The "Midfield Battle" of the Capitalization of Fashion Toys
Recently, overseas news reported that Sony Pictures has obtained the film and television adaptation rights of Pop Mart's LABUBU. The project is in its early stage, and it has not been determined whether it will be a live - action movie or an animated film.
Pop Mart has not officially responded to this. However, the emergence of this news at a time when Pop Mart's valuation is fluctuating is rather delicate.
Looking back at Pop Mart's "rise", the core lies in the fact that it has essentially revolutionized the value system of trendy toys. It has established a pricing standard for trendy toys that is different from traditional toys and reshaped the public's perception of the concept of "trendy toys". This unexpected transformation has directly driven the leap - forward development of the entire domestic trendy toy industry.
Currently, Pop Mart's valuation has declined from its peak in August this year. What supports the capital's confidence in Pop Mart and even the trendy toy track is not simply business growth, but the sustainability of the model - shifting from "blind box promotion + emotional economy" to a more solid "blockbuster IP × global retail".
The news of collaborating with Sony to develop IP movies is, in itself, a hedge against the doubts of the capital market, especially overseas institutions active in the Hong Kong stock market.
Going global, especially entering the European and American markets, has become the main driving force for the growth of trendy toy companies at present, and it is also the main source of the "growth potential" of investment targets in the eyes of capital interested in trendy toys.
Not only Pop Mart, but also Miniso is entering the European and American markets more aggressively. Many trendy toy companies that received financing this year are mainly targeting overseas markets. For example, the trendy toy brand OHKU, which was established this year, recently received nearly 100 million yuan in its first - round financing, and its main concept is to quickly seize the European and American markets with a light - asset model.
During the process of going global, the value of IP will become more prominent. Compared with product exports, IP exports can support a more ambitious story in the capital market. It is not difficult to understand that Pop Mart prefers to cooperate directly with Hollywood film giants, which can achieve the goal in one step. Coincidentally, Sony itself is also in the strategic process of promoting cooperation with Chinese local creators to develop cultural and entertainment products for the global market.
In October, Ye Guofu, the founder of Miniso, said that Miniso and Pop Mart "will become more and more similar in terms of product categories and business strategies in the future. The only difference is the IP. You have your IP, and I have mine." - This further endorses the sustainable model of "blockbuster IP × global retail" in the trendy toy industry.
However, this also means that the two major Chinese IP trendy toy giants have defined the general framework for the development of the trendy toy industry. At present, other participants in the trendy toy industry, despite their advantages in products, operations, business models, etc., have not stepped out of the existing industry development framework.
In fact, although the soaring market value of Pop Mart has given the entire market a lesson in capital operation. The era dividend of IP consumption and emotional economy reflected behind its high - growth performance has supported the new consensus of the entire capital market on trendy toys and significantly increased the activity of capital operation in the trendy toy industry compared with last year.
To some extent, it can be concluded that this round of capitalization of trendy toys, led by industrial capital and centered on the secondary market, is the "mid - game battle" of the Chinese trendy toy industry.
Since this year, in addition to TOPTOY, 52TOYS, and Tongshifu queuing for IPO in the Hong Kong stock market, there have been reports of other trendy toy companies such as Jason Entertainment and Hitcard advancing their listing plans. There are also more trendy toy companies below the surface brewing IPOs. Whether they can successfully list will become a watershed for the future development focus of Chinese trendy toy companies and the change of the trendy toy industry pattern.
Many concepts and interests are still colliding, which makes the current trendy toy industry present a situation where long - termism and short - term speculation coexist.
At this time, our focus on "the capitalization of trendy toys" is not simply to track the financing trend or the ups and downs of the trendy toy industry itself. We are more concerned about the influence of the development of the trendy toy industry and its underlying capital operation on the entire IP entertainment and consumption industry.
On the one hand, as the scale of capital flowing in and out of the trendy toy industry increases and the number of participants becomes more extensive, the flow direction and precipitation areas of funds will have a profound impact on the entire IP entertainment and cultural industry in the next three years. On the other hand, with the upgrading of the status of the trendy toy industry, more and more trendy toy companies themselves are expected to truly grow into important forces that can influence the pattern and development trend of the IP entertainment and consumption industry.
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The Panorama of the Capitalization of Trendy Toys from 2015 - 2025
Fever, Differentiation, and Logic Reconstruction
"The number of investors introduced by banks this year is 30% - 50% more than in previous years."
As the executive secretary of the Dongguan Trendy Toy Association, Tong Yuan receives many inquiries from investment institutions and industrial companies every year, hoping to be introduced to high - quality trendy toy enterprises in Dongguan. In the past, most investors came with the purpose of researching the trendy toy market. However, this year, they have basically completed their research and are clearly well - prepared.
