On July 5th, POP MART opened its first LABUBU IP-themed store in Bangkok, Thailand. On its opening day, sales surpassed 10 million RMB. Recently, a Thai princess was spotted in China with her bodyguard, who carried a LABUBU ‘Pain Bag.’ These impressive achievements mark the official establishment of the Chinese trendy toy giant in the Southeast Asian market.
(2024 POP MART (left) and 52TOYS (right) offline store foot traffic in Thailand. Source: Instagram)
In recent years, blind box culture has rapidly risen globally, sweeping through Southeast Asia. From the recently popular LABUBU to the niche Chinese trendy toy newcomer PIMOMO, from Singapore to Thailand, from Malaysia to Indonesia, this diverse market of 600 million people is becoming a new battleground for Chinese trendy toy brands.
According to POP MART’s 2023 financial report, the company’s revenue from Hong Kong, Macau, Taiwan, and overseas markets reached 1.066 billion RMB, a year-on-year increase of 134.9%. In the first quarter of 2024, revenue even grew by 245% to 250% year-on-year, significantly driving POP MART’s overall revenue growth.”
(Morgan Stanley's comparison and forecast of POP MART's domestic and overseas sales share from 2021 to 2026. Source: Morgan Stanley)
According to Morgan Stanley, this revenue is expected to grow to 2.151 billion RMB this year. The Southeast Asian market has played a crucial role in this remarkable growth rate.
Why are Many Chinese Trendy Toy IPs Choosing Southeast Asia?
Southeast Asia is a vibrant and multicultural market, and its rapid development is driven by robust economic growth.
With rapid economic development and the rise of the middle class, the Southeast Asian market has shown immense consumer potential. According to the World Bank, GDP growth rates in Southeast Asian countries have remained around 5% in recent years, significantly higher than the global average, making it one of the fastest-growing regions in the world. This growth is primarily due to continued investments and development in manufacturing, services, and technological innovation. Meanwhile, the per capita income levels in major Southeast Asian countries are rising, with Indonesia’s disposable income growth rate reaching 9%, leading to a rapid expansion of the middle class.
The trendy toy consumer group in Southeast Asia is mainly between 18 and 35 years old, with increasing penetration. This younger generation shows strong interest in trendy toy products. While their purchasing power may not match that of first-tier cities in China, their pursuit of personalized and fashionable IPs is equally intense. POP MART’s International President, Wang De Yi, stated, “From a market performance perspective, local income levels and trendy toy consumption willingness are two different things.” For example, in Thailand, with a per capita GDP of around 7,800 USD in 2023, young people are still willing to allocate a portion of their disposable income to trendy toy consumption. Additionally, EqualOcean analysis indicates that while purchasing power varies across Southeast Asian countries, affecting regional trendy toy consumption capabilities, there is an overall upward trend.
Chinese Players Dominate Southeast Asia's Trendy Toy Market
Although the Southeast Asian trendy toy market started later, it has experienced rapid growth. According to the Yuhai Capital "Southeast Asia Toys & Games Market Report," the market size reached approximately 20 billion RMB in 2023, with significant growth expected by 2025. In comparison, China's trendy toy market size is 40 billion RMB with a penetration rate of 6.2%. Southeast Asia's trendy toy market had a penetration rate of 5.1% from 2023 to 2024, still relatively low, indicating substantial growth potential.
Currently, apart from comprehensive toy brands like Bandai and LEGO, Chinese trendy toy brands dominate about 70% of the Southeast Asian market. In addition to POP MART, brands like 52TOYS and Miniso are also actively expanding their presence.
Current major players include:
POP MART: The market leader, with multiple stores in Singapore, Thailand, and other locations.
52TOYS: Offers a range of products, including toy figurines and building blocks. Popular characters like the Lucky Fat Tiger and the Fat Panda are well-received by Thai consumers.
Miniso: Although not exclusively a trendy toy brand, its IP-licensed product lines, such as Chiikawa and Marvel, hold a significant market share.
Alpha Group: With well-known IPs like "Super Wings," Alpha Group has established nearly 20% of its business in the Southeast Asian market.
The remaining market share is divided among local and other international brands. Notably, local brands like Mighty Jaxx from Singapore, which received investment from Tencent, are also making a mark in the trendy toy market. Mighty Jaxx's collaboration with Singaporean artist Clogtwo on the "Hell Lotus" has created quite a stir locally. These local brands are gaining significant popularity by incorporating local cultural and emotional elements, and are expected to further capture market share in the coming years. The future market dynamics will require continuous observation.
Banpresto, a well-known Japanese trendy toy brand, also holds considerable recognition and influence in the Southeast Asian market. By collaborating with popular anime IPs such as "One Piece" and "Naruto," Banpresto has launched a series of popular trendy toy products, attracting the attention of many young consumers in Southeast Asia.
Chinese trendy toy brands like POP MART not only face competition from local brands but also need to contend with these international brands, highlighting an emerging crisis that cannot be overlooked.
Entering the Southeast Asian Trendy Toy Market: A Three-Year Window
The answer is affirmative, but competition is intensifying at an astonishing rate. EqualOcean analysis predicts that within the next three years, the Southeast Asian trendy toy market will see the addition of hundreds of new brands. An executive from a Southeast Asian e-commerce platform told EqualOcean, "Chinese brands bring high-quality products and mature operational experience, but local brands are also rising quickly. The future market landscape may become more diversified."
