No one saw Labubu coming. With bulging eyes, furry ears, and stubby legs, this toy doll is a mischievous gremlin—ugly enough to feel comforting in an Instagram- and TikTok-perfect world. Its colorful vinyl and plushy figurines hit a cultural nerve, drawing fans from the tennis star Naomi Osaka and Blackpink’s Lisa to teenagers in Tokyo and collectors in Copenhagen.

At the Pop Mart, Labubu’s distributor, near McKinsey’s Shanghai office, we see adults and children shaking “blind boxes” for clues—a gram of weight, the tap of the box lid, the rustle of an accessory—to divine whether they hold a common one in twelve designs or the ultra-rare prize. Shaking boxes nights and weekends, one father said his nine-year-old amassed a hundred different figurines in a few months. That kind of obsession has pushed Pop Mart global, with flagship stores from London to Los Angeles and nearly $2 billion in revenue in the first half of 2025. Pop Mart has turned its toys into a new form of consumer expression—rooted in a hyper-digital youth culture that collapses the line between online and offline identity.

For decades, China’s most recognizable form of soft power was the panda, carefully loaned to foreign zoos as a gesture of goodwill—diplomacy embodied in black and white fur. We’re now talking about something very different. China may still be the world’s $3.6 trillion factory floor, but a handful of companies are beginning to export something new: culture, characters, and aspiration, helped along by what we call a “cultural supply chain” ecosystem that connects creators, social media platforms, e-commerce entrepreneurs, and consumers in a giant digital loop.

This is the early flicker of China’s emerging “soft power”—the late Harvard professor Joseph S. Nye’s term for influence achieved through “ attraction rather than coercion or payments.” Soft power isn’t just a geopolitical concept; it shows up in many arenas, including the commercial realm, where culture, values, music, movies, fashion, and brands travel across borders and shape how people perceive a country. Hollywood and the NBA are pillars of America’s soft power; K-pop has the same role for Korea.

Chinese companies are now beginning to cross into this world after decades of being better at making stuff than creating intellectual property (IP) for a global audience. This move feels late in their evolution; they’ve been so dominant in global manufacturing that this gap between their “hard” capabilities and “soft” appeal feels that much wider. In the next China, we are beginning to see the rebalancing of this discrepancy.

Whether it be TikTok’s global reach, the video game Black Myth: Wukong ’s breakout success, or the on-demand fashion machine SHEIN’s popularity, several Chinese consumer-facing companies are learning to build loyalty, aspiration, and cultural relevance. We expect that Chinese firms will increasingly attempt to project themselves globally not just through technology and manufacturing strength but also through culture and aesthetics. “Ten years ago, no one would wear a Chinese brand to show off. That’s changing,” says Michael Chi Chen, a McKinsey partner in the consumer practice. “Companies like Huawei in phones or Laopu Gold in jewelry or Zeekr in electric cars are beginning to be seen as aspirational in some parts of the world. These companies are investing in design, storytelling, and global ambassadors, and they’re starting to appeal in new ways.”

It took Chinese companies around a decade to master manufacturing, starting from the late ’80s and early ’90s. But once they did, the next step was inevitable: they wanted their names on the box. By the mid-1990s, factory champions who’d built fortunes producing generic goods for foreign brands began creating identities of their own. Apparel moved first. Hong Kong entrepreneurs launched brands Esprit and Bossini, purposefully choosing Western-sounding names. Contract manufacturers across mainland China and Taiwan followed, such as Giant and Merida in bicycles; Lenovo, Huawei, and Xiaomi in consumer electronics; and Haier and Midea in household appliances.

The motivation was simple: manufacturing delivered volume but thin margins. As factory owners scaled up, many wanted to capture more value. “We were core to these brands’ supply chains, but they did the marketing and branding, and they kept most of the margin,” says Fred Yau, second-generation owner of Dongguan-based Yen Sheng Factory Limited, a major leather handbag and accessories supplier to American and European multinationals. “Every few years one of our fellow industrialists would try launching a brand. Most failed. It’s just not in our DNA.”

Yet a handful succeeded, thanks to China’s vast and fast-growing domestic market. As consumer demand grew, companies realized they could either brand what they built—or outsource production entirely and focus on marketing and distribution. Local brands proliferated: Kang Shi Fu in instant noodles; Baixiang and Jinmailang as fast followers; Snow, Tsingtao, and Yanjing in beer; Heilan Home in menswear; and later, digital-native beauty players like Perfect Diary and Florasis.

