By Lu Yi and Wang Xiaozhou

The rapid rise in global popularity of Labubu, the collectible toy and fashion accessory produced by Chinese company Pop Mart, has become a true pop culture phenomenon, propelling the company to become one of the hottest consumer stocks on the Hong Kong stock market. The soaring stock price has also quickly made its founder Wang Ning the richest person in China’s Henan province, the tenth richest man in China, and 108th richest globally on the Forbes Billionaires List.

While Pop Mart was founded in 2010, it is the sudden emergence of two new IPs, Molly and Labubu, that have brought the toy maker into the global spotlight. Is there a unique business philosophy that lies behind the breakout success of these two IPs? Can this phenomenon-level popularity be sustained? In this article, CEIBS Assistant Professor of Marketing Lu Yi, and Research Assistant Wang Xiaozhou, dive into Pop Mart's business strategy from the perspective of IP business model.

The Serendipity Behind Pop Mart's Success

In 2025, Labubu has become a highly sought-after collector’s item. Its top-tier status not only allows Hermès bags to serve as the toy’s accessories but has even inspired banks to launch marketing campaigns offering a Labubu blind box for new account deposits of RMB 50,000 to attract customers. A one-of-a-kind mint-coloured PVC Labubu recently sold for RMB 1.08 million at an art auction, sparking further public attention. The capital market's response has been strong—soaring stock prices have pushed the market capitalisation of its parent company, Pop Mart, to over HK$360 billion, with founder Wang Ning's net worth also rising accordingly.

Labubu's global popularity and eye-catching commercial performance have thrust Pop Mart into the spotlight. However, looking back at its journey, we see a path to successful IP that was far from easy. The explosive success of its latest IPs is down to good business sense, but also, to some extent, accidental, making Pop Mart a lucky player in its field.

Founded in 2010, Pop Mart initially established itself with a "trendy department store" model. With the rise of ecommerce, however, Pop Mart’s comparatively high prices become clearer to consumers and, without notable differentiators from competitors, the company’s offline retail-focused operations became increasingly difficult.

At the end of 2015, through sales data analysis, Pop Mart discovered that a Japanese doll called "Sonny Angel" was experiencing rapid sales growth and high repeat purchase rates, with annual sales that accounted for nearly half of the company's total revenue. However, at this critical juncture, Sonny Angel's copyright holder decided to terminate cooperation with Pop Mart. Losing its core IP and products put Pop Mart's revenue in trouble, pushing Wang Ning to realise the importance of the company owning proprietary IPs.

In early 2016, a frustrated Wang Ning turned to the Chinese social media platform Weibo for help, asking fans about their favourite IP characters. "Molly" became a frequently mentioned name among fan responses. Designed by Hong Kong designer Kenny Wong, Molly is portrayed as a pouty young girl with lake-blue eyes and a beauty mark below her left eye. She was originally conceived as a painter. Before being picked up by Pop Mart, the Molly IP's development had followed a similar trajectory to most trendy Hong Kong and Taiwan toys: possessing a distinct visual identity and specific emotional resonance but lacking a complete background story, existing merely as an IP.

By that time, Molly had been around for ten years, and while its fan base was small, it was extremely loyal. After receiving user feedback, Wang Ning quickly flew to Hong Kong, heading straight to Kenny's design studio. After several rounds of communication, he ultimately convinced the artist to cooperate deeply with Pop Mart on Molly's copyright.

Molly's strong sales gradually smoothed Pop Mart's financing path, helping the company successfully list on the Hong Kong Stock Exchange at the end of 2020. However, to avoid a repeat of the Sonny Angel situation, Wang Ning didn't want to rely too heavily on a single IP; as such, Pop Mart embarked on a global journey to discover top-tier IP artists.

Since 2017, Pop Mart has held annual toy exhibitions. On one hand, these events aim to promote pop culture trends and tap into young consumers’ emotional needs; on the other hand, they serve as a platform to screen potential talent from participating artists. As Wang Ning himself has put it: "These conventions provide a big stage for undiscovered potential superstars, and many IPs with the potential to become hit products are born here".

Some of Pop Mart's successful IP collaboration cases include the “Peach Riot” series with Los Angeles artist Libby Frame, the “Crybaby” series developed in partnership with Thai designers and of course, collaboration with Hong Kong artist Lung Ka Sing, who signed with Pop Mart in 2018. His masterpiece, Labubu from the “Monsters” series, has since surpassed Molly as Labubu’s most popular IP, captivating customers around the world.

