Retailers and investors alike are piling into companies and shares related to what is called the guzi economy, a flourishing industry based on making badges, pins, cardboard cut-outs and other paraphernalia based on popular animation characters.

Unlike common merchandise that serves practical purposes, such as mugs, T-shirts and key chains, guzi, a phonetic translation of the English word 鈥済oods,鈥� are usually not functional. Young people, however, don鈥檛 seem to care.

According to iiMedia Research, China鈥檚 鈥済uzi economy鈥� was valued at US$23 billion last year and is expected to reach US$42 billion by 2029.

Fueling such big numbers are consumers, generally aged between 15 and 25 years, like high school teacher Sun Meng, who carries a bag covered in pins printed with her favorite animation characters.

Sun, 28, has collected about 30 pins from online and offline vendors, at a cost of more than 450 yuan (US$61). 鈥淚t is expensive per se,鈥� she admitted. 鈥淏ut looking at them makes me feel happy, so I don鈥檛 mind the cost much.鈥�

The guzi craze has not been lost on traditional retailers. Just before New Year, Bailian Group, the largest retailer in Shanghai, launched its second Bailian ZX mall, a brand wholly dedicated to otaku, a Japanese word that describes people with consuming interests in the pop cultures of anime, manga, video games and computers.

In the Wujiaochang area of Yangpu District, the mall was originally called the Umax Youmai Life Plaza, a four-story department store that provided clothing, parent-child activities and dining. It was like other malls in the area. Then came a complete makeover and a surge in popularity.

In 2023, Bailian renovated a mall on the Nanjing Road Pedestrian Mall into its first ZX. On weekends, the mall receives more than 100,000 visits. Bailian鈥檚 Shanghai No.1 Department Store also began focusing on otaku culture.

Guzi retailers such as GuGuGuGu, ComeFor, and Bilibili Goods are especially popular in Bailian ZX.

鈥淕uGuGuGu belongs to Road Pictures, a film company that is sales agent for several Japanese movies and animations,鈥� said Jing Xiaori, director of GuGuGuGu鈥檚 Wujiaochang branch. 鈥淲e have the rights to develop our own goods based on those works, so 70 percent of the goods sold in our stores are self-designed.鈥�

GuGuGuGu鈥檚 鈥済oods鈥� are basically based on three major Japanese intellectual properties popular in China: 鈥淪uzume,鈥� a 2022 animated adventure movie directed by Makoto Shinkai; 鈥淗aikyu,鈥� a manga and animation that has been in serialization for 12 years; and 鈥淪py x Family,鈥� another manga and animation series.

China is a hot market for the merchandise. 鈥淪uzume,鈥� for example, had a box office of 752 million yuan on the mainland, even higher than in Japan.

鈥淚n 2023, the company saw the business opportunities in guzi and decided to have a go,鈥� said Jing. 鈥淣ow we have eight flagship stores on the mainland, and all very popular. We have a team of designers and artists to develop the guzi. As long as the design is approved by the copyright owners, we can put the products on shelves.鈥�

鈥淢aybe that is how this generation of young people emotionally satisfies themselves,鈥� he said.

Companies related to the guzi economy have become stock market favorites with investors.

Miniso Group Holdings closed trading on the Hong Kong stock exchange on Tuesday at HK$43.60 (US$40.89), up 35 percent from six months ago.

On Chinese markets, guzi-related Class A shares rose more than 10 percent on November 26, according to financial website wallstreetcn.com. Deyi Cultural Creativity and Wahlap were among a group of shares that hit the 20 percent daily limit, and Shifeng Culture and Guangbo Co reached that limit for the fifth consecutive trading session.

Pin-collecting teacher Sun said there is more than just a feel-good factor to guzi collectables. She thinks the sales of the cartoon toys can influence how characters develop, especially in works that may be serialized for years or even decades.

鈥淧ublishers and producers will pay attention to the sales of guzi,鈥� she told Shanghai Daily. 鈥淏uying your favorite characters鈥� guzi is a way to tell 鈥榯he powers that be鈥� that these characters have high commercial value and their stories sell well. So in future, there will be more stories about them.鈥�

A booming market means more fierce competition, especially when copyright holders authorize multiple access to product rights.

Guzi shop ComeFor cited the example of their products derived from the 鈥淗arry Potter鈥� series.

鈥淲e were once a company developing toys and stationery, but in 2021, we transformed ourselves and entered the guzi market,鈥� Yang Jing, director of ComeFor鈥檚 Wujiaochang shop in Bailian ZX, told Shanghai Daily.

鈥淗arry Potter is one of our most important intellectual properties,鈥� he said, 鈥渂ut in recent years many other companies have received authorization from Warner Bros to develop guzi related to the series. That has been a great challenge for us.鈥�

The solution? Develop an entirely different style of goods.

ComeFor has designed a series of Harry Potter derivatives like acrylic plates and pins in the Japanese animation style. They were an immediate hit upon release. 鈥淲e have a design team of about 20 people, and almost all of them are fond of animation and manga culture,鈥� said Yang. 鈥淪uch personal passion transforms itself into creativity.鈥�

Industry insiders divide these intellectual properties into three types: super properties that enjoy long-term mass popularity, such as 鈥淗arry Potter鈥� and 鈥淧ok茅mon;鈥� hit properties that can be popular for a considerable length of time, such as domestic mobile game 鈥淕enshin Impact;鈥� and emerging properties, such as Japanese manga 鈥淪kip and Loafer鈥� that is developing a fan base around the world.

Buying the rights to such properties can be costly. For interested parties without deep pockets, the only way to grab a slice of the cake is by acting as overseas sales agents. It鈥檚 sometimes a risky undertaking, fraught with misjudging the market or the popularity of properties.

Ma Xiu in the southwestern city of Chongqing found that out the hard way. His guzi shop lasted only five months. 鈥淭he depreciation of the Japanese yen was the reason I decided to open a guzi shop and imported products from Japan,鈥� he said. 鈥淏ut agents like me mushroomed, and the market became saturated much faster than I expected. So I tried some niche properties, thinking they would attract some hardcore fans, but the end result was a warehouse of unsold goods.鈥�

Liang Shenzhi, who has been collecting guzi for seven years, said it comes as no surprise that some shops may flop within a short period of time.

鈥淢any shop owners don鈥檛 really know about otaku culture themselves, but only want to follow the trend and make quick money,鈥� he said. 鈥淚鈥檝e been to many guzi shops, and many are quite homogenized, with more or less the same shop d茅cor and products. Such shops can鈥檛 survive long in any industry, and the guzi market is no exception.鈥