Tue, Jul 01, 2025 page7

• Labubu’s biggest threat is not Wakuku or Lafufu

  Pop Mart is doing a fragile dance with the toy’s resellers

  • By Shuli Ren / Bloomberg Opinion
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  Labubu, an elf-like plush toy with pointy ears and nine serrated teeth, has become a global sensation, worn by celebrities including Rihanna and Dua Lipa. These dolls are sold out in stores from Singapore to London; a human-sized version recently fetched a whopping US$150,000 at an auction in Beijing. With all the social media buzz, it is worth asking if we are witnessing the rise of a new-age collectible, or whether Labubu is a mere fad destined to fade.

  Investors certainly want to know. Pop Mart International Group Ltd, the Chinese manufacturer behind this trendy toy, has rallied 178 percent this year. With US$43 billion market cap, the company is worth more than twice as much as Sanrio Co and Mattel Inc combined, owners of long-time favorites Hello Kitty and Barbie respectively. Last year, Pop Mart’s revenue doubled to 13 billion yuan (US$1.81 billion), while its gross margin came in at an enviable 67 percent, roughly twice as profitable as a generic toymaker. The company generated 4 billion yuan in operating profit, versus 1 billion yuan in 2023.

  However, there are worries that copycats might dent Labubu’s brand image, which underpins Pop Mart’s outsized profitability. Wakuku, a chubby character with a familiar mischievous grin, is being rolled out by lifestyle retail chain Miniso Group Holding Ltd. Whereas Labubu is about a little monster inspired by Nordic fairy tales, Wakuku tells the story of a rebellious wild child in the forest. These dolls are also being sold in blind boxes, a clever marketing ploy that Pop Mart championed to add an element of surprise to its products. For Miniso, it is a good bet so far: Wakuku dolls have drawn long lines at the retailer’s flagship stores across China. Meanwhile, NASDAQ-listed QuantaSing Group Ltd, which ultimately owns the intellectual property through an acquisition deal in March, is up 365 percent this year.

  

  Illustration: Yusha

  There’s also Lafufu, a term collectors use for counterfeit Labubu dolls that are flooding online marketplaces. These knockoffs, with lopsided faces and misaligned limbs, are getting their cultural moment, competing with the original on how ugly they can get. After all, Labubu went viral because of its weird, yet somehow cute looks, and custom-made Lafufus with unique outfits or expressions are accentuating that aesthetic.

  While both might chip away some of Labubu’s business, neither can tank it. Wakuku is still swimming in the more lucrative designer toy category, not undercutting Pop Mart on pricing. Meanwhile, Lafufu owners often end up buying the original to establish a frame of reference for their customized dolls if nothing else. As for Chinese state media’s warnings on blind box sales, Labubu as a brand has already moved beyond this marketing tool.

  Rather, the biggest threat to Labubu’s lure as a collectible is Pop Mart’s fragile dance with the toy’s resellers. On the one hand, the company would have trouble fostering a broad fan base if its dolls largely end up in scalpers’ hands. On the other, Labubu cannot become a luxury item if it does not have a resilient resale market. In an economic slowdown, consumers tend to seek out luxury products that command higher resale value.

  Pop Mart tested that resilience on June 18, the last day of China’s month-long shopping festival, launching its first online presale of third-generation Labubu plush toys. While it was a tremendous success for the company’s bottom line — revenue from the presales is expected to exceed 500 million yuan — the second-hand market crashed. Average transaction price for the doll tumbled by as much as 40 percent amid worries that the company would destock faster and more often than before.

  Before the surprise presale, a 99 yuan toy could be sold in secondary markets for roughly anywhere between 200 and 500 yuan. In other words, resellers were reaping more profit from Labubu than its manufacturer. However, as more consumers receive their dolls over the next few months, what would Labubu’s resale market look like? Does the economics still work for arbitrageurs?

  Right now, Pop Mart’s biggest puzzle is to figure out what percentage of its Labubu sales is going to resellers. For other luxury items such as the fiery baijiu moutai (白酒茅臺) liquor, industry analysts have a rough estimate on how many bottles resellers have hoarded over the years, thus giving producer Kweichow Moutai a sense of how much new supply it should bring to the market while maintaining scarcity and thus brand exclusivity. However, this kind of information is impossible to obtain for Labubu, because it is such a recent phenomenon. Social media buzz can also cloud one’s judgment.

  Of course, Pop Mart should be pleased with Labubu’s stardom. However, lately, this weird-looking toy is becoming a bit unwieldy.

  Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. She is a CFA charterholder. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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