After resigning from a state-owned enterprise, he turned a small workshop into an industry leader, with annual sales approaching 200 million.

At the end of 2013, a “hot potato” landed in Kong Xiangpeng’s hands.

Looking back today, it was just an ordinary order: a custom-made batch of plush‑toy mascots, produced for a company in Huzhou. But at the time, China’s toy industry was still stuck in the low‑end contract‑manufacturing phase, and that company had scoured the entire internet—only to find no single factory capable of meeting its requirements.

In the end, 28-year-old Kong Xiangpeng reluctantly took on the order. He traveled to toy‑manufacturing hubs like Yangzhou, Dongguan, and Qingdao, repeatedly producing prototypes and coordinating directly with designers on the production line. “It took a tremendous amount of effort,” but he ultimately delivered the batch of mascots on schedule.

Though the process was painstaking, Kong Xiangpeng sensed a business opportunity: at the time, the buzz from the Beijing Olympics and the Shanghai World Expo was still fresh, and mascot characters like the “Fuwa” and the “Haibao” were making their debut. Many Chinese companies began designing their own mascots and turning them into plush toys to hand out as gifts when visiting clients.

Compared with traditional gifts like USB drives and canvas tote bags, plush toys have an appealing appearance that helps convey a company’s culture, leading to a rapid surge in demand for custom mascot products. Riding this wave, Kong Xiangpeng founded the “Zhiduowa” toy company, capturing a niche segment in “custom‑made mascots from provided designs,” and gradually expanding its business scope to include merchandise, cultural‑creative products, and other areas.

In 2024, Zhiduowa’s sales reached RMB 150 million, and it is projected to hit RMB 180–200 million this year.

Kong Xiangpeng, General Manager of Yangzhou Zhi Duwa Toy Co., Ltd.

Kong Xiangpeng told “Tianxia Wangshang” that many of today’s best-selling products owe their success to Zhi Duo Wa. From high-profile events and initiatives such as the Winter Olympics, the Asian Games, the World Internet Conference, and the China International Import Expo, to luxury brands like Chanel, Dior, Rolex, and Boucheron, and even to household names like Moutai, the Palace Museum, and BaWang Cha Ji, all have placed orders with Zhi Duo Wa.

In recent years, the meteoric success of brands like Pop Mart and jELLYCAT, coupled with the emergence of new categories such as AI‑powered toys, has drawn a flood of brands and investors into this space, all vying to create the “next Labubu.” According to data from the Ministry of Industry and Information Technology, China’s toy market is projected to exceed RMB 100 billion in retail sales by 2025.

Toy manufacturers at the production end are naturally poised to seize numerous opportunities. According to Kong Xiangpeng, Zhi Duowa has recently received many inquiries, but he remains committed to focusing on the B2B sector: “We aim to serve our existing customers well and continue to deepen our expertise in the custom‑made segment.”

From the ceaselessly roaring factory assembly lines to the booming market where young parents struggle to have even one child, it’s less that Kong Xiangpeng and Zhi Duo Wa hit on a consumption trend and more that this represents a resonant convergence between China’s supply chain—after years of painstaking preparation—and the currents of our times.

Business Opportunities Brought by the “Fuwa”

In 2013, Kong Xiangpeng resigned from a state-owned instrument factory and founded his own gift company.

The rationale behind the venture is straightforward: Kong Xiangpeng observed that when sales representatives conduct cold calls—visiting clients they’ve never met—they invariably bring along promotional gifts, such as USB drives, power banks, and selfie sticks emblazoned with the company’s logo. He believes this represents a viable market opportunity, noting, “Many companies have a clear need in this area.”

To meet the diverse needs of its customers, the gift company offers an exceptionally wide range of product categories—so extensive, in fact, that Kong Xiangpeng jokingly remarks, “It’s like a department store.”

The sheer number of SKUs, once vast and countless, ultimately converged by the end of 2013 on a single product category: plush toys. The “Fuwa” and “Haibao” mascots made domestic entrepreneurs acutely aware of the importance of mascot‑based intellectual property. Kong Xiangpeng recalls that even university courses in graphic design—specifically those teaching corporate visual identity (VI)—for the first time included a dedicated module on “corporate mascot design standards.”

With surging demand and a flood of talent, the transformation naturally followed. Kong Xiangpeng assembled a team of designers and pattern makers, gaining the genuine capability to turn flat mascot designs into three-dimensional plush toys.

This capability may sound simple, but in 2013 it was quite rare. Kong Xiangpeng told “Tianxia Wangshang” that Chinese toy manufacturers at the time could be categorized into three models: the first was contract manufacturing for foreign trade; the second was producing knock-offs and counterfeit goods; and the third involved designers leveraging their experience and global trends to independently develop a handful of products for customers to choose from—already the most advanced approach of the day.

In other words, Kong Xiangpeng entered a largely untapped market—one that at the time represented the most sophisticated segment of the “custom‑made-to‑spec” industry.

In addition, Kong Xiangpeng capitalized on the e‑commerce boom, leveraging online platforms like 1688 to expand his customer base. In an era when acquiring customers still relied heavily on offline trade shows, he was among the first to go online, securing a competitive edge in the market.

In 2014, Kong Xiangpeng opened his own factory in Yangzhou, known as the “Capital of China’s Plush Toy and Gift Industry.” Transitioning from a cold, mechanical workshop to the soft world of plush toys, he seized the opportunity presented by the mascot craze sparked by the Olympic Games and the World Expo, marking a pivotal leap in his career.

The rivers and seas do not reject small streams.

Yangzhou, Jiangsu, is not only the elegant setting of “the bright moon over the Twenty-Four Bridge on a quiet night,” but also a major hub of China’s toy industry.

