Toymaker Lego to be partners with Tencent

Games, online videos among options for joint venture deal

Danish toymaker Lego Group has formed a partnership with Chinese internet giant Tencent to develop games, online videos and a social media network for children in China.

Under the new partnership, Lego says it will aim to create a safe online ecosystem with platforms, content and experiences tailored for Chinese children and in which it will increase awareness of digital safety at a time when more children spend time online.

The toymaker said Legobranded games will be available on Tencent’s popular gaming platforms in China.

The collaboration includes Lego Boost, a building and coding set that lets children turn their brick creations into moving objects, and a plan to explore developing a joint social network, Lego Life, for children in China.

“We’ve seen more and more Chinese children engage with the world digitally, and the partnership will bring them safe and imaginative digital Lego content that also supports their needs of learning, development and entertainment,” said Jacob Kragh, general manager of Lego China.

Lego opened a factory in China in 2016 and expects to produce there between 70 percent and 80 percent of all its products that are sold in Asia. In 2016, Lego opened its flagship store in Shanghai, the first of its kind in Asia, and four brand stores in firsttier cities in 2017. The company tailor-made a Chinaspecific product — the Shanghai Skyline — last year.

“We are growing in China, and we feel that there is a strong potential for the LEGO Group to bring more of these great opportunities to children now, not only in the firsttier cities, but across a much broader sample of the Chinese consumers,” Kragh said.

John Baulch, a UK-based toy expert, said the collabora- tion between Lego and Tencent is a good idea because China will be one of the fastest-developing markets for toys during the next few years.

“While a lot of Western markets are more mature, such as the United States and Europe, etc, China is still rapidly growing. So the scope for Lego in China is huge. Focusing on the Chinese market is a very clever thing to do,” Baulch said.

China’s toys and games market is worth $31 billion and the Danish toymaker will face competition there from Barbie maker Mattel and Hasbro, the company behind My Little Pony.

Lego has seen a slowdown in sales growth in recent years, but China has been a bright spot, with sales there growing by 25 percent to 30 percent in 2016.

Lego is the third-largest traditional toy and game maker in the world, according to Euromonitor International. However, Lego saw one of its smallest gains in global value share in years in 2016.

China in particular should be a focus as a growing middle class, as well as a recent surge in the child population due to the relaxation of the country’s one-child policy, is expected to greatly grow construction toy sales, according to Euromonitor’s analyst Matthew Hudak.

Mattel teamed with e-commerce giant Alibaba in 2017.

While a lot of Western markets are more mature, such as the United States and Europe, etc, China is still rapidly growing.” John Baulch, UK-based toy expert