Labubu Supply Chain After the Peak: What China's Toy Towns Are Selling Now
The 24th China Toy Expo opened in Shanghai on October 21. The four co-located CTJPA exhibitions together covered 230,000 square meters, with 2,667 exhibitors, 5,504 brands and more than 2,700 licensed IPs. On paper it is an IP fair. Walk the halls and the more interesting exhibitors are the ones without a character on the booth: the mould makers, the plush lines, the printing suppliers and the factories from Dongguan and Chenghai that offer integrated design, prototyping and production services.
That is the part of the Labubu story that outlived the hype. The character peaked. The machinery that made it did not.
Key Takeaways
Pop Mart's THE MONSTERS collection, which contains Labubu, fell 7.5 percent year on year in H1 2026 to RMB 4.45 billion, the first decline since the character became a global hit. Its share of group revenue dropped from 34.7 to 26 percent.
Group revenue still grew 23.8 percent to RMB 17.17 billion, but overseas revenue declined, with Asia Pacific down 9.7 percent and the Americas down 16.5 percent. Inventory days rose from 123 to 201.
One possible explanation is portfolio breadth. Pop Mart now has six IPs above RMB 1 billion and eleven above RMB 100 million, so factory orders spread across many characters instead of one.
What the Labubu supply chain sells now is not a character. It is short runs, fast retooling and the ability to switch IPs without stopping the line.
What Happened to Labubu in 2026?
Pop Mart reported its interim results on August 20, and the numbers were good in absolute terms and bad against expectations. Revenue reached RMB 17.17 billion, up 23.8 percent, against a consensus of about RMB 19.98 billion. Net profit attributable to shareholders was RMB 5.04 billion, up 10.1 percent, against an expected RMB 6.64 billion. Gross margin slipped from 70.3 to 69.7 percent.
The more consequential number was inside the IP table. THE MONSTERS, the collection that contains Labubu, booked RMB 4.45 billion, down 7.5 percent year on year. It was the first decline since Labubu became a super IP, and it cut the collection's share of group revenue from 34.7 to 26 percent. A new character, Twinkle Twinkle, took RMB 2.65 billion, up more than 580 percent, which illustrates the growing contribution of other IPs.
Overseas was weaker than the headline. Revenue outside China fell to RMB 4.97 billion. Asia Pacific dropped 9.7 percent, the Americas dropped 16.5 percent, and Europe grew 5.9 percent from a small base. Almost all of the decline came from online: Asia Pacific online fell 39.8 percent, Shopee fell 62.1 percent, and the Americas online channel fell 45.6 percent. Offline stores kept growing, which means the brand did not lose shelf space. It lost the traffic that had been arriving through short video and marketplace search.
Founder Wang Ning told investors on the earnings call that the company would probably miss its own 20 percent growth target for the year and described 2026 as a year of internal adjustment. Inventory days moved from 123 at the end of 2025 to 201, which is the clearest sign that the pipeline had been built for a demand curve that did not arrive.
Why Did the Labubu Supply Chain Keep Growing After the IP Cooled?
Regional export growth and company IP revenue measure different things. Together, they suggest that one character’s sales do not determine the whole cluster’s performance. Dongguan's above-scale toy companies, the deepest node in the Labubu supply chain, booked RMB 14.08 billion in revenue in H1 2026, up 12.9 percent, and the city exported RMB 10.77 billion of toys to more than 120 countries, up 8 percent. Shipai, the town inside Dongguan that concentrates the plush and collectible cluster, reached RMB 17.23 billion in output in 2025 across 149 cluster companies.
A single super IP produces a small number of very large purchase orders. A portfolio of eleven IPs above RMB 100 million produces a larger number of smaller orders, each with its own mould, colourway, packaging and delivery window. For a factory, the second pattern is harder to schedule and better for survival, because no single cancellation can empty the line.
The IP table shows the shift clearly. Six Pop Mart IPs passed RMB 1 billion in the half: THE MONSTERS at 4.45 billion, Twinkle Twinkle at 2.65, CRYBABY at 1.63, DIMOO at 1.62, SKULLPANDA at 1.55 and HIRONO at 1.01. MOLLY, the character that built the company, booked RMB 900 million and fell out of the top six. A factory that only knew how to make Labubu would have had a bad year. A factory that can make any of them had a busy one.