For the first three years after its release, Labubu sales remained modest. Its breakout success was fuelled in large part by celebrity endorsements. In 2024, Lisa, a member of the hugely popular K-pop group Blackpink, began frequently showcasing Labubu dolls on social media and even used them to accessorise her Louis Vuitton bags, triggering a global wave of fan imitation. Thailand’s princess Sirivannavari Nariratana was seen pairing Labubu with Hermès bags at Paris Fashion Week; Western celebrities, including Rihanna and David Beckham also shared photos featuring Labubu on their social media accounts, further expanding its status as an icon in the cultural and fashion worlds. These endorsements turbocharged Labubu’s emergence as a status symbol, with little input from Pop Mart themselves, demonstrating how luck and serendipity can play a powerful role in the success of top-tier IPs.

The Inevitability Behind Pop Mart's Success

Of course, Pop Mart's success wasn't entirely due to luck. As we often say in business schools, when examining a company, don't just look at what it does during times of success; focus more on what it was doing when it was not favoured by global markets and consumers.

During its early days operating trendy pop-up stores, it discovered that products backed by strong IP grew more rapidly and contributed higher gross margins. This insight led the company to establish IP as its core development strategy, with its entire business model and commercialisation efforts being centred around IP-driven growth. After losing the rights to Sonny Angel, Pop Mart developed more detailed thinking around IP development. The company built an IP matrix including external cooperation licensing, an internal designer centre (PDC), and exclusive licensing or artist collaborations, with the aim of avoiding putting all their eggs in one basket.

Pop Mart's criteria for selecting designers goes beyond design capability, focusing more on whether creators can evoke emotional resonance in customers. The “Hirono” series, for example, expresses a sense of melancholy, while the “Sweet Bean” series presents a "healing" feel, both of which effectively meet the demand for a “kidult” (adult infantilisation) connection amongst Gen Z consumers.

Labubu's "ugly-cute" aesthetic was the result of artist Lung Ka Sing's continuous adjustments and optimisation—evolving from a slightly mischievous and eerie style into today's more approachable and endearingly quirky appearance. This "ugly-cute" image has become a powerful expression of younger generations’ desire to challenge traditional aesthetic standards of beauty and authority. It also transcends regional and cultural barriers to demonstrate a strong universal appeal. However, an excellent company cannot rely solely on emotional value—Pop Mart also continuously cultivates the logic of its comprehensive business operations.

IP Discovery and Operational Management

Pop Mart has its own unique approach to cultivating and training internal designers. It has the Pop Design Centre (PDC), a designer centre that discovers potential creators through a dual-track approach of online portfolio libraries and offline exhibitions through a multi-dimensional designer evaluation system.

When collaborating with external independent artists, Pop Mart doesn't adopt traditional employment relationships; specific cooperation models are determined by case-by-case negotiations. Models can include exclusive one-time buyouts of all commercial rights where artists don't participate in subsequent operational revenue sharing, as well as cooperation models that provide revenue sharing based on sales, and regional exclusive commercial operation models.

With these strategies, Pop Mart's releases of top-tier IPs in recent years have resembled an endless relay race, with former leaders like Molly and the “Skullpanda” series facing a strong challenge from the “Monster” series at the end of 2024.

This competitive dynamic also demonstrates Pop Mart's strategy of operating a well-balanced IP portfolio— a coordinated approach where mature IPs hold the fort while the company incubates new ones ready to take over at any time. By diversifying risk through an IP portfolio, the brand ensures long-term vitality and sustained success. Over the years, Pop Mart has successively launched a range of artist IPs including Molly, Dimoo, and the Monster series. 2024 annual report data shows artist IP accounts for over 80% of the company’s revenue, with each of the top-performing IP series generating more than RMB 1 billion in sales.

Notably, Pop Mart also maintains restraint in IP development and commercialisation, having reduced the number of annual new series launches from five-to-six to three-to-four to avoid overconsumption. Skullpanda took two years from signing to market launch, with its debut series "Secret Forest Castle" having a two-year market lifecycle, far exceeding the industry average of nine-to-twelve months. For top IPs like Molly and Skullpanda, Pop Mart only launches one-to-two new series per quarter, strategically extending their lifecycles through a variety of formats, including blind boxes, premium lines of figures, derivatives, and other formats.

