To encourage Ye Guofu of Miniso to venture into trendy collectibles, a comprehensive business plan was prepared | A conversation with Sun Yuanwen of TOP TOY

Author | Li Xiaoxia

Interviewers | Li Xiaoxia, Yang Xuan

Editor | Qiao Qian

The star of March is trendy toys.

Pop Mart released its financial report. Its revenue exceeded 10 billion yuan for the first time, with a profit increase of over 180%. Its market value reached a new high of over 200 billion Hong Kong dollars.

TOP TOY, the trendy toy brand under Miniso, opened its first global flagship store on Nanjing Road, a prime location in Shanghai. Meanwhile, it announced the launch of a global strategic upgrade, aiming to cover the core business districts of 100 countries worldwide and open over 1,000 stores in the next five years.

The world's first flagship store

Ye Guofu, the founder of Miniso Group, said that cultural consumption and cultural expansion overseas are the directions for Miniso and TOP TOY.

As a latecomer, TOP TOY opened its first store the day after Pop Mart went public. After four or five years, it is beginning to show its potential: last year, its revenue was 980 million yuan, a year-on-year increase of 45%, and it achieved annual profitability. The number of its stores also increased from 148 to 276.

In terms of going global, TOP TOY has currently opened five stores in Southeast Asian countries such as Malaysia, Indonesia, and Thailand. In the future, it plans to have overseas sales account for over 50%.

Competing in the trendy toy arena, it's inevitable to be compared. When asked, "How do you compete with Pop Mart?"

Sun Yuanwen, the founder of TOP TOY, told 36Kr Future Consumption that he doesn't regard Pop Mart as a competitor. The two companies are on different paths - Pop Mart focuses on self-owned IPs, while TOP TOY chooses to do secondary creations of major IPs.

TOP TOY once tried to follow Pop Mart's path and develop self-owned IPs, but the result was "a huge loss." The best dividend period has passed, and they need to explore new outlets.

"At that time, another relatively untapped market was that the blind box market for major IPs was very large, but there was no leading company in this area. Considering our own advantages and efficiency, we resolutely entered this track to do secondary creations of major IPs."

In his view, whether a self-owned IP can become popular is full of uncertainties, while major IPs have more certainty based on their operating time and user base. Under this certainty, TOP TOY's first goal is to become a global brand, and the way to achieve it is to open stores all over the world, just like its parent company, Miniso.

The following is the dialogue between 36Kr and Sun Yuanwen:

Sun Yuanwen, the founder of TOP TOY

Once tried to develop self-owned IPs, but "suffered a huge loss"

36Kr: When you opened your first store, Pop Mart had just gone public, and its path had been proven. Didn't you think about replicating this path at that time?

Sun Yuanwen: We also developed our own IPs in the first year, but we suffered a huge loss. At that time, we really didn't have the ability or the determination to develop self-owned IPs.

In the past two or three years, we opened many stores and developed many IPs. We realized that we had to find a path suitable for ourselves, and we also found that secondary creations of major IPs could work.

So, it's not that I think Pop Mart's model is bad. I just hope that we can give full play to our own advantages and ideas instead of blindly following others.

36Kr: You suffered a huge loss in developing your own IPs. Was it because the products couldn't be sold or the development cost was too high?

Sun Yuanwen: Both. The development cost was extremely high, and we didn't refine the products carefully. There was also no professional team to incubate and operate them. It's true that the products couldn't be sold.

At that time, the market pattern was already set. The users of several self-owned IP companies were crazy about those few IPs. So, to promote a new IP to popularity would mean spending huge marketing expenses and costs, and the waiting period might also be very long.

But at that time, another relatively untapped market was that the blind box market for major IPs was still very large, but there was no leading company in this area. Considering our own advantages and efficiency, we resolutely entered this track to do secondary creations of major IPs.

36Kr: TOP TOY focuses on secondary creations of major IPs, including Disney and Sanrio. Will the licensing cost be very high?

