Labubu lessons: what a plush toy says about China's transition to a consumption powerhouse
China is no longer just a place of engineering and manufacturing excellence but also a player in the tougher arena of culture
What Labubu dolls signal about China
Singer Madonna recently celebrated her 67th birthday, and her birthday cake came in the form of a giant Labubu toy. This signals, if anyone had anymore doubts on the score, the arrival of this stuffed toy from China as an icon of contemporary popular culture. And that, in turn, attests to a structural change in the Chinese economy, bringing it in the league of rich world economies, even if China’s per capita income is still that of a middle-income economy, albeit towards the upper end of that income range.
That China is no longer the low-cost manufacturer of the world, relying on low wages, tremendous scale and state-enabled superior infrastructure to flood the world’s markets with all kinds of goods at prices no one else could match is not in doubt. China today deploys almost a quarter of the world’s production-line robots. Chinese BYD is the world’s most advanced electric car company. CATL has the world’s most advanced battery technology.
Huawei, the Chinese electronics manufacturer, produces almost everything in the telecom ecosystem, from logic and memory chips, the phone operating system, the phone itself, all the equipment in the telecom network, and WiFi routers. It is at the centre of China’s concerted effort to create its own ecosystem to manufacture advanced semiconductors, ranging from laser lithography machines, the chemicals needed, the lenses and everything else. China wishes to rid itself of dependence on western made silicon for powering the Artificial Intelligence revolution, in which Chinese companies are neck and neck with American ones.
China has produced a mid-range aeroplane that can compete with Boeing’s 737 and Airbus’s A320 series aircraft, with carrying capacity and flying range in excess of what Canada’s Bombardier and Brazil’s Embraer, the other two major civilian aircraft manufacturers, have been able to come up with.
Citing UNCTAD figures, Visual Capitalist gives the break-up of shipping tonnage manufactured in 2023 as follows: China, 33 Million Tonnes, South Korea, 18 MT, Japan, 10MT and the rest of the world, 4 MT.
China has been building and deploying more than half the world’s addition to renewable energy capacity these past few years.
Clearly, China is a powerhouse of industrial engineering and manufacturing sophistication. But this is not enough to register a country’s presence in the big league. For that, a country must produce goods and services that have the power of branding and cultural salience. And that the Labubu toys deliver.
Labubu was created by a Hong Kong-born artist, Kaising Lung, who was brought up in the Netherlands, which country’s folklore influenced his creation of a monster toy, which began its journey to become a runaway hit when its production was taken up by Beijing-based Pop Mart, a toymaker. Pop Mart is today worth more than Mattel, the maker of Barbie and Hot Wheels.
The plush toys soon acquired other companions, came in different sizes and was marketed by way of blind box packaging. It was sold in a sealed package that did not reveal the precise variety of Labubu toy it contained. This led to multiple rounds of purchases by eager collectors of all Labubu models, a brisk culture of comparison and informal exchange of Labubus. Pop Stars took a fancy to the toys and spread the craze to their fans.
If you search Amazon in India for Labubu toys, you will get toys made by Pop Mart at prices ranging from under Rs 500 a piece to Rs 15,000 a piece. There are all kinds of knock-offs, available in the market, as well.
Such is the demand for Labubus inside China that the toy is often smuggled back into China. Thanks to discount sales and exchange rate fluctuations, Labubu exports from China are, at times, cheaper abroad than back home, creating an incentive for smuggling the toys back into China, where the demand for the toys continues to be high.
China is thus revelling in the mass popularity of a domestically manufactured cultural products. Labubu has company, as well. One of the most successful recent video games of the world — thanks, essentially to its popularity in China — has been one based on the character of the Monkey King, a character from the mediaeval Chinese classic, Travels to the West, the West in question being India, home of the Monkey King. Bubble Tea is another cultural export from China, although its precise origin probably was in Taiwan, whose Chineseness is a matter of geopolitical contestation.
Labubus also serve to forecast that the Chinese economy is ready to make the transition from primary emphasis on ‘external circulation’ to ‘internal circulation’, to use the language of the Chinese Communist Party, which has been planning to reduce the economy’s export dependence by boosting domestic consumption.
The collapse of the property market in China makes it inevitable that Chinese growth would rely increasingly on consumption, rather than investment, which had been the mainstay of growth at home in the past. Nobody could have imagined the arrival of stuffed toys as the harbinger of a consuming class in China that is willing to spend big on branded, social-media-promoted cultural icons, rather than merely on articles of rational utility, to drive domestic growth.
Are there lessons here for Indian producers, too? You can bet your last Chennapatna toy that there are!