reads as a gimmick and trains customers to wait for the reveal rather than buy the product.
The copyable parts are the boring ones: own the point of purchase, design product for the format you own, price to defeat deliberation where the category allows it, treat the secondary market as owned media, and keep the demand data.
Frequently asked questions
How big is Pop Mart's overseas business?
For the 2025 financial year the company reported overseas revenue of 16.27 billion yuan, up 291.9 percent year on year, against 20.85 billion yuan in mainland China. The Americas contributed 6.81 billion yuan, up 748.4 percent, or 18.3 percent of group revenue. Total group revenue was 37.12 billion yuan with gross margin of 72.1 percent.
Why did Pop Mart shares fall despite record results?
On March 25, 2026 the shares fell more than 22 percent on results day, with coverage attributing the move to concentration risk. The Monsters IP family, which includes Labubu, accounted for 38 percent of 2025 revenue against 23 percent in 2024, and the next largest IP lines were reported at a materially smaller scale. Resale prices and search interest for Labubu had also been declining since a mid-2025 peak.
Is Labubu Chinese intellectual property?
Not in origin. The character was created by Kasing Lung, born in Hong Kong and raised in the Netherlands, drawing on Nordic folklore, and first published in a picture book trilogy in 2015. Pop Mart, a Chinese company, signed an exclusive licensing agreement in 2019 and built the collectible business around it. The Chinese contribution was commercialisation and distribution rather than creation.
Can a Western brand replicate the Pop Mart model?
The distribution logic transfers: own the point of purchase, design product specifically for that format, and keep first-party demand data. The blind box mechanic transfers poorly, both for regulatory reasons and because it depends on a price point low enough that the buyer does not deliberate. Brands that copy the mechanic without the underlying distribution posture generally get a novelty launch and no structural change.
What should we be watching to see if this happens in our category?
Not wholesale data, which will lag badly. Watch for foreign-owned retail leases and vending placements in malls in your category adjacencies, for direct-to-consumer apps with sudden download spikes in your product keywords, and for resale listings of products you do not recognise. The China market entry strategy piece covers how to tell whether your category is in the phase where Chinese brands are exporting rather than defending at home.
The question to bring to your next planning meeting
Not what our Labubu could be. Ask instead who, today, has the power to prevent a customer from buying our product, and what happens to our defences if a competitor arrives who does not need that person's approval.
Most incumbent brand strategy is built on the assumption that access is scarce and controlled by parties who already know you. Pop Mart's 72.1 percent gross margin during a continental expansion is the clearest available evidence that the assumption has an expiry date, and the expiry is not category-specific.
"The threat is not that a Chinese company will make something your customers love more. It is that they will reach your customers without passing through any of the places you have spent thirty years defending."
If you want the platform-level view of how these brands build demand before they arrive, the China social media marketing overview covers where the signal appears first.
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Ex-Transsion Global Digital Marketing Director · Effie Awards Greater China jury member · Guest lecturer, Peking University School of Economics · Writes Annie Chan Talk, your insider lens on China.
