China's Pop Mart exercises pricing power as Labubu popularity surges abroad

The Star

26-04-2025

Chinese trend-toy maker Pop Mart is hiking prices on its popular Labubu character in the US and shifting more production to Vietnam, as the tariff war between the world's two largest economies weighs on its profit margins.
The Beijing-based company will introduce Labubu 3.0, a colourful set of seven figurines from the Norse mythology-inspired 'The Monsters' series, globally on Thursday.
Items in the new collection will be priced at 99 yuan (US$13.50) in mainland China, on par with the current resale price of previous iterations. Meanwhile, US consumers will see a notable price bump to US$28, up from US$22 for the previous series, as the company seeks to protect its margins, according to a Wednesday report by Jefferies.
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'Pop Mart is already positioned as a high-end toy brand overseas and primarily targets adult buyers,' said Richard Lin, chief consumer analyst at SPDB International, a Hong Kong-based investment bank. 'So given this context, it has a lot of say when it comes to determining its prices.'
Lin added that Pop Mart could also raise the prices of existing collections later if the tariffs have a significant impact. 'Otherwise, the company won't be able to cover the additional costs,' he said.
Pop Mart is making efforts to diversify its supply chain, moving more production to Vietnam to skirt heightened US tariffs on Chinese goods. Those tariffs now stand at 145 per cent, although US President Donald Trump said on Tuesday in Washington that tariffs on China will 'come down substantially, but it won't be zero'.
Pop Mart's Vietnam site already manufactured 10 per cent of its total output as of the end of 2024, according to Jefferies, and the toymaker is planning to have all US products made there by the end of this year.
Vietnam was one of the hardest-hit Asian countries under Trump's trade restrictions, slapped with a 46 per cent 'reciprocal tariff' earlier this month. But the measure was quickly rolled back as part of a 90-day tariff pause on all US trade partners except China.
Still, analysts projected some pressure on Pop Mart's margins.
'We slightly trim our margin assumption, considering possibly higher supply-chain-management pressure and product return rate in a hyper-growth period and short-term damage from US tariff hikes,' wrote Jessie Xu, who leads China consumer discretionary research at Deutsche Bank.
The price increase and supply-chain adjustments are far from a threat to the company's global expansion, as Pop Mart's popularity continues to grow in every market where it has a presence.
Its Labubu toy – an elfin character with a mischievous grin – took the Asia market by storm last year and won over high-profile followers including K-pop star Lisa of Blackpink and members of the Thai royal family. Now, it is gaining favour in the US and Europe as well.
The company's first-quarter sales surged up to 900 per cent year on year in the US and 605 per cent in Europe, far outpacing the 350 per cent growth in Asia and 100 per cent growth at home, according to the company's latest unaudited results on Tuesday.
'Fan effect is emerging in the US and Europe as more celebrities and influencers are becoming obsessed with Pop Mart's toys since just late 2024,' Deutsche Bank's Xu said in a report.
'The 'kidadult' trend and plushies are quickly gaining popularity amid a much wider group of consumers (from teenagers to those in their 50s and the super-wealthy), leading to a much larger total addressable market for Pop Mart.'
Deutsche Bank raised the revenue forecast of the Hong Kong-listed company for the next two years by up to 30 per cent, and expected China and overseas markets to grow 56 per cent and 180 per cent year on year in 2025, respectively. Meanwhile, Jefferies projected that Pop Mart's sales abroad could hit 13 billion yuan (US$1.8 billion) this year, up from 5.1 billion yuan in 2024 and matching last year's global total.
Overseas revenue now accounts for close to 40 per cent of the company's total, CEO Wang Ning said in a memo this month, where he also announced a management revamp in a bid to accelerate the brand's international expansion.
Former senior-vice president Justin Moon will join Sid Si as co-chief operating officers, while regional headquarters will also be set up for Greater China, the Americas, Asia-Pacific and Europe, according to an organisational chart seen by the Post.
Shares in Pop Mart have risen more than 95 per cent so far this year, following a 370 per cent surge in 2024.
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