Core Viewpoint - The Labubu imitation industry is facing significant challenges due to increased competition and stricter regulatory scrutiny, leading to reduced profits and market demand [1][6][10]. Group 1: Market Dynamics - After a successful initial period, the imitation market for Labubu products has become saturated with competitors, causing prices to drop and profit margins to shrink [1][6]. - The demand for Labubu products surged initially, with one factory reporting sales of over 10,000 units in the first month of operation, leading to profits exceeding the annual earnings of a long-standing business [4][5]. - By mid-2024, the domestic market for Labubu began to show signs of saturation, with a notable decrease in customer demand and increased price competition among imitation manufacturers [6][8]. Group 2: Regulatory Environment - Regulatory authorities have intensified their crackdown on imitation products, with multiple enforcement actions reported, including the confiscation of counterfeit Labubu items [10][11]. - The customs authorities have also increased their efforts, seizing over 38.67 million counterfeit items in the first half of the year, including Labubu products [10]. - Legal experts indicate that unauthorized use or imitation of Labubu's unique image can lead to severe legal consequences, including potential imprisonment for serious offenses [11]. Group 3: Competitive Strategies - Imitation manufacturers are now actively engaging in marketing efforts to attract customers, utilizing social media and promotional tactics to maintain sales [9][12]. - The emergence of new competitors has led to aggressive pricing strategies, with some manufacturers advertising "lowest prices" and "highest quality" to capture market share [9]. - Despite the challenges, some manufacturers continue to operate within the gray market, indicating a reluctance to exit the industry despite the risks involved [12].