We call this China’s shift from “hard” to “soft.” Hard goods are measured in yield, efficiency, and cost per unit. Soft goods—design, stories, and cultural IP—carry emotional meaning and command pricing power. As Chinese firms moved upmarket, they began pairing performance with creativity and storytelling, following a path long popularized by global consumer brands such as Coca-Cola.

Proya is a vivid example, evolving from distributor to billion-dollar global beauty brand. Founder Juncheng Hou launched a distribution business with family members and soon became restless importing others’ products. He moved to Hangzhou, launched Proya’s first line twenty-three years ago, and came to root the brand’s identity around themes of workplace equality and personal growth: “Gender isn’t a boundary line—bias is,” it advertised around International Women’s Day on March 8, 2021. The company also invested heavily in R&D and highlighted technology innovation in its marketing: “41.12 percent reduction in ‘smile line’ depth after eight weeks of use,” it claimed for one recent new product, alongside visuals of lab instruments. Another skincare line from a decade ago emerged from a partnership with Chinese-made manned submersibles tasked with collecting deep-sea extracts from Chinese coastal provinces. The result is a confident, innovation-driven, homegrown brand that resonates with contemporary Chinese women.

Branding in China, however, has distinctive characteristics compared with other mature markets. For years, Chinese consumers prioritized function over form: smartphones competed on camera specs, EVs on battery range, cosmetics on visible efficacy. This was branding, too—only rooted in performance rather than in emotional appeal. A client calls the Chinese way the “featurization” of marketing—fast, visual, and densely informative. International clients often wondered why Chinese apps felt cluttered: “Do the Chinese not want sleek, minimalist designs?” We explained that China’s slow download speed in the early internet era made it crucial to load everything on the first page—mostly text descriptions and product specs—and that aesthetic simply stuck.

China’s digital ecosystem accelerated the shift. Platforms like Douyin, RedNote, and Bilibili integrated discovery, validation, and purchase into a single loop, allowing brands to prototype, test, iterate, and scale in real time. Sprouting up alongside them was a vast “cultural supply chain” of livestreamers, creators, and mini-store operators—and a creative workforce producing digital assets for gaming, fashion, toys, and more.

Still, building a brand remains brutally hard. For every success, hundreds fail. Most manufacturers excel at operational rigor, not consumer insight or design. We often advise manufacturing clients to stick with what they’re good at: discipline, efficiency, managing thousands of workers, and meeting punishing delivery schedules. Brand-building demands different muscles, such as marketing, product design, consumer insight, and relentless innovation.

That doesn’t stop them from trying. Everyone wants to become “China’s Nike” in sportswear—from Anta and Li-Ning to 361 Degrees and Xtep. In smartphones, Xiaomi, Oppo, and Vivo took on Apple and Samsung. China’s huge domestic market made the fight irresistible. Of course, this rise has brought criticism: Chinese brands are often accused of mimicking Western designs; critics point to the Xiaomi sports car SU7’s resemblance to Porsche’s Taycan, for example. In the same vein, Xiaomi skipped the “16” series, branding its new flagship the Xiaomi 17 to align with and directly compete head-to-head with the iPhone 17.

The real differentiator is speed. China’s market runs at a dizzying pace: millions of users cycle through promotions, gifting events, lucky draws, and livestream shopping every day; memes become product lines almost overnight. It’s a high-metabolism environment where brands evolve in full public view. Those that endure learn to communicate and differentiate with humor, intimacy, and agility—capabilities that will matter even more as Chinese firms step onto the global stage.

Of course, many Chinese companies never set out to build global brands. They built category-killing products for 1.4 billion domestic consumers—and the world barged in.

Joe likes to tell a self-effacing story about his first brush with the concept of soft power, and it involves the late Harvard political scientist who coined the term. As a Harvard sophomore, Joe cold-called Jerry Cohen, the influential legal expert and China scholar, to invite him to speak at a student conference. Cohen heard the caller announced as “Joe Nye,” assumed it was the legendary dean of Harvard’s Kennedy School of Government rather than “Joe Ngai,” and took the call immediately. “It was my first lesson,” Joe recalls, “in the power of a good name.”

Some of China’s most visible soft-power successes were largely accidental. Douyin’s domestic success became TikTok overseas, reshaping global media through short video. Pinduoduo’s gamified, group-buying e-commerce model—so familiar to Chinese shoppers—is succeeding overseas as Temu. “As it turns out, Western consumers appreciate great-value-for-money goods and trust influencers on digital channels—just like the Chinese,” says Michael, a partner in the consumer practice.

Increasingly, companies aren’t just shipping goods—they’re exporting elements of culture, whether gaming, film, bubble tea, fashion, or even design aesthetics. Much of this emerges bottom-up through China’s cultural supply chain that links domestic creators with global distribution systems, often through serendipity—the right character or meme on the right distribution channel at the right time.