For Chinese trendy toy brands looking to enter the Southeast Asian market, studying POP MART's approach might be beneficial. POP MART's rapid expansion of overseas stores reflects its pursuit of economies of scale and its direct-to-consumer (DTC) business model. EqualOcean's analysis indicates that POP MART's strategy illustrates several key commercial logics:
Cultural Affinity and Market Potential: POP MART considered cultural similarities and market potential when entering Southeast Asia. The region shares some cultural traits with China and is geographically close, making it a prime choice for POP MART's international expansion. Through market research and consumer interaction, POP MART has gradually adjusted its products and marketing strategies to better fit local cultures and consumption habits.
Localization and Product Innovation: POP MART has adopted a localization strategy and continued product innovation in Southeast Asia. A crucial aspect of EqualOcean’s "Ten Steps to Going Global" is comprehensive localization. After entering the Southeast Asian market, POP MART has launched IP series products that cater to local aesthetics and emotional needs, such as the CRYBABY series in collaboration with Thai artists, which has become a national IP in Thailand.
Collaboration with Major IPs: POP MART has collaborated with globally recognized IPs like Disney, Marvel, and Sanrio to develop "big copyright" products. These IPs have strong cultural affinity and cross-cultural influence, serving as key assets for POP MART’s market entry. For instance, the Disney series blind boxes have successfully attracted Southeast Asian consumers by combining classic Disney characters with trendy toy culture.
Omnichannel Strategy: POP MART has employed a multi-channel strategy in Southeast Asia, combining online cross-border e-commerce platforms with offline stores for comprehensive consumer coverage. EqualOcean's "Ten Steps to Going Global" notes that while e-commerce is rising globally, offline stores remain valuable and essential for brand establishment. POP MART has set up official flagship stores on platforms like Shopee, Amazon, and AliExpress, and is expanding its offline presence in Singapore, Thailand, Malaysia, and other locations. For example, in 2023, POP MART opened its first store in Central World, Bangkok, attracting a large number of fans and achieving first-day sales exceeding 2 million RMB.
(POP MART Thailand’s online shopping process. Source: POP MART Thailand official website)
Additionally, POP MART has integrated the Oracle NetSuite cloud ERP system to monitor overseas business operations in real-time through BI big data analysis, significantly improving management efficiency and decision-making accuracy. This digital operation enables POP MART to better understand market dynamics and consumer needs, allowing timely adjustments to products and marketing strategies, thereby enhancing market competitiveness. Digital operations not only boost management efficiency and reduce marketing and customer acquisition costs but also improve the company's ability to respond to market changes.
POP MART’s marketing strategy in Southeast Asia is also noteworthy. EqualOcean highlights that effective marketing is crucial for brand building, and brand building is the goal of good marketing. POP MART has expanded its brand influence through marketing activities and collaborations with local social media. Social media marketing is particularly important in Southeast Asia, with Statista data showing that Instagram and Facebook have monthly active users of 185 million and 420 million, respectively, making these platforms key for reaching young consumers. In Thailand, about 80% of the population uses Facebook, while in Malaysia, this figure is nearly 90%. POP MART leverages Instagram, Facebook, and other social media platforms to post eye-catching visual content and interactive activities, attracting a large number of young trendy toy enthusiasts. Additionally, POP MART collaborates with local KOLs (key opinion leaders) to further enhance brand exposure and influence. These KOLs share unboxing videos and product experiences, successfully sparking consumer interest and brand loyalty. These activities not only increase brand awareness and influence but also strengthen emotional connections with consumers, further consolidating POP MART’s position in the Southeast Asian market.
Challenges Facing Trendy Toy Brands Entering Southeast Asia
A seasoned IP investor with nearly a decade of experience in the trendy toy sector told EqualOcean that Southeast Asia is currently the most significant growth area for the industry. Expanding into this market is seen as a natural progression. Miniso’s trendy toy director also indicated that Southeast Asia is a top priority for their future international expansion.
However, with great opportunities come significant challenges. Here are some key issues to consider:
Brand IP Management: For trendy toy brands, the ability to succeed and sustain growth hinges on the strength of their brand IP. Adapting to local markets while maintaining brand consistency and gaining cultural acceptance from overseas consumers is a critical challenge. Mighty Jaxx’s founder emphasized that brand impact comes from content-driven brand tone, and over-reliance on star IPs and popular series can be risky. If new IPs fail to meet expectations, it can be difficult to continually attract consumers. The rapidly evolving Southeast Asian market presents both opportunities and pressures.
Supply Chain Issues: EqualOcean highlights logistics and factory management as major challenges. The long lead times and high costs associated with mold development and production require brands to manage their primary factories, inventory cycles, and logistics effectively. This includes training supply chain teams to respond flexibly to market demands.
Hidden Costs and Initial Investment: Other hidden costs and initial investments are also significant. For example, POP MART invested considerable effort in meeting Indonesian government requirements for full SNI (Standard National Indonesia) compliance. Additionally, POP MART has adopted a direct management model for its overseas stores, which, while establishing a strong local presence, also requires substantial financial resources to train local teams. Such costs, though unavoidable, can squeeze profit margins and necessitate a strong cash flow.
These intrinsic challenges pose a serious test for every trendy toy player entering the Southeast Asian market. Will POP MART’s success in Southeast Asia prove to be a fleeting surge, or will it lay the foundation for sustained growth?
Conclusion
Looking ahead, the Southeast Asian trendy toy market holds immense potential. EqualOcean predicts that by 2026, the market could surpass 5 billion USD, while competition will intensify with local brands and international players vying for dominance.
For Chinese companies like POP MART, Southeast Asia represents just the first step in their global expansion, following a cooling-down phase in the domestic market. The next target will be the European and American markets, but whether they can replicate their Southeast Asian success remains uncertain.
Though small in size, blind boxes carry the ambition of a billion-dollar market. In this global competition, whether Chinese brands can maintain their lead is something we will have to watch closely.