Faced with the shrinking domestic market, trendy toys are targeting overseas markets

This article introduces the decline of the domestic market size of trendy toys, and the players in the trendy toy track are targeting the overseas market. It is suitable for readers who are interested in trendy toys.

"Dongjing Menghualu" has a record: "On the seventh night of the seventh month, the tile houses outside the Song Gate in the east of Panlou Street, the tile houses outside the Liang Gate in the west of the state, the streets outside the Beimen Gate, the streets outside the Nanzhuque Gate, and the Maxing Street all sell Mohele, which are small clay dolls. They are all made of carved wood and decorated with railings, or with red gauze and green cages, or decorated with gold beads, ivory and jade. A pair of them costs thousands of yuan and is used as a seasonal item by the imperial court, the rich, and the common people."

Among them, "Mohele" is very similar to the popular figurines today: under the same prototype, different series of products are released according to different themes, characters, and costumes. In other words, the trendy toy culture has existed since ancient times. In recent years, the concept of trendy toy has been introduced into China from Japan and South Korea, and has exploded from the Z generation to the entire young group, and also spawned capital myths such as Pop Mart.

According to its prospectus, in the three years before its listing, from 2017 to 2019, Pop Mart's revenue was 158.1 million yuan, 514.5 million yuan, and 1.6834 billion yuan, respectively, and its net profit was 1.56 million yuan, 99.52 million yuan, and 451 million yuan, respectively, which means that its net profit soared nearly 300 times in three years. In addition to the bright prospects for money, the cases of trendy toys going beyond the circle are also amazing.

The sky-high priced bear of 126,000 pounds in 2021, the Lingna Belle that made customers line up and bleed at the end of the year, and the China Consumers Association's comment at the beginning of 2022 on the 8-fold increase in the second-hand price of KFC blind boxes, etc., all reveal the "crazy" side of the trendy toy market from top to bottom.

Now that the bubble has faded, sometimes there has been no news of trendy toys going viral for months. Pop Mart’s market value has also fallen by more than 90% from its peak, and its offline stores are no longer as lively as before. New Standpoint visited some trendy toy stores and communicated with young trendy toy enthusiasts and found that many young people increasingly feel that trendy toys are a scam from beginning to end, and many players regret the huge amount of money they invested in buying blind box trendy toys. Perhaps, trendy toys are being "abandoned" by young people of Generation Z.

1. The trend of game players is receding

“MOLLY series, Harry Potter series, DIMOO constellation series, etc. Every time I came across a new series in the past two years, I would definitely buy it back to open all of them.” When talking about blind boxes, Xiao Yi, a 24-year-old trendy toy enthusiast, knew Pop Mart’s blind box series like the back of his hand. He even set up a display window at home specifically for these figures. Every day when he looked at the full window, he felt a great sense of satisfaction in his heart.

"But I haven't tried a new series for a long time, and I haven't experienced the feeling of opening a package every day for a long time," Xiao Yi suddenly said with emotion. He said that during the time when he bought blind boxes, the couriers around his home changed several times, and they were all very familiar with him, because he bought a lot and bought frequently.

But now I haven't bought a blind box for nearly a year. When I occasionally bought a door-to-door express delivery, the courier would joke, "I haven't come to your place for a long time. I didn't expect that you have changed the couplets." Xiao Yi told "New Standpoint": "Fashionable toys may be a business for merchants and scalpers, but for buyers who really like a certain IP and have their own beliefs, it has caused great financial and spiritual damage. To be precise, this is more like a scam that consumes consumers' emotions of 'love'."

Xiao Yi also frankly stated: "After recognizing the nature of blind boxes, my life has become happier. Even if I take my girlfriend out to play more often, I can still save more than half of my salary. You know, I couldn't save any money when I bought blind boxes before." In fact, Xiao Yi is not an exception among the entire Generation Z.

During its visit, "New Standpoint" found that nearly 70% of young people who once had an extreme pursuit of trendy toys such as blind boxes and figures stopped their "buying, buying, buying" within a year, and were instead willing to spend their income on daily life areas such as nearby travel, camping, and home living.

Looking back, the peak moment of trendy toys is still vivid in our minds, which is only about two or three years. Since the introduction of trendy toys into China in the millennium, the market size has always been on the rise, especially in recent years. According to a report from the Prospective Industry Research Institute, the market size of blind boxes in China alone is on the rise from 2019 to 2023, rapidly expanding from 3.2 billion yuan in 2019 to 9.7 billion yuan in 2021, a doubling of growth.

