Grassroots IP ‘Yuyu’ Emerges as a Rare Bright Spot in China’s Cooling Designer Toy Market
TREE NEWS reports: A little girl with freckles, a red nose and a jagged fringe has become one of the most closely watched consumer IP stories in China this year. Yuyu, an original character created by a Gen-Z illustrator on Xiaohongshu, drew hours-long queues at a themed pop-up in a historic Shanghai villa over the National Day holiday, with a second Yuyu store operating simultaneously on nearby Fumin Road.
The commercial engine behind the character is TOP TOY, the collectible toy unit of Miniso Group. At the end of 2025, TOP TOY took a controlling stake in Guangzhou Jiaoshan Shizu Art Culture Co., the company that owns Yuyu. Since then, the character has generated tens of millions of yuan in sales through mall atrium pop-ups, and has signed collaborations with Huawei, CASETiFY, Nayuki and McDonald’s. On September 25, Yuyu’s “Beautiful Girl” plush blind-box series and related merchandise launched across TOP TOY’s full retail network.
Why the Timing Matters
Yuyu’s rise comes as China’s designer toy sector digests a difficult cycle. Pop Mart’s revenue grew 23.8% year-on-year to 17.17 billion yuan in the first half of 2026, but net profit attributable to shareholders rose just 10.1% to 5.04 billion yuan — a marked deceleration. More tellingly, inventory ballooned 168.4% to 6.10 billion yuan from 2.27 billion yuan a year earlier, while inventory turnover days stretched from 83 to 201.
Miniso faces similar pressure. TOP TOY’s revenue rose 32.7% to 985 million yuan in the first half, yet its segment operating result swung from a 51.03 million yuan profit to a 72.34 million yuan loss. Group IP licensing fees climbed nearly 48% and promotion and advertising expenses rose about 46% — both outpacing revenue growth of 22.4%. The group’s adjusted net margin, excluding foreign exchange gains and losses, fell 1.7 percentage points to 10.6%.
Market Implications
For equity investors tracking Miniso’s Hong Kong-listed shares and TOP TOY’s stalled IPO process — the unit filed with the Hong Kong Stock Exchange in September 2025 and refiled in late March 2026 — the Yuyu case cuts both ways.
- IP diversification is real but unproven at scale. TOP TOY now holds more than 30 self-owned IPs, including Nuomier, which surpassed 200 million yuan in 2025 sales, plus Meimei, Nini Mo and FOFO. Yet only a handful have delivered meaningful revenue, and the segment remains loss-making.
- Cost structure is the swing factor. Rising licensing and marketing spending is compressing margins even as revenue grows. The company’s “park-style” flagship stores — around 100 in China today, with a long-term target of 1,200 — carry roughly double the sales per square meter of standard outlets, but require upfront capital and a 3-to-6 month validation period before franchising.
- Star power remains the hedge. TOP TOY’s largest marketing budget of 2026 went to actress Zhao Lusi, named the brand’s first global ambassador in April, alongside a jointly developed IP called SISI. This mirrors industry practice — Wang Yibo with Qimengdao, Wang Junkai with JOTOYS — where celebrity traffic underwrites merchandise sales when hit characters cannot be predicted.
Key Takeaways for Investors
The Yuyu phenomenon illustrates a structural tension in China’s IP retail sector: store networks can be expanded on schedule, but blockbuster characters cannot be manufactured on demand. Miniso’s own YOYO IP crossed 1 billion yuan in gross merchandise value across the first three quarters and now reaches 53 countries, demonstrating that concentrated resources can build scale — but only after a character has already proven itself.
Watch three signals: whether TOP TOY narrows its segment loss in the second half, whether inventory turnover improves across the sector, and whether Miniso’s flagship store economics hold as the network scales. Until then, the sector’s earnings recovery rests on a pipeline of hits that remains, by management’s own admission, partly a matter of luck.