Channel Operations

Pop Mart's IP portfolio construction and investment represent a macro strategy, while its chosen channel construction model represents micro details, which are often overlooked by analysts.

If Pop Mart's IP selection involves factors like vision and luck, its operational level involves real dedication and hard work. Financial data shows that from 2017-2024, aside from 2021, Pop Mart's cash flow has significantly outperformed net profit in all years.

This indicator is extremely important because Pop Mart runs under a fully self-operated, omni-channel model. With a diverse IP portfolio, factors such as SKU selection strategies, store location planning, inventory management, supply chain management, and the pace of new market expansion all significantly increase operational difficulty. In particular, rapid expansion during promising periods can easily lead to cash flow crisis.

During Pop Mart's high-growth period in recent years, we can still see restraint and rationality in its operational results, which is particularly crucial. As early as 2014, Wang Ning had proposed a "reduce width, increase depth" operational strategy. This approach begins with a disciplined attitude toward IP development, focusing on the trending toy category, reducing risks from excessive SKU development.  Maintaining focus on SKUs in one category also means constantly making strategic reductions. Wang Ning believes that "pruning" the enterprise, or cutting non-essential elements, is something that needs to be done not just annually, but even daily.

Pop Mart also maintains remarkable restraint in the methods and pace of its store expansion, with most stores being so-called "Robo Shops", automated vending machines that dispense products without requiring staff. Pop Mart's Chief Operating Officer Si De states that robot stores function as a "radar" for offline retail— offering low cost, rapid market penetration while providing valuable sales data to inform future store locations. Robo Shops can also serve as "private domain entrances" for managing Pop Mart’s member community. By linking robotic stores with the brand’s online blind box mini-programme, Pop Mart creates a closed-loop system. After users' initial offline IP encounter, they can transition to online mini-programs for follow-up purchases, achieving a consumer journey of offline discovery to online engagement.

According to their 2024 annual report, Pop Mart has a total of 46.083 million registered members on the Chinese mainland, with members contributing 92.7% to its total sales, with a repurchase rate of 49.4%.

Although Pop Mart operates across multiple channels, it serves customers with shared interests and hobbies. How to efficiently and repeatedly reach this specific group is key to sustained growth. Pop Mart's operational strategy centres on direct-to-customer sales and robust digital platform development. On the channel level, it eliminates intermediaries through direct stores, robotic stores, and online ecommerce to directly engage consumers. On the data level, it has established a global data platform that plays a crucial role in enabling flexible supply chain and refined operational management.

The Four Quadrants of IP Business Models

IP business models are mainly divided along two dimensions: whether they own proprietary IPs, and whether they build their own sales channels. This gives rise to the four strategic quadrants of IP business models.

Proprietary IP + Self-Built Sales Channels: The "Ace Combination"

Pop Mart is a typical representative of this model. Although it also sells some licensed IPs, core sales still come from proprietary or exclusively contracted IPs. Through channels such as offline stores, robotic stores in shopping malls, and ecommerce, Pop Mart has built its own powerful sales network. With these channels plus strong IPs, this model has allowed the company to go truly global, with Labubu becoming a beloved favourite among global trendsetters.

Proprietary IP + IP Licensing: "Light Asset Operations"

The second business model is represented by Japanese company Sanrio, which owns numerous famous IPs like Hello Kitty and Kuromi. Sanrio doesn't directly produce goods; its strategy is to license IPs to partners. For example, in China Sanrio is operated by Alifish, Alibaba's licensing and entertainment business, by leveraging the company’s Tmall platform’s powerful resources to expand its business territory.

Non-Proprietary IP + Strong Sales Network: "Resource Integration"

The third business model is exemplified by Chinese retailer MINISO, an enterprise that mainly relies on powerful sales networks to sell non-proprietary IP products. MINISO is a leader in this model. Although it also possesses some proprietary IPs, it mostly operates by integrating various external IP resources. Relying on its powerful channel capabilities and China's supply chain system, it combines global IPs with products to expand its presence in the global market while helping Chinese IPs gain exposure on the world stage.

Global Top IPs + Distributor Network: "Channel Dominance"

The fourth IP business model is typically represented by Chinese company Bloks, which mainly leverages global top IPs, including Ultraman, while relying on a dense network of distributors for rapid expansion and comprehensive channel coverage. This makes expanding and managing distribution networks this model’s core competitive advantage.

