Pop Mart's Explosive Growth and Global Expansion: Why Now Is the Time to Invest in the "Emotional Consumption" Revolution

In 2025, the global investment landscape is witnessing a seismic shift driven by a generation redefining what it means to consume. Generation Z—born between 1995 and 2010—is not merely purchasing products; they are investing in emotional experiences, self-expression, and cultural identity. This phenomenon, termed “emotional consumption,” has become a $8.9 trillion force by 2035, with companies like Pop Mart International Group (HKEX: 1949) at the forefront. For investors, the question is no longer if to act on this trend, but how to position themselves to capitalize on it.

The Gen Z Consumer: A New Economic Powerhouse

Gen Z's spending power is growing at twice the rate of previous generations, with the average 25-year-old in the U.S. earning $40,000 annually—50% more than baby boomers at the same age. Despite economic uncertainties, this cohort is willing to take on debt (34% globally) to splurge on items that align with their values. In China, where deflation and a sluggish jobs market persist, Gen Z's emotional consumption is a lifeline for brands that tap into their desire for self-identity and community.

The key to unlocking this market lies in IP-driven innovation and emotional storytelling. Pop Mart has mastered this formula, transforming collectible toys into cultural touchstones. Its blind box model, which combines surprise and scarcity, has proven irresistible to Gen Z, who are 25% more likely to engage in repeat purchases compared to older demographics.

Pop Mart: A Case Study in Emotional Capitalism

Pop Mart's 2024 revenue of RMB 13 billion—a fivefold increase since its 2020 IPO—reflects its ability to monetize emotional value. The company's IP characters, such as Labubu and Molly, are no longer just toys; they are lifestyle symbols. Labubu, for instance, became a global subculture icon in 2024, endorsed by celebrities like Rihanna and featured in viral TikTok challenges.

The company's global expansion strategy has further amplified its success. By 2024, overseas markets accounted for 38.9% of Pop Mart's revenue, up from 9.8% in 2022. Its direct-to-consumer (DTC) model in regions like Southeast Asia and North America has slashed distribution costs while deepening customer relationships. E-commerce sales now contribute 22% of total revenue, a figure expected to rise as Pop Mart integrates AR and NFTs into its product ecosystem.

Why Emotional Consumption Is a Sustainable Trend

Critics may argue that Gen Z's spending habits are fickle, but the data tells a different story. Pop Mart's IP universe—spanning apparel, home goods, and themed parks—creates a recurring revenue stream. For example, the HIRONO IP, launched in 2023, now generates 15% of the company's annual revenue, demonstrating the longevity of well-crafted IP.

Moreover, Pop Mart's collaborations with cultural icons (e.g., Chinese intangible heritage artists and British pop designers) ensure its products remain relevant. This strategy mirrors the success of brands like Laopu Gold (stock up 23x in 12 months) and Mixue Group (stock up 100% since 2025 listing), which have similarly leveraged Gen Z's appetite for hybrid traditional-modern aesthetics.

Investment Implications and Risks

The emotional consumption revolution is reshaping China's stock market. Traditional consumer stocks like Kweichow Moutai have lost 30% of their value since 2021, while new entrants like Pop Mart and Laopu Gold dominate investor sentiment. For 2025, the focus is on companies that:
1. Create emotional IP ecosystems (e.g., Pop Mart's themed parks and AR experiences).
2. Adopt DTC models to bypass intermediaries and build loyalty.
3. Leverage global Gen Z trends through social media and influencer partnerships.

However, risks remain. The pop toy market is becoming crowded, with rivals like TOPTOY (under MINISO) and international IPs (e.g., Harry Potter) vying for attention. Pop Mart must continue innovating to avoid IP fatigue, as seen with older characters like Molly, whose sales have plateaued.

The Verdict: A High-Conviction Play

For investors, Pop Mart represents more than a toy company—it is a gateway to the emotional economy. Its ability to monetize Gen Z's desire for self-expression, combined with a scalable global strategy, positions it as a long-term winner. While short-term volatility is possible, the broader trend of emotional consumption is here to stay.

Actionable Advice:
- Buy Pop Mart (HKEX: 1949) for exposure to the emotional consumption boom.
- Diversify into complementary sectors, such as Gen Z-focused fintech (buy-now-pay-later services) and digital collectibles.
- Monitor IP lifecycle risks and ensure companies maintain a pipeline of innovative characters.

In 2025, the future of consumer investing is no longer about products—it's about emotions. And for those who act now, the rewards could be as transformative as the Gen Z generation itself.