Wang Ning interprets Pop Mart: Domestic growth this year exceeds expectations

Summary

1) A long-term operational philosophy, with a vision of coordinated development across land, sea, and air. 2) Confront organizational issues head-on and proactively solve problems. 3) Cultivate IP value to avoid excessive depletion. 4) The market needs to focus on the worldview, artists, and design concepts behind IPs.

Business journalist Li Xiang recently conducted another exclusive interview with Wang Ning, the founder of Pop Mart.

From Wang Ning's statements, it is evident that: 1) The company adheres to a long-term operational philosophy, with a vision of coordinated development across land, sea, and air. 2) Confront organizational issues head-on and proactively solve problems. 3) Cultivate IP value to avoid excessive depletion. 4) The market needs to focus on the worldview, artists, and design concepts behind IPs. $POP MART (09992.HK)$

I. Challenges encountered during rapid business growth and strategies for addressing them.

1) Challenges in organization and management.The company now has over 10,000 employees, with operations spanning multiple countries worldwide, forming an intricate system akin to capillaries. This brings about differences in culture, laws, regulations, and work methods, leading to potential invisible barriers and conflicts in management styles between departments, business lines, and countries. As organizational levels increase, problem-solving evolves from person-to-person interactions to how groups can systematically collaborate and divide tasks.

2) Challenges brought by globalization.Firstly, the complexity of management has significantly increased, requiring responses to entirely new types of issues. Secondly, as globalization deepens, market demands for products will become more stringent. This requires all aspects, from design, element usage, to production standards, to be executed at higher standards.

3) Challenges in global operational standards.Although overseas store sales have grown exponentially, product delivery processes and store operational levels lag behind domestic standards by 2-3 years. As the brand’s global recognition rapidly increases, the standards and expectations for overseas operations also rise, with hopes that operational standards will soon align with those domestically. The company is driving comprehensive operational improvements in engineering details, product displays, inventory management, and customer service.

4）The challenge of an overheated single product: Proactively implementing LABUBU heat control.To protect the long-term value of the IP and avoid overconsumption, specific measures include postponing many new products originally scheduled for release in 2025 to 2026 to reduce the frequency of new releases; suspending almost all offline marketing activities to prevent overexposure; exercising great restraint in external licensing collaborations by adopting a 'subtractive' approach, carefully selecting partners that can mutually empower the brand, rather than engaging in indiscriminate mass licensing.

These measures aim to protect the long-term value of the IP, ensuring its healthy and sustainable development. By controlling popularity, the company aims to balance supply and demand, allowing genuine users to purchase products, thereby achieving healthier and more sustainable growth.

Second, Pop Mart’s vision: Coordinated development across land, sea, and air.

Building a coordinated 'land, sea, and air' system: Deepening the advantages of offline stores (the 'Army'), exploring new fields like desserts and home appliances (the 'Navy'), and movies and games (the 'Air Force') to enrich the IP's world view, focusing on internalizing capabilities rather than mere licensing.

The company’s core advantage lies in its offline business, which is likened to the 'Army,' while exploration into new categories (such as desserts and home appliances) resembles the 'Navy' probing future possibilities. The ideal state is coordinated development among the 'land, sea, and air' forces.

Third, Pop Mart’s value: Continuously providing emotional and experiential value to users.

Pop Mart is not a mass-market consumer brand in the true sense; its products fall under non-essential, non-utilitarian categories with relatively high price points. However, once consumers gain a unique and positive experience through a product, they are likely to remain engaged and make repeat purchases.

The core of trendy toy consumption is satisfaction and a sense of presence, particularly for non-essential products that provide emotional value. For instance, plush toys and cushions can offer joy, pleasant experiences, and emotional companionship in the physical world.

LABUBU’s 100 million physical products will exist in users’ physical spaces such as desks and homes, continuously reinforcing users' recognition of the IP, accompanying their lives, and creating new emotional connections and value.

Fourth, the product lifecycle can be extended, and success can be replicated.

The sustainability of IP popularity depends on:The IP's worldview, artists, design philosophy, and the systematic operations and channel reach that support all of this.

LABUBU’s success is no accident.It is built on a series of preparatory work: the product's design and aesthetics have universal appeal, supply chain capabilities ensure consistent and stable product quality, and channel capabilities guarantee effective consumer reach.

Explore a unique path for corporate development.The company has established a relatively mature operational foundation and framework; this system can continuously discover and manage IPs.

Risk Warning: The above content is compiled from publicly available data and does not represent any investment advice. Please bear the risks on your own.

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