AI toys offer emotional support to consumers in China

China is rapidly pushing into AI-driven “companion” toys—positioned as emotional-support devices—backed by a broad government action plan from MIIT and other agencies that for the first time lists collectible toys as a priority consumption category and targets certain segments to exceed ¥100bn by 2027; the AI toy market was ¥24.6bn in 2024 and is forecast at ¥29bn in 2025. Startups and OEMs are scaling commercial traction: Robopoet’s Fuzozo (¥399) sold >1,000 units in 10 minutes and about 100,000 units year-to-date with a 1m-unit/¥400–500m GMV target for next year, Ropet’s AI pet reached JD top-three robot sales, and TangibleFuture’s $150 LOOI Robot has shipped >10,000 units (90% exported). The story signals a hardware-plus-behavioral-data business model leveraging China’s complete toy supply chain to drive domestic growth (retail ¥97.85bn in 2024, +25.5% vs 2020) and exports (US$39.87bn in 2024), creating new monetization and export opportunities while leaving outcomes dependent on competition, product adoption and regulatory developments.

Analysis

China’s central and industry ministries published an action plan in November that explicitly prioritises collectible toys and supports AI-enabled toys, underpinning a market the Ministry of Industry and Information Technology valued at 24.6 billion yuan in 2024 and forecast at 29 billion yuan in 2025. The plan targets certain consumer segments to exceed 100 billion yuan by 2027, signaling policy-backed demand stimulus that materially raises the sector’s growth runway.

Commercial traction is evident: Robopoet’s Fuzozo, priced at 399 yuan, sold over 1,000 units in the first 10 minutes of 618 presales, ranked No.1 on JD and Tmall during Double 11, has sold ~100,000 units YTD and is targeting 1 million units (400–500 million yuan GMV) next year. Ropet’s AI pet reached JD’s top-three robot sales during Double 11, and TangibleFuture shipped >10,000 LOOI units since November 2024 with ~90% exported and a social endorsement from Elon Musk, highlighting both domestic demand and near-term export pull-through.

The story matters for investors because China’s toy retail market was 97.85 billion yuan in 2024 (+25.5% vs 2020) with exports of US$39.87 billion (+19.1% vs 2020), implying meaningful addressable markets and supply-chain advantages. Key risks are execution on 1m-unit scale targets, competitive pressure, product adoption/retention dynamics and regulatory developments that could affect monetisation of behavioural data and cross-border sales.

Key Decisions for Investors

• Consider selective exposure to Chinese e-commerce platforms and retailers (eg, firms benefiting from JD/Tmall distribution) that capture early AI-toy sales volume and category leadership, monitor platform sales rankings and conversion metrics closely
• Evaluate suppliers and contract manufacturers with demonstrated scale and export capability given high overseas demand (TangibleFuture: >10,000 units, 90% exported) and prioritise names with visible unit economics and supply-chain resilience
• Maintain a watchlist on emerging leaders (Robopoet, Ropet) for KPIs such as units sold, retention/usage and behavioural-data monetisation before increasing position size, and hedge or avoid broader exposure if policy support weakens or regulatory scrutiny of AI companions intensifies