"There are investors introduced through various channels. Banks are more enthusiastic about participating this year, and the quality of the investors they introduce is relatively higher. For example, recently, a bank directly stated that the investor is backed by a large consortium and wants to conduct mergers and acquisitions and integration in the trendy toy industry. Many investors specifically named several leading companies and immediately asked if they were planning an IPO."
Tong Yuan said that according to the association's research, there were at least seven financing events in the trendy toy blind box field from January to August this year. Compared with only two financing events last year, the activity has significantly increased.
However, considering the overall capital floating in the trendy toy industry and the number of trendy toy companies seeking investment and financing opportunities, the proportion of actual investment transactions is not large, and the absolute number has not reached the historical peak.
In fact, the real capitalization of the Chinese trendy toy industry started in 2015, going through three investment and financing peaks, which also correspond to the overall development context of the trendy toy and IP industries.
First (2015 - 2018): As an ancillary monetization link in the IP industry
As early as 2015, regarded as the "Year of IP" in China, with the high - profile entry of Internet giants and the emergence of new VC institutions, investment in the cultural and entertainment industry reached an unprecedented high. On the business plans of startup companies in the cultural and entertainment field that year, the most common term was "closed - loop of the entire IP industry chain", and the most resounding concept was "mimicking the Disney model" and building a "Marvel IP universe".
At this stage, companies in all links of the upstream and downstream of the IP industry chain were within the scope of capital investment. The same was true for trendy toys, which were mainly regarded as a monetization link in the IP industry ecosystem.
At that time, Pop Mart was still in a stage that "capital couldn't understand"; the types of trendy toy products popular in the Chinese market were far less diverse than they are now, and the concept of "trendy toys" was yet to break through the niche circle. For most trendy toy companies, investment institutions mainly considered being acquired and integrated by IP ecosystem companies as the main exit path. The business model and upper limit of trendy toys as an independent track had not yet taken shape. After the reshuffle and integration of the entire IP industry in 2018, the activity of trendy toys in the capital market also declined for a while.
Second (2020 - 2022): The concept of "trendy toys" became independent, and the market value shifted
In 2020, Pop Mart was listed on the Hong Kong stock market, and its market value exceeded HK$100 billion on the first day of listing. The concepts of "trendy toys" and "trendy art" returned to the public eye as independent concepts. The primary market became hot again and reached a peak in the number of investment and financing events in 2021.
The typical investment logic during this period was that financial capital was still willing to pay for "concepts" and "models", believing in "growth potential", recognizing "circle culture", and expecting niche categories to break into the mass market and leading companies to emerge in vertical tracks.
Meanwhile, the sources of funds flowing into the trendy toy industry were also different from the previous round.
On the one hand, leading trendy toy and IP institutions represented by Pop Mart invested in niche segments of the trendy toy industry, including building blocks, cards, blind boxes, plush toys, dolls, etc., as a supplement to their own business ecosystems.
On the other hand, Internet companies such as Kuaishou and Xiaohongshu, which were booming at that time, continuously focused on content and cultural products that met their platform characteristics and user needs. At the same time, game companies became the new main force in cultural industry investment. Many game companies or VC institutions funded by game companies invested in trendy toy companies that could help the IP - based development of games and enrich the means for game IPs to reach users.
"At that time, people came to us every day, saying that there were all kinds of opportunities that could make our company develop by leaps and bounds. But there were a lot of people, and it seemed that there was a lot of exaggeration. Many people didn't understand the trendy toy industry and actually couldn't understand Pop Mart either." said the founder of a trendy toy company established in 2019.
Moreover, in his opinion, getting a large amount of financing at once didn't mean that the company could immediately create ten more trendy toy series. Instead, he was worried that trying to meet the capital's goals might lead to improper management and ultimately accelerate the company's demise.
This concern is not unfounded. In fact, the subsequent plunge in Pop Mart's stock price made some hesitant capital back off. In 2023, game companies suddenly stopped their external investments, and game - related capital withdrew drastically, which largely led to a rapid cooling of investment and financing in the trendy toy industry. Some startup companies relying on financing either had their capital chains broken or left the market in various ways, which also damaged the vitality of some VC institutions.
Many investors who experienced this stage told Dongxi Entertainment that on the one hand, VC institutions had less money, and on the other hand, they seemed to suddenly lose the logic for investing in trendy toys. For a while, it seemed that except for hard - tech, other content and consumption tracks were not worth investing in. "After all, some institutions still haven't recovered. This year, we can still see some VC institutions that were active at that time reporting abnormal operations."