Perceptions have shifted accordingly. A decade ago, Chinese products were dismissed as cheap imitations; today they often rival global competitors, and by the time a product reaches Miami or Milan, it’s typically been stress-tested by a vast ecosystem of users. Moreover, the lived experiences and desires of consumers in Shanghai, Tokyo, Johannesburg, LA, and London are converging.

Platforms like TikTok have accelerated this diffusion. Its pacing, humor, and rapid content cycles mirror cultural instincts honed in China, and a growing wave of Chinese consumer companies lean heavily on TikTok-native storytelling rather than traditional advertising. “We understand better than anyone else in the world how to market and monetize through TikTok. The global success of TikTok has given Chinese companies much more confidence to go abroad,” notes one Chinese entrepreneur who has found success in the US and Latin America.

“China’s scale gives companies permission to invest in global branding,” says Daniel Zipser, a McKinsey senior partner and co-leader of the Asia consumer and retail practice. “Automotive is a great example. In performance, Chinese EVs are seen as technologically superior to some German models. That credibility creates the foundation for aspirational brands—and for competing through soft power.”

Still, these are early days. We find ourselves repeating the same references, because there are only a handful of at-scale successes so far. China under-indexes sharply on global brand equity; on Interbrand’s 2024 Top Global Brands, only two Chinese firms, Huawei and Xiaomi, rank among the top one hundred companies with 30 percent of revenue outside their home region. Kantar BrandZ, which paints a broader picture since it includes Chinese consumers’ perception, counts twelve in their latest 2025 report. Soft power, after all, doesn’t scale the way factories do—it takes longer to build.

Pop Mart matters not because it has captured the global imagination for however long, but because its trajectory hints at what may become more common as China’s creative ecosystem matures.

Labubu emerged from the imagination of Hong Kong artist Kasing Lung, who grew up in the Netherlands sketching upstairs from his parents’ Chinese restaurant. The character—part Nordic folklore, part childhood sketch—is a sharp-toothed rebel with a soft heart that first appeared in Kasing’s book The Story of Puca .

At first, Labubus were produced in small batches for Hong Kong toy boutiques. When Pop Mart approached Kasing in 2019, scouting designers the way a record label might seek musicians, Kasing was wary that mass production might dilute his artistic roots. But Pop Mart founder Ning Wang offered a different model: a “blind-box” format combining chance, scarcity, and community.

The first Labubu release sold out instantly. The partnership would produce the first Chinese character IPs to break out internationally at this scale. Pop Mart handled global distribution and retail spectacle, turning queueing, dropping, and unboxing into a form of social performance. Labubu moved from niche collectible to global obsession, with fans lining up across Asia, Europe, and the United States.

The numbers were striking. Blind boxes typically retail for only $12 to $15 a pop, yet Pop Mart did $887 million in global sales in 2023, doubled that in 2024, and more than doubled that again in 2025 to roughly $4 billion. At its 2025 peak, Pop Mart’s market cap briefly reached $49 billion, soaring beyond Hasbro, Mattel, and Sanrio combined. Since then, its stock performance has grown increasingly volatile—collectibles run on sentiment as much as loyalty—and its secondary market value has also fluctuated. But Chinese IP has created a bubble worth talking about.

Pop Mart’s ambitions extend beyond any single character. Executives describe a Disney-style road map: a portfolio of IPs that can support content, entertainment, and experiences—a Chinese “house of characters.” That path, however, demands sustained investment and deliberate storytelling, and masterful execution; Disney itself took more than a quarter century to expand Mickey Mouse from animated short film into a cast of characters and finally its first theme park.

Whether Labubu endures or fades, Pop Mart’s cultural impact is already clear. It didn’t just sell figurines; it reshaped consumer behavior through the blind-box format, a Japanese idea reimagined around a Chinese character IP. (The knockoffs—“Lafufus”—arrived quickly.) Cultural influence can move from China to the world—and this is likely to happen again.

If Pop Mart shows how toys can travel, Black Myth: Wukong shows digital culture can, too.

Game Science—a mid-sized studio founded by veterans from Tencent Games—set out to reinterpret one of China’s most familiar stories: Journey to the West , and its central figure, Monkey King, Sun Wukong. Long embedded in China’s cultural imagination, the character was rendered for a global audience from the outset. Built for PlayStation and PC, it was designed to meet global expectations with top-tier production values in graphics, sound, world building, and animation. “The team wanted to introduce an international audience to a very Chinese story—with new and innovative design tools,” says Shannon Cheung, founder and CEO of Averest Capital, one of the investors.