However, with the rapid expansion of the market, the mentality of companies in the trendy toy track has also been affected. They began to adhere to the logic of data being king and profit first, blindly pursuing growth and selectively ignoring various hidden dangers.

The trendy toy market has quickly turned from a "bear" market to a "bull" market, with various blind boxes emerging one after another, from a single hit IP to an assembly line-style manufacturing of emerging IPs. Regardless of the quality or the core value, as long as a certain story gathers a group of audiences, merchants will immediately be eager to launch figures and peripherals around this IP.

And there is a high probability that they will be snapped up, and then appear in the second-hand market at a premium of several times to be purchased by real users until the heat fades. And this fanatic effect provides endorsement for the emergence of more popular trendy toys. After several years of internal friction, trendy toy consumers have been greatly hurt and have begun to lose trust in the value of trendy toys. Nowadays, except for the popular Bing Dwen Dwen and Gu Ailing figures at the beginning of last year, there are very few trendy toys that have really gone viral.

This phenomenon also confirms that the weight of trendy toys in the hearts of young people today is plummeting. According to the information released in Pop Mart's financial report, in Q3 2022, Pop Mart's overall revenue fell by 5% to 10% year-on-year, of which mainland China's revenue fell by 10% to 15% year-on-year. The data of leading companies may not be able to summarize the situation of the entire industry. As a central player, Jiumu Zawushe (a trendy toy business under M&G Stationery) only achieved operating income of 635 million yuan in Q3 2022, a year-on-year decrease of 8.96%, which can show the current situation of the trendy toy market.

It is obvious that China's trendy toy market has begun to shift.

The scale of the industry has turned from a state of rapid expansion to a state of decline . Although the decline of about 10% does not seem exaggerated, it means a change in trend . As of now, the number of notes on Xiaohongshu platform about "Pop Mart quitting" has exceeded 20,000, and the tag #blindboxquit has nearly 14 million related views. Pop Mart's "first collectible for young people" MEGA series is no longer popular. The second-hand market has gone from premium, original price to below original price, and continues to move forward on the road of breaking defense.

Various signs indicate that in the post-epidemic era, young people in the trendy toy market have really woken up. From the descriptions of consumers and combined with the current trendy toy market, we can clearly perceive that young people have changed from "daring to spend, willing to spend, and spending casually" to "not spending, spending little, and spending at will" now. On the surface, it seems that the income has decreased due to the epidemic, but in fact, the consumption concept is constantly changing in a conservative and rational direction. More importantly, young people have a "trust crisis" in their recognition of the value of trendy toys.

Because in essence, the reason why trendy toys can become so popular and be sold at sky-high prices is that the fundamental logic is still to rely on "toy" financial management. There will always be someone to take over if you buy low and sell high, which is similar to a "Ponzi scheme" based on physical carriers.

This also means that only when certain trendy toys are released on a small scale and with low frequency on the basis of overall parity, can these specific trendy toys be transformed into collection value through their scarcity and become popular products.

However, in recent years, many trendy toy companies have been over-producing popular products and over-raising prices, which has far exceeded the healthy proportion. This has not only hurt high-end players who are willing to spend a lot of money, but also ordinary consumers who are the basic players. According to statistics, the number of new trendy toy-related companies in 2021 alone has reached 1,470.

Not only is the quality uneven, but the most important IP value is also constantly abused. Just by putting a touching story on a doll, you can harvest a lot of Generation Z leeks. The radicalism and greed of trendy toy companies and the excessive tilt of the scale of popular products have broken the scarcity ecology of trendy toys described above. It is reasonable for young people to "retreat".

2. Coming from and going overseas

Faced with the rapidly declining consumption power of Generation Z, major players in the trendy toy market are anxious to see it. In order to regain the domestic market, even if they are not fully prepared, remedial plans are still on the table. For example, Pop Mart once again focuses on blind boxes, significantly diversifies in toy categories and cultural and creative peripherals, uses the MEGA series as a breakthrough point, and uses multiple main IPs such as SKULLPANDA and DIMOO to support the MEGA series. Among them, the first launch of SKULLPANDA's BJD dolls and LABUBU plush dolls have also had a certain influence in the market.

On the other hand, MINISO, which held high the banner of trendy toys in 2021, let TOP TOY turn to the "Chinese building blocks" track and focus on the 41 billion building blocks market to find a growth curve. However, it is still unknown whether the market idea of ​​supporting "interest consumption" by using the diversified categories and bundling of large IPs laid by the past collection stores will be successful. The mid-range player 52TOYS started from the trendy toys flash show in Sanlitun, Beijing last year, bringing BOX series, SOFUBI and other categories, focusing on expanding product lines such as mecha transformation, movable dolls, static dolls, designer/artist toys, and derivatives, and upgrading its brand along the "collection of toys" route.

