Labubu and Moutai: A Comparison and Risks of New and Old Social Currencies

A recent study compared the emerging IP Labubu with traditional liquor giant Moutai, attempting to explore whether this is a replay of the consumption cycle or a profound paradigm shift.

Analysis shows that although Labubu and Moutai both possess attributes of social currency, there are significant generational differences between them. The social attributes of Labubu are more based on the shared interests and values of the younger generation, while Moutai primarily relies on power and hierarchical relationships. This difference reflects the essential distinctions between “new consumption” and “traditional consumption.”

Research indicates that the company where Labubu is located is also facing a dual challenge brought on by the IP cycle and investment attributes. If there is a prolonged gap between Labubu and the next blockbuster IP, the company's global growth may slow down.

In addition, regulatory risks and market congestion are also factors that cannot be ignored. The current phenomenon of capital concentrating on the “new consumption” sector is quite similar to the previous trend of funds clustering around blue-chip stocks, and the fragility of such crowded trading may have a significant impact on valuations.

!7378492

Intergenerational Differences in Social Currency

The research team believes that Labubu and Moutai both possess social currency attributes, but there are significant generational differences between them:

1. Differences in Social Attributes: Moutai's social attributes rely more on power and hierarchical systems, primarily serving business occasions; Labubu represents the younger generation's social interactions based on interests and values, emphasizing emotional value and instant gratification.

2. Consumption Motivation: Moutai can serve as a “productivity tool” (business lubricant), while Labubu meets the demand of young people for emotional value and “dopamine”-style consumption in a digital social environment, reflecting China's transition trend from investment-driven to consumption-driven.

3. Globalization Process: Moutai is deeply rooted in Chinese traditional culture, and globalization is still in its early stages; Labubu, on the other hand, has already achieved significant success globally, aligning with global trends.

The Double-Edged Sword of IP Cycle Risks and Investment Attributes

While experiencing rapid growth, research has also pointed out the dual challenges faced by the company where Labubu is located, similar to those of Moutai, namely the dual test brought by the IP lifecycle and product investment attributes.

1. IP lifecycle risk: Moutai, with a history of a hundred years and official endorsement, has proven its ability to withstand cycles. In contrast, Labubu has a history of only 10 years, and the IP lifecycle remains a core risk.

2. Pros and Cons of Investment Attributes: The history of Moutai indicates that “investability” is a double-edged sword, serving as a booster during rising cycles and becoming an amplifier during downturns.

Research has noted that the company Labubu is actively managing the prices in the secondary market to ensure its appeal to young consumers and to create a favorable environment for the launch of new IPs and products.

The Unignorable Regulation and Market Congestion

The study ultimately emphasizes that regulation and market sentiment are two other risk factors that investors must confront.

1. Regulatory risks: Moutai is always influenced by policies such as price controls and anti-corruption campaigns. Similarly, the company where Labubu is located is not in a regulatory vacuum. However, as its consumer base becomes increasingly diverse, “mainstreaming” reduces its exposure to risks concerning minors in the Chinese market. At the same time, the continuously growing overseas business also helps to hedge against regulatory risks in a single market.

2. The vulnerability of “herd” trading: In every cycle of the capital market, dominant “crowded trades” may emerge. The influx of funds into consumer blue-chip stocks represented by Moutai from 2016 to 2021 is quite similar to the current concentration of funds in the “new consumption” track focused on Labubu. Changes in fund flow and positions can have a huge impact on valuations.

Research suggests that against the backdrop of scarce high-quality investment targets, this “crowding” situation may continue for a period of time. The real turning point may not arrive until meaningful turning points occur in high-frequency data from overseas markets or when a strong recovery in the Chinese economy provides investors with more options.