Pop Mart shares fall as China pressure, Morgan Stanley cut stake

Shares of Chinese toymaker Pop Mart fell over 5% on June 20, 2025. This decline continues a two-day trend that began due to regulatory criticism and changes in analyst recommendations.

This marks the company’s first negative trading week since early May, with total losses exceeding 13%.

The decline follows an article in the People’s Daily, a publication of the Communist Party of China. The article advocated for stricter regulation of “blind box” toys.

Although it did not specifically name Pop Mart, the article criticized the trend of unmarked toy boxes that are popular among children and young people.

Pop Mart’s “blind box” toys, priced between US$5 and US$10, have been central to its business model.

China’s customs agency has also highlighted efforts to prevent counterfeit Labubu toys, a popular line produced by Pop Mart, from entering the market.

Adding to the pressure, Morgan Stanley removed Pop Mart from its focus list for China and Hong Kong.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Blind box phenomenon represents China’s latest evolution in the global toy industry

China’s toy manufacturing has evolved from basic production to brand-driven innovation over decades, with Pop Mart exemplifying this transformation.

China has dominated global toy production since the early 2000s, accounting for approximately 75% of the world’s toy manufacturing by 2006, primarily as an OEM producer for foreign brands1.

The industry employs around six million workers across more than 10,000 manufacturers, with Guangdong province serving as the leading hub producing over half of the world’s toys2.

Pop Mart’s rise represents China’s shift from manufacturing for Western brands to creating its own globally recognized IPs, with revenues growing from 514.5 million yuan in 2018 to 1.68 billion yuan in 20193.

This evolution reflects broader changes in China’s economy, moving from labor-intensive manufacturing toward higher-value products driven by intellectual property and emotional connection with consumers.