Sun Yuanwen: First of all, the business terms of major IP owners are public and transparent. They don't treat people differently but look at whether you have enough strength to do this. The copyright owners value two aspects. One is the licensee's ability to develop and operate IP products, and the other is the ability to sell the developed products, that is, whether there is enough influence in the market to spread among different circles. Even if a weak company offers a lot of money, Disney may not license to it because it will worry that the company doesn't have the ability to operate this category. We have proven our ability to operate these categories in the past few years.

The uniqueness of major IPs is not important. What matters is the unique design

36Kr: The good sales of secondary creation products of major IPs are based on your differentiated operation or development, or on the influence of the major IP itself?

Sun Yuanwen: We think the uniqueness of the IP is not very important, but the unique design of the IP is very important. So, when we get the IP license, we do our own secondary creations. After getting the IP license, we basically don't use the original image library but redesign and redraw everything.

Another thing is that we understand consumers best. We create secondary IP products in a way that consumers can most easily accept. This is our logic.

36Kr: If the uniqueness of the IP is not important, why do people rush to sign major IPs?

Sun Yuanwen: It's because major IPs have a sufficient user base, enough applications, and certainty. This is a different logic from the uniqueness of the IP.

It's precisely because the uniqueness is not important that people rush to sign. We don't sign the exclusive rights of major IPs. Maybe many people are working on this IP, but in the process of developing this IP, we have our own channels, design, and supply chain to support us in making this IP the best.

For example, on the grassland, we don't want to be the lion. We want to be the fastest antelope. Everyone is working on this IP, and I want to do it best. This is more suitable for our current stage of development.

Of course, the independence of the IP is another path, which is what Pop Mart has been talking about.

36Kr: Have you done it best?

Sun Yuanwen: In the past two or three years, it has been proven that our products sell well, and we have turned losses into profits through this path.

36Kr: Have you summarized any methodologies?

Sun Yuanwen: We have a large database and user portraits, and we also have our own stable customer source. This may be our advantage compared with other studios or brand owners.

36Kr: Pop Mart also has these.

Sun Yuanwen: He does. So, he is relatively perfect in all aspects at present. As I said before, Pop Mart focuses more on developing its own IPs. If we choose to follow its strategy, there may not be enough differentiation.

Whether a self-owned IP can become popular is a mystery

36Kr: How can a new IP be promoted to popularity?

Sun Yuanwen: Developing a self-owned IP is an absolute mystery. It requires enough original design to incubate and operate, and then test it in the market. These investments are very large, but the uncertainty is too great. We hope to pursue something more certain.

36Kr: Is there any mystery in whether a secondary creation of a major IP can become popular?

Sun Yuanwen: This is relatively certain. Because Disney and Sanrio have been operating for so many years. When a new category appears, there is an opportunity window. It's just a matter of who does it first. Not many people are working on new categories of these mature IPs. We were the first to do it, so we got the first wave of dividends.

36Kr: When you first started developing self-owned IPs, did Ye Guofu participate in the decision-making?

Sun Yuanwen: He participated throughout the process. The decision was made jointly by us. At that time, we were just entering the trendy toy industry, and we had to make some attempts.

36Kr: When you entered the trendy toy industry, were you affected by Pop Mart's listing?

Sun Yuanwen: It took us half a year to a year to prepare for opening the first store. At that time, blind boxes and figurines were a niche market. I proposed that as a post - 90s generation, I had never seen anyone around me who didn't like figurines, but the market was relatively blank, so I wanted to open a store. We were also making blind boxes at that time. Pop Mart's listing instantly detonated this market. We never thought it would be like this.

36Kr: Without a prominent example to refer to, how did you convince Ye Guofu?

Sun Yuanwen: I made a very complete BP (business plan). You have to have something when you're "asking for money" (laughs).

36Kr: Did he have any doubts at that time?

