China’s new consumer darlings can get old quickly

Laopu Gold Co

22/08/2025 02:08

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own. Refiles to fix grammar in third and fifth paragraph.

By Ka Sing Chan

HONG KONG, Aug 22 (Reuters Breakingviews) - What's in vogue today may be out of style tomorrow. That's the biggest risk for China's two hottest consumer companies: Pop Mart International 9992.HK and Laopu Gold 6181.HK. Yet the dramatic decline of once-trendy retailer Li Ning 2331.HK is a warning on how fickle young shoppers are.

The pair are stars of so-called new consumption brands, which appeal to the country's youth that are increasing eschewing luxury and foreign names. With its ugly-cute Labubu dolls taking the world by storm, Pop Mart’s shares have rocketed nearly 600% over the past 12 months. Similarly, Laopu, often called the "Hermes of gold" for its sought-after pieces that combine Chinese heritage and modern design, has climbed 770% over the same period.

There is some justification to the hype. Net profit at Pop Mart, now worth $55 billion, topped 4.6 billion yuan ($640 million) in the six months to end-June, a near fivefold increase from a year earlier. Chief executive Wang Ning reckons the company's sales can easily hit $4 billion this year, up from $1.8 billion in 2024. At the $17 billion Laopu, both its top and bottom lines more than tripled in the same period.

Keeping the breakneck growth will be a challenge. Pop Mart's shares currently trade on 41 times forecast 2025 earnings, per LSEG, well above the roughly 11 times for Barbie-owner Mattel MAT.O, or Hello Kitty-parent Sanrio's 8136.T 38 times. To extend Labubu's longevity, Wang is targeting an aggressive expansion abroad, where the toothy-grinned doll has won over fans including Rihanna and David Beckham, as well as a move into films, theme parks and more. Meanwhile, sales and marketing expenses at Laopu are on track to rise 150% this year, per Visible Alpha forecasts, as it tries to stand out in a crowded sector.

It will probably not be lost on both companies that just a few years ago, sportswear brand Li Ning, China's answer to Nike and Adidas, was riding high on a “guochao” wave. Literally meaning “national trend”, it refers to Chinese buyers’ preference for domestic labels. But Li Ning’s share price has dropped more than 80% from its peak in 2021 as its clothes fell out of fashion. Fads always fade faster than expected.

CONTEXT NEWS

Hong Kong-listed Pop Mart International, maker of the Labubu doll, on August 20 reported a net profit attributable to owners of the company of 4.6 billion yuan in the six months to end-June, a 397% year-on-year rise.

Separately, jewelry retailer Laopu Gold reported on August 20 a net profit of 2.3 billion yuan for the fiscal first-half ended in June, an increase of 286% year-on-year.

Pop Mart and Laopu Gold have vastly outperformed https://www.reuters.com/graphics/BRV-BRV/gdvzbbgblvw/chart.png

(Editing by Robyn Mak; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on CHAN/ KaSing.Chan@thomsonreuters.com))