However, the Q3 2022 performance of various companies has proved that these practices have little effect and are difficult to save the market . Therefore, while domestic trendy toy companies are "fighting with each other" , they are also looking overseas , where the concept of trendy toy came from. Pop Mart has successively made moves in markets such as Japan, South Korea, the United States, and Australia. According to the Q3 2022 financial report, Pop Mart's revenue in Hong Kong, Macau, Taiwan and overseas increased by 115%-120% year-on-year.

But in fact, most players have already laid out their plans in the overseas market. According to the data from the "2020 Cross-border Export Consumption Trend Report", the overseas online transaction volume of blind boxes at that time increased by 400% year-on-year. However, since Pop Mart only listed overseas data separately in its 2022 semi-annual financial report, its overseas development status in the first two years is unknown. But as far as Q3 2022 is concerned, the increase in the overseas market can only make up for the decline in the domestic market.

52TOYS CEO Chen Wei once said in a public speech: "The overseas layout has made up for the shrinking domestic market this year to a certain extent. The company's sales scale this year is expected to be the same as last year." Interestingly, although the revenue of Chinese trendy toys abroad has been flat, a "wave" of reverse cultural output has been formed.

The local trendy toys that have emerged in the Chinese market have absorbed the experience of young Chinese people: Since Chinese people born after 1995 and 2000 have obvious characteristics such as circle social interaction, sense of experience, and interest symbols, Chinese trendy toys will deliberately cater to the preferences of young people when opening offline stores.

And this underlying logic has been passed down overseas - in the offline stores or pop-up stores of most Chinese trendy toy brands, the staff will display "Chinese-style service": accurately remember the name of each toy, communicate in a low voice while paying attention to social distance, encourage customers to increase their time in the store, and be happy to help customers take photos and share... Jin Tai, a senior ACG artist currently living in Seoul, South Korea, said bluntly: "China's trendy toys are very interesting. Maybe there is not much novelty in mature IPs at present, but the offline stores are very fun and make me feel at home."

Jintai also said that these stores can quickly help him find friends with the same hobbies, and he is particularly willing to bring friends to these places to get together, meet new partners and expand his network of contacts. According to Liu Chang of Huxiu, compared with traditional foreign toy brands, Chinese trendy toy brands pay more attention to e-commerce data, information technology, new traffic marketing, and community building .

Chinese students often post on Twitter to promote Chinese trendy toys: "I have been attracted by many types of blind boxes on TikTok, but the ones that impressed me the most are the Chinese-style blind boxes. When I see the special blind boxes that are unique to my country, I can't help but place an order to buy them. Even my friends around me are influenced and develop a liking for Chinese trendy toys."

However, the output of trendy toy culture still relies on China's traditional culture, and in terms of hard power, Chinese trendy toys are still far behind foreign trendy toys. Local trendy toys that have been entrenched in the overseas market for many years have considerable strength and influence far greater than Chinese trendy toys. Bandai Namco, which owns IPs such as "Gundam", "Naruto", "Dragon Ball", "One Piece", and "Digimon" in Japan, had sales of 362.198 billion yen (about 7.8 billion yuan) in its trendy toy business in 2021 alone.

The biggest reliance of Chinese trendy toys going overseas may be Chinese elements , but at the same time the hidden dangers are very obvious. Once the overseas trendy toys encounter the same chaos as in China , such as IP abuse, when the "homesickness" is exhausted, compared with foreign trendy toys , what "trump card" can these "outsiders" play to compete with them?

3. Final Thoughts

Trendy toys can be works of art or spiritual sustenance for contemporary young people. Perhaps, to be a little pretentious, they can also be said to be objects that allow lonely souls to find comfort and sustenance. But they should not be tools used by certain businesses or scalpers to make money.

It is not advisable to kill the goose that lays the golden eggs. The first consensus that companies in the trendy toy industry should reach is that the audience in this field obviously has a ceiling, and it is not a leek that can grow one crop after another. Betting overseas is certainly an optional path, but first of all, Pop Mart and others should learn to respect the market and cherish the existing stock players. After all, if you hurt the hearts of these consumers, it is easy to "ebb" and difficult to get into the pit again.

Author: New stance

Source: WeChat public account "New Position NewPosition (ID: xinlichangNP)"