There is a second order source that did not exist at this scale two years ago. Plush has become the growth category inside the category: plush revenue reached RMB 9.83 billion in the half, up 60 percent, while vinyl toys grew 0.3 percent and other IP derivatives and other products fell 15.8 percent. Plush is a different manufacturing skill from injection-moulded figures, with different tooling, different quality tolerances and a much shorter product cycle. The factories that added plush lines in 2024 and 2025 are the ones absorbing the shift.
What Are the Toy Towns Actually Selling?
They are selling three things, and only one of them is a product.
The first is speed. Dongguan now runs AI-assisted design centres that cut a concept to a prototype in 48 hours and to mass production in 72, according to the city's own promotion of the cluster. That is not a marketing claim about creativity. It is a claim about how fast a factory can respond when a brand tests twelve characters and only three sell.
The second is IP ownership. About 70 percent of Dongguan's above-scale toy companies are now developing their own IP, up from a long-established contract-manufacturing base. Chenghai, the Shantou district that is the other major cluster, produces more than 1,000 new products a day, and close to half of them are tied to Chinese IP. The shift is not altruism. A factory with its own character has a reason to exist when the licensed order moves to a cheaper supplier.
The third is category extension. The CTE floor this year includes a dedicated AI toy zone, alongside model kits, art toys and museum licensing, which tells you where the organisers think the next order book is. Connected AI toys may require electronics integration, connectivity and additional safety testing, adding requirements beyond conventional plush production.
Why Does a Falling Resale Price Change What Factories Make?
A resale premium is a production signal. When a figure trades at a large multiple of its retail price, the brand cannot make enough of it, and the factory receives large, repeated orders for one SKU. When the same figure trades at a 30 percent discount within half an hour, the brand controls volume instead, because unsold inventory is now a bigger risk than missed sales. Pop Mart's inventory days rising from 123 to 201 is that risk showing up on the balance sheet.
For the factory, the change is operational. A large single order can be scheduled months ahead with one set of moulds. A controlled release means smaller batches, more colourways, shorter lead times and a higher chance that the next order is for a different character. The factories that survived the transition are the ones that had already invested in flexible tooling and digital prototyping, because retooling cost is what kills a small order.
For distributors, transparent resale prices can make premiums harder to sustain. When buyers can compare the price of an identified figure, a business built on scarcity faces additional pressure.
What Is a Toy Fair For When the IP Is No Longer Scarce?
It is no longer mainly a place to take orders for a known character. The four co-located exhibitions this year bring together more than 2,700 licensed IPs. When IP is abundant, the scarce input is the ability to execute: a factory that can hold a colour standard across six sizes, pass a safety audit for the destination market, and ship a reorder in three weeks.
The exhibitor list is useful because a fair lets buyers compare production partners as well as characters. A supplier’s ability to meet a color standard, satisfy destination-market requirements and manage reorders is a different proposition from owning a popular IP.
So What Survives the Reset?
Three judgments follow for anyone using this floor to plan a year.
First, character demand can change quickly while tooling and production adjustments take time. Brands should leave room for misses rather than assume that one release will keep a line busy indefinitely.
Second, a factory making its own IP is not automatically moving up the value chain. It is buying an option. Most of those characters will fail, and the ones that work will do so because the factory kept the contract business running while it tested.
Third, for Chinese brands going abroad, the supply chain is the floor, not the pitch. Pop Mart's overseas decline came from online traffic, not from an inability to make product. The factories kept shipping. The lesson from this cycle is that manufacturing capacity is what lets a brand survive a bad IP year, and it is not what makes a good one sell.
The Labubu supply chain did not break when the character cooled. It quietly became the most valuable part of the business.
Double V is a cross-border operating partner and intelligence house for emerging consumer brands, based in Hong Kong and Shenzhen. We help brands connect China and the world through three businesses: Brand Operation (marketing and distribution for brands on retainer), Brand Incubation (sister company Glam Infinite and our own-built brands), and Industry Intelligence (cross-border research and reports). Talk to our team
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