( ) Top 10 toy companies in China (2014)
Though surprised to see the made- in-Vietnam toys, Zhang acknowledged that his company is considering setting up plants in Vietnam and neighboring Thailand because of lower manufacturing costs. His company exports 90 percent of its products, and the US is its most important market.
China is still the world’s largest manufacturer and exporter of toy products, producing more than 70 percent of the global total, according to a 2015 report from industry researcher IBIS World Inc.
But that long-standing dominance is facing competition from low-cost producers. Labor and rawmaterial costs also have been rising in recent years, increasing production costs, while the Chinese yuan appreciated, affecting export activity. China’s economic slowdown and the growing popularity of video games over traditional toys are other challenges to the industry.
London-based market-research firm Euromonitor International estimates the mainland’s toy market produced about 63.4 billion yuan ($9.7 billion) in sales last year, and is likely to reach nearly 70 billion yuan this year. Sales in China are projected to climb to 97.52 billion yuan by 2019, according to industry data.
Most toy-making companies are small and have low profit margins. IBIS noted that industry profitability has been decreasing in recent years, falling to about 4.2 percent in 2015.
Despite challenges, IBIS forecasts that during the next five years, the toy-manufacturing industry in China will expand steadily, said IBIS. And the main reasons are the expansion of the middle class and the elimination of China’s onechild policy.
“We hope to get more sales from the change in the one-child policy,” noted Zhang.
As China’s middle class grows, parents and grandparents are increasingly turning to products that will move children outside when playing with toys and games.
Products that encourage children to participate in outdoor activities sold well in 2014 as outdoor-activity products and sports toys, radios, remote control toys and ride-on vehicles benefited from this trend, according to Clover Wei, senior associate at Euromonitor International.
“Parents are increasingly aware of the academic workload their children bear, and they believe products that require children to play outdoors can effectively relieve their stress,” she said. Moreover, teamwork and team spirit skills are also developed through outdoor activity, sports toys, radios and remote control toys, added Wei.
For China’s increasingly large and wealthy urban population, demand also is shifting from traditional and medium-end electric and decorative toys to novel, intelligent toys and high-end plush toys, said Goodman.
“The industry’s top companies, including Auldey, Blue Cat, Goodbaby, MSD and Huawei, are investing in more research and development to satisfy that demand. Toy companies in the Pearl River Delta are also altering their business strategy to emphasize other segments of the value chain, such as marketing, and product research and development. To increase sales, domestic manufacturers are focusing on online shopping platforms (such as Taobao and Jingling) as well as developing their own e-commerce sites,” added Danielle Goodman, IBIS’s business manager in China.
Guidecraft, a 50-year-old company based in Tuxedo Park, New York, is hoping to take advantage of China’s growing market. The company was started by Fred Fein, who made small, wooden figures called “wedgies’’ in a one room shop in Garnerville, New York. The figures represented professional men and women like postal carriers and some with different skin tones — a groundbreaking