Third (2025 - ): Led by industrial capital and driven by the secondary market
Thanks to the amazing consumption power shown in the C - end market and the considerable increment contributed by the overseas market, the revenue growth of many trendy toy companies from 2024 to now is no less than that after a round of financing. The global market's interest in IP consumption and the capabilities of the Chinese trendy toy industry in supply chain, marketing, channels, etc., have provided more definite factors for the capital market to judge the growth potential of trendy toy companies.
More importantly, the soaring market value of Pop Mart (reaching a high of over HK$450 billion in August this year) has fully stimulated the enthusiasm of industrial capital and the secondary market, making them the main force in investing in trendy toys at this stage. For a while, "companies in the film, retail, publishing, media, and 3C industries have all entered the trendy toy circle."
Gu Yuhao, the general manager of Shanghai Film New Vision Fund, who has long been concerned about the IP trendy toy field, said, "The biggest change in the past two years is that more capital has been interested in the young culture direction. After seeing the listing and global development of Pop Mart, many capitals can better understand the market opportunities of Chinese IP cultural and creative industries and IP going global. This is also reflected in the fact that the Hong Kong stock market is willing to set a much higher market - value expectation for such listed companies than the average price - earnings ratio in the Hong Kong stock market."
Dongxi Entertainment learned from several companies and institutions that have invested in the trendy toy industry at different ecological positions that with the opening of the Hong Kong stock market channel, many second - tier trendy toy companies after Pop Mart have either submitted or are preparing to submit their prospectuses in Hong Kong, setting off a wave of concentrated IPOs. By the first half of 2025, the price - earnings ratio (PE) has generally risen from 8 times in 2024 to 15 times, far exceeding the industry average.
There are two main investment mentalities in the secondary market: one is to quickly supplement the capabilities of affiliated companies by investing in trendy toy companies, which is equivalent to buying time with money. Usually, the invested trendy toy companies are required to have an annual revenue of over 100 million yuan; the other is to aim directly at IPOs, requiring trendy toy target companies to meet the revenue scale (over 1 billion yuan) and net profit margin indicators of pre - listed companies.
In contrast, the primary market is in an awkward position.
At present, there are still a large number of relatively young trendy toy companies in the "middle layer" of the trendy toy industry. These are also the companies whose business plans VCs can easily obtain, and they are more active in seeking financing. Their annual revenues generally range from 50 million to 100 million yuan, and their net profits are usually not high. Some are even in the red. Their financing needs are mostly between 10 million and 20 million yuan, with the goal of achieving an annual revenue of 100 million yuan in two years.
If these companies don't have unique insights and capabilities or a powerful backer, they seem to lack growth potential for VCs, and it's difficult to judge whether they have the ability to achieve their goals.
"VCs are now making investment decisions more slowly because they haven't seen anything new and eye - catching. It's also more difficult to make money from the difference in cognition and information in the industry." said an investor who invested in trendy toy companies in the early days. Although there are high - quality companies, they have passed the stage of urgently needing funds for expansion and are not in a hurry to take the capitalization path. For most VCs, there are few opportunities to participate in the middle - round financing of these companies, either investing in the first round or the last round before IPO.
Another investor still interested in primary - market opportunities said that he prefers to capture early - stage projects "from scratch". He mainly tries to verify new IP incubation and channel distribution strategies through early - stage projects to find the "future second - place" company that can overtake the leading companies. To diversify risks, the strategy is mainly to focus on small teams (<50 people), make seed - round investments, and target companies with a valuation of less than $50 million.
On the other hand, the primary market is also more concerned about the exit mechanism than before.
In addition to IPOs, the relatively common exit mechanisms for trendy toy startup companies previously included "dividend exit", "repurchase exit", and "strategic merger". According to the feedback from Dongxi Entertainment's research, currently, there are few companies that can meet the first two exit conditions.
The main reason is that the 80/20 rule in the trendy toy industry is becoming more and more obvious. To achieve the scale set by capital in the short term, mid - and lower - tier companies need to pay a higher cost than companies that already meet the pre - listing conditions, and their cash - flow capabilities are limited. "Among the many trendy toy companies I've seen, I can count on one hand the number of companies with an annual net profit of over 10 million yuan."
In contrast, "merger" may be the most realistic and achievable exit method for small and medium - sized trendy toy enterprises at present.
An investor said that considering the high uncertainty and high threshold of the IPO window period, it is recommended to regard strategic mergers as the core guaranteed exit method. For this purpose, the investment target can be adjusted to ensure that the invested enterprise can be acquired by a strategic buyer at a reasonable multiple (such as 5x to 10x) within 3 to 5 years, while retaining the potential for excess returns from a leading IPO.
Moreover, with the acceleration of the overseas expansion of Chinese trendy toy brands, international toy giants and cultural and entertainment groups may become potential acquirers, providing investors with the possibility of cross - border merger exits and usually a higher valuation premium.