Previously, the trendy toy company POP MART was &#34;killing it&#34; overseas, and now the &#34;Guzi&#34; from the ACG (Anime, Comic, Game) culture is crazily harvesting young people.On November 26, during the trading session of A-shares, the Guzi economy concept index rose over 10%, with stocks in the sector such as Deyi Cultural Creativity and WAHLAP hitting the 20% daily limit, while Alpha Group, Hengdian Film, and Shifeng Culture also reached their daily limits. Among them, Shifeng Culture and Guangbo Co., Ltd. both achieved five consecutive limit-ups.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/d5f04ce4-2f91-47a4-af45-ce92029171b7.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/d5f04ce4-2f91-47a4-af45-ce92029171b7.png"/>With the rapid development of the &#34;ACG&#34; culture and its derivative economy, the emerging market created by the surrounding products of &#34;Guzi&#34; is quickly rising and becoming a new investment hotspot. Since September this year, multiple securities firms, including Haitong Securities, CITIC Securities, Huachuang Securities, and Debon Securities, have released research reports related to the &#34;Guzi economy.&#34;According to data from the Qianzhan Industry Research Institute, from 2016 to 2023, the scale of China's ACG industry grew from 18.9 billion yuan to 221.9 billion yuan, with a compound annual growth rate of 42%. Among them, the scale of peripheral derivative industries surged from 5.3 billion yuan to 102.3 billion yuan, with a compound annual growth rate of 53%.<h2>What exactly is the &#34;Guzi economy&#34; that is surging in A-shares?</h2>The term &#34;Guzi&#34; in ACG culture is a transliteration of &#34;Goods,&#34; broadly referring to peripheral products related to IPs such as comics, animations, and games, including badges, standees, keychains, etc.Unlike trendy toys that monetize through aesthetics, Guzi products carry ACG IPs and are an important form of expression for ACG peripherals and derivative industries. The consumer group is primarily composed of younger ACG users, significantly reflecting a &#34;paying for content&#34; consumption mentality.On November 22, analysts Ma Yuanfang and Ma Li from Zheshang Securities stated in their research report &#34;The 'Guzi Economy' is Thriving, and a Trillion Market is Rising—Special Report on the IP Cultural and Creative Industry&#34; that generally, Guzi refers to &#34;soft peripherals,&#34; such as stationery, clothing, keychains, etc., which typically combine practicality and aesthetics, are relatively inexpensive, and have a broader consumer base.On the 24th, analysts Lin Qixian, Yuan Weijia, and Ren Mengni from Shenwan Hongyuan analyzed in their report &#34;The Rise of the Guzi Economy, POP MART Hits New Highs, Focus on Self-Consumption—Commentary on the IP Derivative Products Industry&#34; that the Guzi industry began to rise in 2022 and entered an explosive period in 2023—the structure of social retail growth indirectly reflects the prosperity of the &#34;Guzi&#34; economy:<blockquote>In 2022, the growth rate of sports and entertainment products in social retail was not significantly ahead of the overall growth rate of social retail. However, from March 2023 to now, the growth rate of sports and entertainment products has outperformed the overall social retail growth rate for most of the time (excluding August 2023 and June 2024).From an annual perspective, the growth rates of sports and entertainment products for the full years of 2022, 2023, and January to October 2024 were 1.2% / 11.2% / 11.5%, while the overall growth rate of social retail during the same period was -0.2% / 7.2% / 3.5%.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/7606991d-0127-440d-baf5-b122e78fdeb5.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/7606991d-0127-440d-baf5-b122e78fdeb5.png"/>Looking ahead, according to data from the Forward Industry Research Institute, it is expected that from 2023 to 2029, the scale of the ACG (Anime, Comic, and Game) industry will grow from 221.9 billion yuan to 590 billion yuan, with a compound annual growth rate of 18%, and it is expected to continue to enhance the growth momentum of the &#34;Aito economy.&#34;</blockquote><h2>Aito Industry Chain: Focus on IP and Channels</h2>As a pan-entertainment product, the Aito industry chain can be divided into several segments: IP, product development and design, and channels, with IP and channels being the core.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ad256bd3-7849-4633-a763-9ce219cfe00b.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ad256bd3-7849-4633-a763-9ce219cfe00b.png"/>From the perspective of the entire industry chain layout, compared to the trend toy industry, which has established a complete industry chain layout (POP MART owns its own IP + product design and development + self-operated stores), there are fewer companies with a complete layout in the Aito industry chain.As leading companies in the current industry, companies like KAYOU and Guangbo Co., Ltd. mainly focus on product design, development, and distribution in the midstream of the industry chain, obtaining IP authorization from upstream, building their own supply chain to provide product production capabilities, and connecting downstream distribution channels to achieve monetization, but the contribution of self-operated store revenue is still low.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/0bfab26d-b956-410f-8962-ac3d142de4fb.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/0bfab26d-b956-410f-8962-ac3d142de4fb.png"/>As the core selling point of Aito, IP authorization is a top priority for upstream efforts. Zheshang Securities believes that for midstream and upstream operating companies, closely integrating with the IP industry chain, becoming an important participant in IP derivative development, and providing consumers with more differentiated IP experiences are essential to stand out in fierce competition.In simple terms, the higher the quality and quantity of IP obtained by operating companies, the stronger their core competitiveness.From the perspective of the midstream and downstream of the industry chain, the midstream mainly involves product development and production, while the downstream mainly refers to agency distribution stores, including: Aito stores, grocery stationery gift stores, Japanese retail stores, card stores, &#34;ACG + traditional store formats,&#34; etc.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/fce538b0-3c9e-479b-9e7f-744147ee2b9b.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/fce538b0-3c9e-479b-9e7f-744147ee2b9b.png"/>Shenwan Hongyuan pointed out that currently, only a few companies in the industry have production lines, mostly adopting OEM cooperation. Due to the low material and production costs of Aito, and the fixed investment in production lines and fixed minimum fees for IP, the gross profit margin depends on economies of scale.Zheshang Securities believes that the current Aito economy is in a stage of competing for channels, and companies or brands with extensive retail channels are expected to enjoy industry beta in the early stages. In the medium to long term, core competitiveness will return to product development and selection capabilities, ultimately focusing on differentiated product supply.Zheshang Securities also added that in addition to opening more stores and expanding channels, having upstream IP resources is also a significant competitive advantage for retailers.For example, the well-known Aito store March Beast has previously introduced several leading Japanese anime titles such as One Piece, Bleach, and Naruto, and has over a decade of cooperation with domestic and foreign IP parties, allowing it to obtain many exclusive IPs and products, as well as the ability to negotiate with Japanese manufacturers for the re-sale of popular productsThe founder of SanYueShou stated in a public interview that nearly 90% of the legitimate Japanese market is represented by SanYueShou

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The "millet economy" relies on monetizing IPs such as games and animations, with the industrial chain focusing on competing for IPs and distribution channels. The more IPs obtained and the larger the distribution channel scale, the stronger the core competitiveness. Institutions expect that from 2023 to 2029, the scale of the ACG (Anime, Comic, and Game) industry will grow from 221.9 billion yuan to 590 billion yuan, with a compound annual growth rate of 18%, accelerating the development of the "millet economy."

POP MART "Jewel in the Front," "Millet Economy" Has Become Popular in the Market