According to Kong Xiangpeng, the manufacturing hub for plush toys was originally in Japan, then gradually shifted to South Korea and Taiwan, before finally moving to mainland China. These overseas orders were typically handled by Shanghai-based foreign trade companies, which subsequently subcontracted production to state-owned toy factories in Yangzhou. In the 20th century, Yangzhou’s plush‑toy output at one point accounted for more than 90 percent of the national total.

A long-standing history of contract manufacturing for toys has fostered a well-developed talent pool and a mature, integrated supply chain. This is also the primary reason Kong Xiangpeng chose Yangzhou to establish the “Zhiduowa” toy company.

Of course, supporting infrastructure doesn’t automatically cater to entrepreneurs—especially in the non‑standard, custom‑made sector, where order volumes are small and supply-chain management demands are particularly high. Kong Xiangpeng illustrated this with an example: “If you buy 10,000 meters of fabric, the entire market is happy to supply it. But if you only purchase three or five meters at a time, buying ten or twenty times, they’ll quickly grow frustrated.”

The “small‑batch, fast‑response” flexible supply chain that has gained popularity in recent years was already a challenge Kong Xiangpeng had to grapple with more than a decade ago.

He told “Tianxia Wangshang” that every link in a flexible supply chain requires rapid responsiveness: in procurement, it’s essential to identify suppliers willing to provide small‑batch materials and establish long‑term partnerships; in the sampling stage, a sufficient number of pattern makers is needed to handle a high volume of small orders, which drives up labor costs; and in quality inspection, customers of small‑batch orders impose stricter requirements and often opt for full‑inspection, necessitating high‑standard after‑sales service.

“These are all our core strengths and competitive advantages,” Kong Xiangpeng emphasized. Zhi Duowa has established a systematic, collaborative working framework, and its design processes are increasingly standardized. One of the company’s employees even contributed to the development of a design textbook for plush‑toy pattern makers, positioning Zhi Duowa among the industry’s standard‑setting leaders.

Today, Zhi Duo Wa employs more than 600 people, placing it among the industry’s leaders even in Yangzhou, a city renowned for its concentration of toy manufacturers. Yet the company continues to handle a wide range of small‑batch orders, with minimum quantities starting at 500 units and order values spanning from several thousand yuan to over one million yuan.

However, as market trends shift and manufacturing capabilities advance, Zhiduowa’s order portfolio has gradually expanded into cultural‑creative products and merchandise. According to Kong Xiangpeng, the company currently derives roughly 50% of its revenue from toys—including export sales—30% from custom mascot production, and 20% from cultural‑creative items.

“Agricultural peoples” and “nomadic peoples”

As a segment of the light industry, toy manufacturing was never considered a particularly “sexy” business. However, with the rise in popularity of trendy toy brands like Pop Mart and jELLYCAT, this rather modest sector has gained unprecedented attention.

Kong Xiangpeng admitted that, recently, “there are opportunities almost every week.” Many well-known brands and publicly listed companies have approached Zhi Duo Wa, extending a wide range of proposals: establishing joint ventures, developing original content, and forging deep IP‑based partnerships. Capital is pouring into the toy market, with players betting on the next Chiikawa, Barcelona Bear, or Labubu.

Resisting these temptations is no easy feat, but Kong Xiangpeng remains resolute: rather than spreading his resources across a diversified array of markets, Zhi Duo Wa prefers to stay rooted in the B2B space he knows best, digging deeper to fortify his competitive moat.

“We want to serve our existing customers well and deepen our expertise in the customization space, rather than chasing the idea of building a ‘second Pop Mart,’” said Kong Xiangpeng. “While the vision may be ambitious, it doesn’t necessarily guarantee success.”

He draws an analogy between “agricultural peoples” and “nomadic peoples”: nomads excel at spotting industry trends and are eager to make quick profits, while agricultural peoples focus on cultivating their own patch of land and creating long-term value. “We prefer to see ourselves as ‘agricultural peoples.’”

On the one hand, he remains steadfast in his core business; on the other, Kong Xiangpeng, now approaching the age of forty, clearly recognizes the tectonic shifts of our times: China’s younger generation of artists and cultural‑creative professionals is increasingly launching blockbuster IPs that resonate with consumers. The era when industry giants like Disney and Sanrio monopolized the market has given way to a landscape marked by pronounced decentralization and diversification in IP creation.

In the eyes of this industry veteran, the toy sector is currently characterized by three major trends: technological advancement, exemplified by AI‑powered toys; the adoption of new materials and manufacturing techniques, such as the combination of vinyl and plush pioneered by Pop Mart; and integration into everyday life scenarios, as seen in jELLYCAT’s playful food‑themed collection launched in 2020.

From being confined to low‑value segments such as contract manufacturing, to gradually moving upstream in the industry chain, Kong Xiangpeng and Zhi Duowa’s more than decade‑long business journey serves as a microcosm of the evolution of China’s toy industry.

Looking ahead, Kong Xiangpeng remains optimistic: although the trend of low-end manufacturing shifting to Southeast Asia and other regions is inevitable, high-end orders will continue to be largely sourced from China. Whether it’s AI technology, materials science, internet infrastructure, or a well‑structured pool of technical talent, these are advantages that other countries will find difficult to replicate in the short term.

“We must move upward—our path lies in the high end.” As the industry evolves, there are both underlying concerns and new opportunities. For this Shandong native, running a business has always been a delicate balance of offense and defense: striving to catch up at the top while firmly establishing roots at the bottom.

(Featured image from Unsplash; other images provided by the interviewees)