Sun Yuanwen: His biggest doubt was whether this was a large - scale market or just a small business. At that time, it was obviously a very small business. In the business plan at that time, I didn't even list Pop Mart. I mainly referred to Japanese toy stores like Bandai. Because when I made the proposal, Pop Mart hadn't gone public yet, and it had less than 100 stores. Miniso already had 3,000 stores in China. At that time, in Mr. Ye's view, it might be a small - scale brand. Later, when it suddenly went public, people thought blind boxes were so amazing. So, the whole industry, including us, is quite grateful to Pop Mart.

36Kr: Did Pop Mart's performance after listing bring any inspiration or stimulation to you?

Sun Yuanwen: The inspiration is that blind boxes will really become a major category. So, at that time, we increased the sales proportion and store space occupancy of blind boxes.

At that time, we were the first company to know that blind boxes would become a major category. Because the day after its listing, we opened our first store. There weren't many blind boxes, and figurines, statues, and some other categories accounted for a relatively high proportion. But later, we thought that blind boxes might be the core product of trendy toys.

36Kr: In 2021, you said that the ratio of your self - developed products to externally purchased products was 3:7. What about now?

Sun Yuanwen: Now it's 5:5, and in the future, it will be 7:3. The 30% is for providing diversity. We hope to continuously explore opportunities for new categories and new IPs for excellent companies in the market and establish connections with them instead of just working in isolation. Otherwise, this industry won't grow big.

[Note: Self - developed products refer to products developed and designed by TOP TOY (including secondary creations of licensed major IPs and their original self - owned IP products). Externally purchased products mean taking products from other trendy toy brands and selling them in the store.]

36Kr: Why is the proportion of externally purchased products decreasing from 3:7 to 7:3?

Sun Yuanwen: We must pursue good financial indicators. We will maximize the empowerment of some valuable original IPs, domestic IPs, and innovative studios. This is based on consumer demand. But pure external purchasing will lead to homogeneous competition. So, from the company's perspective, if we can't attract consumers to the store, then our brand will die.

36Kr: So, will making money be the first goal?

Sun Yuanwen: No. The first goal is to build global brand awareness and open 100 stores in the best 100 shopping malls around the world.

We are still investing now. We don't care whether the profit is 10% or 15%, but we can't not make money. As part of a listed company, we have to account to the shareholders. Our first goal is definitely not making money, but a company that doesn't make money really won't work.

36Kr: Is this Ye Guofu's requirement?

Sun Yuanwen: No. It's my understanding of an enterprise. If you don't make money, you can't reinvest in the company. How can you open 100 stores if you don't make money? You can't always say that we have money. The group has supported us for four or five years. We can't always rely on others. It's too undignified. So, now we have our own cash flow and our own profits.

TOP TOY is like Android, and Pop Mart is like iOS

36Kr: The cost of opening stores is very high. How do you determine that the model can work?

Sun Yuanwen: Our current scale is large enough to cover the costs. Of course, we have gone through a process of growing from small to large. To be honest, the cost was really high in the first year because we had too few stores. Now we've got through that difficult period. The number of stores is approaching 300, and the revenue last year was nearly 1 billion yuan. In the future, the marginal cost may become less and less. This is a good sign.

36Kr: You once said that your advantages and disadvantages are very obvious?

Sun Yuanwen: Our advantages are the ability to open stores and the supply - chain ability. In these two aspects, we are on par with Pop Mart. Even in the ability to open stores globally, we are better because the group has many years of experience in going global.

Our disadvantage is that we don't have the first - mover advantage and strong self - owned IPs. Pop Mart is indeed the leading company in this industry, and the brand assets in its hands are also stronger than ours.

But I think it's fair because they've been in business for 15 years, and we've only been in business for four years. If we look at a five - to ten - year cycle, we will continuously make up for our shortcomings.

36Kr: Who do you regard as your competitor now?

Sun Yuanwen: Actually, we really don't regard anyone as a competitor.

36Kr: But you always mention Pop Mart at your press conferences.

Sun Yuanwen: People are concerned about it, and I can't not mention it. Actually, Pop Mart is not our competitor. I particularly like