China's toy industry presents a contrasting picture in international markets: while some companies achieve remarkable success through precise strategies, others face significant losses and even delisting risks. This divergence stems from strategic choices in global competition rather than mere chance.
Since 2001, China's toy exports have grown nearly tenfold, from $4.61 billion to $39.87 billion. In the first nine months of 2025, exports of holiday products and dolls exceeded 50 billion yuan. Regional specialization has emerged—Yiwu's AI smart toys, Pingxiang's $30 billion annual revenue from children's bicycles, Shantou's 11.4% export growth to Europe, and Yangzhou's dominant global plush toy market share. While China's mature supply chain provides a solid foundation, profitability ultimately depends on internationalization strategies.
I. Success Models: Three Replicable Profit Strategies
1. Pop Mart: Localization Over Replication (375% Overseas Profit Growth)
Contrary to the misconception that Pop Mart simply exports blind box machines, its success lies in systematically reconstructing products, channels, and teams for local markets—a model valuable for small and medium sellers.
- Customized Products: Instead of pushing domestic IPs, Pop Mart designs region-specific items like tropical-themed limited editions for Southeast Asia and collaborates with celebrities like Rihanna in Western markets, transforming LABUBU from toy to emotional symbol.
- Gamified Experience: Its global website and app adapt the proven "blind box drawing" mechanic into an addictive online game, boosting retention and repurchase rates—a strategy applicable to all collectible toy sellers.
- Channel Specialization: 571 physical stores cover 18 countries, while online platforms target 37 markets—Shopee/Lazada in Southeast Asia, Amazon in the West, supplemented by TikTok influencer collaborations.
- Localized Teams: Four regional headquarters and dedicated e-commerce teams enable country-specific strategies—a critical transition from "exporting" to "multinational operations."
Key Takeaway: Small sellers can start with minor product adaptations (e.g., tropical designs for Southeast Asia) paired with platform-specific limited editions on Shopee for low-cost experimentation.
2. TOP TOY: Channel Dominance Overrides Single Product Failures ($148M GMV)
While Pop Mart excels in IP cultivation, TOP TOY demonstrates how channel strategy can compensate for IP limitations—ideal for sellers lacking original IPs.
- Asset-Light Expansion: Its franchise model (partners cover costs, brand provides support) enables rapid scaling without heavy investment. Domestic partners exceed 1,000, while just 10 overseas stores contribute 3.9% revenue.
- IP Portfolio Diversification: With 11,000 SKUs spanning figurines and building blocks, the failure of any single product (like Japan's only hit "Nommi") is offset by volume—achieving profitability through channel efficiency rather than IP dependence.
- Leveraging Parent Resources: TOP TOY utilizes MINISO's distribution network (45% revenue) and operational support—a replicable approach for small sellers partnering with established cross-border brands.
Key Takeaway: Instead of obsessing over original IPs, sellers can adopt "multi-category + channel partnerships," such as supplying local toy chains or joining distributor networks.
3. Rastar Group: Exclusive IP Licensing as Competitive Moat (57.13% Gross Margin)
In the fiercely competitive toy market, Rastar's exclusive brand licenses create an impregnable barrier—a strategy particularly effective for toy sellers.
- Premium Exclusive Licenses: Holding 35 automotive brand authorizations (including decade-long exclusives for BMW remote-controlled models and children's bikes) prevents copycat competition on platforms like Amazon—licenses serve as "anti-counterfeit certificates."
- Continuous License Refresh: Adding Porsche and Land Rover licenses in 2024 with new models like Ferrari RC cars maintains market novelty.
- Premium Positioning: Luxury car models command 57%+ gross margins, avoiding price wars—a lesson for sellers to target niche high-end segments with exclusive rights.
Key Takeaway: Small sellers can start with niche IPs (local animation characters for children's toys, obscure pet IPs for animal-themed products) before pursuing major brand licenses.
II. Pitfalls to Avoid: Two Fatal Strategic Errors
1. Buluke: The Perils of IP Dependency (898.6% Revenue Growth, $60M Loss)
Buluke's case warns against over-reliance on external IPs—while effective for initial growth, long-term dependence erodes profitability.
- IP Overdependence: Ultraman IP once contributed 63.5% of revenue; even after reducing to 49% in 2024, vulnerability persists. License fee hikes or terminations could cripple operations.
- Revenue Without Profit: Despite soaring overseas sales, losses widened to $60 million due to heavy marketing and licensing costs—unsustainable without proprietary IPs.
- Incremental Innovation Failure: Round-corner designs and special-shaped parts didn't establish unique value, leaving the brand IP-dependent.
Key Takeaway: While leveraging external IPs, sellers should simultaneously develop proprietary innovations (e.g., safety-focused large-particle building blocks for toddlers) to gradually reduce reliance.
2. Alpha Group: The Costly Long Game of Content-First Strategy
Alpha's transition from manufacturer to "content+IP+products" exemplifies the highest-barrier but most capital-intensive approach—suited only for long-term investors.
- Content Precedes Products: Distributing "Pleasant Goat" and "Super Wings" animations to 150+ countries via Netflix/YouTube builds brand recognition before merchandise launches—a slow but durable method.
- Localized Channel Acquisition: Buying U.S. brand Baby Trend provided instant Walmart/Amazon access; Southeast Asian holiday editions sold 800,000 units in one month.
- Short-Term Profit Sacrifice: Heavy content investment squeezes margins—a necessary trade-off for building enduring IP assets.
3. Mubang High-Tech: Mediocrity as Existential Threat ($160M Loss, Delisting Risk)
Mubang's failure underscores that in saturated markets, differentiation isn't optional—it's survival.
- Undifferentiated Products: Generic building blocks lacked Lego's brand power, Buluke's innovations, or Rastar's licenses—rendering them uncompetitive.
- Strategic Distraction: Diversifying into solar energy diverted resources from core toy business, leading to debt crises and accounting violations.
Key Takeaway: Whether through IP, innovation, or channels, sellers must identify unique value propositions—generic products face inevitable obsolescence.
III. Conclusion: Three Strategic Directions for Toy Exporters
While China's toy export advantage persists, profitability now requires methodological sophistication over mere supply chain leverage. Small and medium sellers should focus on:
- Differentiated Selection: Target niche needs (emotion-oriented toys like Pop Mart, premium models like Rastar) or incremental innovations (safety-focused designs), avoiding undifferentiated mass markets.
- Strategic Leverage: Borrow existing IPs/channels (TOP TOY's franchise model, distributor partnerships) if lacking original IPs; those with capabilities can emulate Alpha's content-first approach.
- Localized Execution: Begin with product tweaks and channel specialization, progressively advancing to full localization (Pop Mart's model)—never blindly replicate domestic formulas.