Early attention came in 2020, when Game Science released a thirteen-minute gameplay trailer on YouTube. It exploded, with over two million views on YouTube in the first twenty-four hours and more than ten million domestically. For many observers, it suggested the first time a Chinese studio could compete for global audiences at the level of established action-adventure franchises like Ubisoft’s Assassin’s Creed or FromSoftware’s Elden Ring . “Wukong fought gods—giant titans—and the graphics were incredibly powerful and impactful,” Shannon tells us.

In the month that the game launched, it drew over 2.4 million concurrent players—at the time the widest-reaching single-player title in video game distribution platform Steam’s history. The game fulfilled the promise of that YouTube teaser: fluid, punishing combat, with a lush presentation that felt like stepping into a painting. Chinese mythology was deployed with confidence, and the game’s re-imagined Monkey King felt ancient, uncanny, and intelligent—not campy.

Yicheng Qian, our colleague in Beijing, often plays the game with her husband and says experiencing it was “mind blowing.” “The aesthetic of this game is just so beautiful—I haven’t seen anything like it before,” Yicheng tells us. “It reminded me of the first time I saw a Harry Potter movie when I was a young child.”

The commercial results have been remarkable: ten million copies sold in the first three days; twenty million in a month, more than twenty-five million by early 2025. Despite a few controversies, including streamer guideline disputes and a delayed Xbox version, the game won major awards and was widely embraced. Many of the scenes drew from real-world places; for example, temples in Shanxi, Chengdu, and Xi’an were scanned into the game’s engine with gigabytes of photorealistic data, videos, and photos. “The environments feel real because they literally are real,” says Shannon. “We scanned original environments into the game—one of the game’s first innovations.”

Players responded to that authenticity. Tourists—both Chinese and foreign—began to seek out the real-life temples and mountains depicted in the game, prompting provincial government bureaus to begin recognizing the game’s power as an engine: Black Myth ’s soft power in action.

Chinese games had already been gaining traction internationally, but Black Myth is the first fully Chinese IP to break into global gamer culture at this level. “And there will be more companies trying to replicate its success,” Shannon muses. “We’ll have to see—it’ll be very hard for another one to reach that type of international impact.”

This rise in commercial soft power shouldn’t surprise anyone. Creation follows production, and after years of making everything from clothing and toys to mobile phones and home appliances, Chinese firms have developed strong design sensibilities, notes Derek Sulger, co-owner of luxury house Shanghai Tang. “After twenty years of building iPhones, why are people surprised that China can design a world-class smartphone or an EV or a high-end home appliance? If you’ve built a majority of what the world consumes, of course you get good at creating what people want.”

As Chinese consumers become more sophisticated and demand more personalized goods, we predict the center of design gravity will begin to inch toward China, too. In digital retail, that transition is already visible: Temu and SHEIN are the world’s two most downloaded retail apps, and TikTok, with 773 million downloads and counting, is slightly ahead of Instagram and far outpaces the rest of the field. We expect a similar pattern in autos: when a generation of global commuters from Australia to Israel to Norway drives its first EVs, they might be driving Chinese brands. In AI, Chinese large language models have emerged as an unexpected soft-power breakout—powerful, inexpensive, and often open-source. As US leaders pivot toward closed, premium systems, Chinese models have gained traction through utility: by early 2026, Chinese models accounted for over 60 percent of total token usage among the top ten models on the OpenRouter AI hub. With a vast domestic market, advanced supply chains, and powerful digital ecosystem, are Chinese firms poised to design as ambitiously as they manufacture?

To accelerate their global presence, some companies have acquired heritage where it already exists—Anta with FILA and Amer Sports; Geely with Volvo’s Swedish legacy and London taxis; Shanghai investment group Fosun with Club Med’s loyal customer base. “We can’t create overnight the kind of brands that have honed their craft over centuries,” says Daniel Tseung, founding partner of LionRock Capital, who acquired the British shoe brand Clarks and the Nordic outdoor performance company Haglöfs, both more than a century old. The Chinese companies likely to globalize fastest are those in categories where heritage matters less, such as consumer tech, EVs, mobile commerce, AI, and gaming.

As more Chinese brands prove they can connect with global audiences, a new generation will lean into storytelling, cultural relevance, and emotional resonance—amplified by China’s strengths in AI and digital marketing. Not every brand will break out, and we expect many will thrive solely at home. We aren’t holding our breath for Chinese music and movies to reach the impact of K-pop and K-drama anytime soon, but we do expect the number of global hits—some engineered, others unexpected—to begin to grow.

While the old label was “Made in China,” we may soon start seeing more of “Created in China.”