By Haicen Yang and Fred He, CNN

Hong Kong and Beijing (CNN) — At a busy market in a small town of China’s Hebei province, Labubu is no longer the coveted collectible displayed in glass cases. Here, they’re treated like sweet potatoes or cabbages, dumped by the dozen into large plastic bags, or piled into car trunks waiting for sale.

These aren’t genuine Labubu – the Pop Mart dolls that have gained cult status in recent months – but “Lafufu,” a tongue-in-cheek nickname for a wave of knockoffs. Collectors have even coined playful variants like “Lagogo,” “Lababa,” and “Lapoopoo.”

Last month Pop Mart reported an astonishing near 400% increase in profits for the first half of the year. Despite warnings from multiple countries not to buy them, Lafufu sales have also surged, inspiring a flood of memes, funny clips, and unboxing vlogs.

Most of these “Lafufu” are manufactured by small-scale factories in China’s Guangdong and Hebei provinces, and are sold in large quantities both domestically and overseas.

Authorities in the United States and the United Kingdom have warned consumers that counterfeit Labubu are poorly made and may contain small, detachable parts such as eyes, hands, and feet, which present a serious choking hazard to young children.

Chinese authorities are also trying to take them off the market – seizing more than 1.8 million dolls that were intended for export since the beginning of this year.

An editorial in state media gave an indication of why Chinese authorities are so concerned about the rise of Lafufu.

Praising Labubu as a Chinese success story, the Xinhua editorial said the nation’s innovation was being eroded by the “rampant proliferation of ‘fakes’ and ‘copycats.’” “Without strict intellectual property protection, there will be no sustainable innovation competitiveness,” it said.

Why Lafufu?

“They’re the cutest, ugliest thing you’ve ever seen,” said Danielle Horres, 50, a single mother from Texas, whose 11-year-old daughter recently gifted her a squinty-eyed Lafufu with lit-up ears for $20 at a local flea market.

The Horres family even named their Lafufu “Gary” – he’s now officially part of the household. “It’s the silliest thing because I’m 50?years old and I don’t have time in my life for toys,” she laughed. “But it’s just this cute little furry … you know what it reminds me of? Ugly babies!”

People are drawn to Lafufu for simple reasons: they’re so-ugly-it’s-cute charm, their quirky features like singing and dancing – things the original doesn’t even do – and, perhaps most importantly, the price tag. A Lafufu typically costs just a tenth of the official version.

“I like to go look for the fake ones because the fake ones actually do things that the real ones don’t – sing and dance!” said Horres.

To Mao Mao, a 29-year-old pastry chef from China’s Fujian province, the value of Labubu stems solely from brand hype, and spending big on it feels like tossing one’s hard-earned money down the capitalist drain.

“I can’t stomach Labubu’s inflated price anymore. It was originally priced at 99 yuan ($13.80). Why would I pay hundreds above that price for hype?” she said. “It’s just a doll.”

On Pop?Mart’s China website, a Labubu plush pendant blind box is priced at 99 yuan, and regular plush dolls typically go for around 499 yuan ($69.45), with more popular figures priced even higher. All of them are marked “out of stock.”

Secondary market prices are daunting. A hidden edition plush pendant – originally 99 yuan – sold for 1,400 yuan ($195) on China’s buyer platform Dewu. The newly released series, originally 199 yuan ($27.70), resold for over 2,000 yuan ($278).

In the United States, official retail prices average about twice those in China, sustaining a robust market for second-hand Labubu figures.

“We have to go on Facebook Marketplace, and you have to know somebody who knows somebody. So, you’re really paying for the opportunity to buy it,” said Horres, the Texan mom. “They will buy big boxes, and they’ll actually unbox them and sell one by one, each for $60.”

Horres understands why many social media users follow celebrities in hanging Labubu figures from their Hermès Birkin bags as a display of status and trendiness. But for her, Lafufu has returned to the doll’s essence – a toy.

“I don’t want to be part of that Birkin and Labubu trend; I want to be part of the Lafufu and Birkin-from-Walmart trend,” Horres said.

A lucrative trade

One toy manufacturer in Dongguan, Guangdong, told CNN that at peak demand in July, it sold 150,000 to 160,000 fake Labubu toys, pulling in profits of up to 2 million yuan ($278,000).

“A lot of fans just couldn’t get their hands on Labubu, even those who tried really hard,” said a sales manager in the factory, who declined to be named due to the sensitivity of his business. “That’s why they turned to Lafufu.”

The manager said the knockoff Labubu toys in their factory are shipped across China, and to Europe and Southeast Asia. But most go to the United States, which alone accounts for over 40% of the factory’s exports.

China remains the world’s top source of counterfeit products, even as authorities ramp up prosecutions.

In the US alone, counterfeit and pirated goods from China made up 84% of the value and 90% of the quantity of such goods seized by US officials in 2023, according to a market review in 2024 issued by the US trade representative.

Last year, China’s Supreme People’s Procuratorate reported prosecuting 21,404 individuals for producing and selling counterfeit and substandard goods. However, the flood of fakes shows no sign of slowing.

The factory in Dongguan produces not only the “Labubu,” but also a variant called “Lagogo” – a singing, dancing Labubu with lit-up ears – that sells for just 18.8 yuan (about $2.60). Monthly sales reach 30,000 to 40,000 units, said the sales manager.

Still, the factory manager drew a line between the two. “Lagogo is obviously not Labubu. But Lafufu looks almost the same, and that gets into intellectual property, which is a whole different story. The government is cracking down on piracy and does respect brand rights,” he said.

A ‘way of rebelling’

Customs authorities at several Chinese airports have seized tens of thousands of Lafufus intended for export since June. The customs administration said that those dolls and packages used the “Pop Mart” logo without authorization, considered an infringement on the company’s trademark rights.

Both government departments and local market regulators have intensified their efforts to target pirate Labubu businesses, according to the official newspaper of China National Intellectual Property Administration in early July.

Pop Mart filed a registration for the trademark “Lafufu,” as shown on corporate information platform Qichacha, which is seen as a defensive measure against the flood of copies.

Amid the intensifying crackdown, two Lafufu manufacturers in China told CNN in early July that they heard about peers “being detained,” so they had been keeping a lower profile since then.

The street market packed with bags and bags of Lafufus in Hebei province was swept away by local authorities on July 2, according to state-owned outlet Red Star News.

But as long as buyers like Mao Mao are around with money to spend on cute – if not authentic – Labubu, the market for fakes could be around for some time yet.

“The counterfeits are made very well now – some cost just tens of yuan and look almost the same, with similar workmanship – so why not buy the cheaper ones?”

Mao admitted she’s tired of the aggressive marketing for the real deal.

“Buying Lafufu is my way of rebelling.”

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