Collectible toymaker sees sharp increase in international business

Earlier this year, POP MART, a leading collectible toymaker that introduced the concept of blind box toys, opened its first store in London where it showed off its top intellectual properties, which included Skullpanda, Dimoo and Pucky, as well as its Space Molly character.

After taking its first step in the European market by opening a store in the United Kingdom, the Beijing-based company has expanded its business to 23 markets overseas, such as South Korea, Japan and the United States.

Revenue from international markets grew 176 percent year-on-year in 2020, the company said, while projected growth was even higher last year, said its top executive.

The sharp increase in its international business has been driven by direct-to-consumer stores in Singapore and Japan and high growth generated by its cross-border e-commerce platforms, including its official website, AliExpress, Shopee－a multinational technology company that mainly focuses on e-commerce in Southeast Asia－and Amazon.

Justin Moon, vice-president of POP MART, who leads its overseas division, said the company is planning to quicken the pace of going global this year by opening 50 new stores, in addition to its 12 existing stores overseas. The majority of the new stores will be in South Asia and Southeast Asia, while the US and Europe will be priority markets for the company.

The COVID-19 pandemic has shifted the way POP MART chooses a location for a brick-and-mortar overseas store.

Previously, shopping malls were the best locations as they attracted visitors with surrounding brand stores. But the lingering pandemic continued to limit customer flow at shopping malls, as the company said it is looking for street stores that can run independently without being affected by other stores in the malls.

Stand-alone stores serve as advertising tools for the company. Opening those stores in another continent during the pandemic remains very challenging, said Moon.

POP MART raised $676 million in an initial public offering in Hong Kong in 2020, giving the company a valuation of $7 billion ahead of its trading debut.

The company decided to expand globally due to its success in the Chinese market. It now runs more than 300 directly operated stores in China and is expected to continue entering first and second-tier cities while expanding its reach to third and fourth-tier cities, said Moon.

As other countries and regions have adopted more relaxed policies to combat COVID-19, the global retail industry is now in the process of recovering. The toy market, in particular, has been comforting families forced to spend more time at home.

Having established itself overseas since 2018, Moon said the pandemic has a silver lining for POP MART. "As a fast-rising startup, POP MART was not ready for a rapid expansion overseas three years ago due to a lack of systematic procedures and matching training," he said.

The past two years actually offered more buffer time for the company to think about the next steps for international success.

At first, when POP MART decided to enter Asian markets, such as South Korea, Japan and Singapore, the company adopted a wholesale model or operated as a joint venture. Such practices later boosted its confidence in facing consumers directly as a wholly-owned entity in the international market.

Moon said the turning point came in Hong Kong, a perfect place to test the waters before expanding overseas, where POP MART has opened two directly-operated stores so far.

Part of the breakthrough is to establish an Enterprise Resource Planning system, a software used to manage the function of a business and which took nine months to develop, flattening the management of all stores globally.

"Before the introduction of the ERP system, we used to receive data at the headquarters in Beijing from an overseas store a month later. Now we can check any data simultaneously worldwide," he said.

The system contributes real-time and standardized data from various markets, thus greatly improving decision-making and analysis, he said. In addition to establishing a unified language in global markets, lifting brand awareness is what POP MART has done overseas.

For example, the company has collaborated with CapitaLand Malls in Singapore by holding installation exhibitions featuring the appearance of Mega Space Molly, one of the most favorable IPs of POP MART, during the holiday season last year at 16 malls.

The shows not only boosted traffic for the malls but also improved recognition of the POP MART brand among consumers in Singapore, a trendsetting area in Southeast Asia.

Currently, due to the high cost of customized or localized approaches adopted by the company while entering a new market abroad, POP MART has designed and developed products in China and has sold them overseas, with localized adaptations for each market.

Its customers in Japan and South Korea, for instance, have similar profiles. Seven out of 10 are women who love cute products and major IPs, such as Disney characters. In the US and Europe, major emerging markets for the toymaker, customer profiles show buyers are mostly men who like to collect toys, said Moon.