No one of these four business models is inherently better or worse than the others; rather, the key lies in whether they match an enterprise’s strategic goals and management capabilities.

Under a channel-focused model, IP becomes a cost item requiring continuous investment. Enterprises need to pay external licensing fees, leading to relatively low gross profit margins. Under licensing-focused models, while profit margins are higher, sales growth is limited. Enterprises with both proprietary IP and channel models, like Pop Mart, can enjoy relatively high gross margins, as long as consumers are willing to pay premiums for the emotional value of their beloved IP. Ultimately, Pop Mart benefitting from the popularity of its proprietary IP, enjoys both high profit margins and sales growth brought by strong channel expansion.

The Implications of Pop Mart’s Success for Chinese Companies Going Global

Pop Mart has now become a bellwether on the Hong Kong stock market, representing the hottest enterprise amongst a wave of Chinese business and cultural global expansion. The company has also called into question the long-held belief that domestic enterprises must build core competitiveness in local markets, establishing absolute competitive advantages, before seeking overseas expansion.

In Pop Mart's case, we find that globalisation and domestic expansion can in fact be complementary. Pop Mart established globalisation goals almost immediately after achieving profitability in 2018, and when its overseas business truly expanded in 2023, it in turn propelled additional growth in the domestic market.

To truly go global, IPs, teams, and concepts must be sourced from beyond the borders of the domestic market. Pop Mart’s signing of designers in Thailand for their “Crybaby” series successfully created a top-tier IPs.

Along with achieving profitability, 2018 also marked another significant milestone in Pop Mart’s global journey: the hiring of South Korean senior executive Justin Moon, who officially joined the company to launch their global business.  This was in line with Wang Ning’s belief that overseas markets would ultimately contribute to over 50% of Pop Mart’s business.

Thus far, Pop Mart has striven to achieve localised operations in each market, with initial target customers in each overseas market being locals rather than overseas Chinese, a common tactic for other Chinese companies expanding abroad.

Pop Mart also doesn't wait for maturity in each overseas market before considering the next. Penetrating a market’s popular culture requires long-term accumulation, with each overseas market requiring enormous effort and time validation.

Pop Mart's expansion decisions require extensive preliminary preparation and research, as well as substantial feedback based on operational data. Pop Mart also tries to test new market operational data first with B2B models and ecommerce models. Through data analysis, the company can effectively adjust operational strategies and steadily advance the expansion of its overseas business.

Conclusion

Pop Mart continues to grow in popularity, with stock prices rising over 11 times since 2024. But, while many marvel at their apparent sudden arrival, it is easy to overlook the fact that this is a company that has been in business for 15 years. Starting from a handful of pop-up stores, Pop Mart made a series of bold and unconventional business decisions: opening physical retail stores during the peak of internet commerce, adopting a differentiated pricing strategy amidst the dominance of cost leadership strategy, and building a global team at a time when globalisation was losing momentum. Beyond its well-timed bet on Labubu, Pop Mart has consistently demonstrated a sharp and forward-thinking business acumen.

Today, Pop Mart has built a comprehensive operational platform covering the entire designer toy industry chain, focusing on five areas: global artist scouting, IP incubation and operations, consumer engagement, cultural promotion of designer toys, and incubation and investment in innovative businesses.

What’s most striking is Pop Mart's unwavering persistence in the face of external misunderstanding in the years leading up to 2022. From the start, the company struggled to secure funding, with a first round of venture capital of only RMB 2 million; in subsequent financing rounds investors were uninterested in its offline models and dismissed the idea of selling toys to adults. Even after its IPO, Pop Mart’s market value shrank nearly 90% from its peak when it struggled to find a second growth curve beyond its Molly products.

Pop Mart's rise is a story of grit, good luck, and resilience. It laid foundations through a decade of channel cultivation and consumer insights, staying true to its mission through seven consecutive years of losses. Over time, it has established a scalable system for IP industrialisation and commercialisation. By seizing the wave of “blind box” culture and the rise of emotion-driven consumption, it has turned luck into "strategic inevitability" through data-driven operations. Ultimately, Pop Mart transformed a single popular IP into a sustainable icon of pop culture with global significance.

This transformation proves that true greatness begins with respect for the fundamentals of enterprise and the fact that success, in business, often takes time.

Lu Yi is an Assistant Professor of Marketing at CEIBS. Her research interests focus on Artificial Intelligence in marketing and management, new tech-driven business models, digital media and content marketing, and the creative industries.