China's toy-making prowess is well-known, what's less known is its move up the value chain, after a decade of investments in quality. This year, toy exports are bucking the trade downtrend, while domestic sales are also bounding ahead. Cheng Lei sheds light on the dynamic between upstart locals and ambitious imports -- and, what's likely to be on holiday wish-lists this year.
This may be where your kids' holiday presents are being made.
"The essential building blocks of a new Lego factory: a qualified local workforce, proximity to the Asian distribution centre: Shanghai, and lots of land in this growing city."
It's no wonder everyone in the Chinese toys industry is smiling these days.
International brands, domestic makers -- are all profiting from Chinese families' "kids' first" spending pattern.
"Chinese consumers are looking for more quality prods, esp for their kids, quality becomes top of everything. I see a trend -- tier 2 & 3 cities developing very fast. local consumers expecting many new brands. local brands very active, react fast, overall, good for market. We also have e-commerce. integration. data driving , mgmt, efficiency, brick and mortar -- emotional link, that's v. impt. what Chinese needs," said Cystal Zhong, GM Kidsland.
Liang Mei, who heads up the China toys association -- on the competition between imports and locals.
"International brands are stronger in their history, r&d, quality and marketing. Chinese companies have good production capacity, a bit of experience in design, but need to improve in marketing, and talent. on the whole, around china, there is a balance between imports and local toy brands."
"Our home grown brands are doing better but to gain consumer recognition overseas, it will take time. Goodbaby has done well, some are using M&A's to internationalise. there are other companies like Aofei that are heading overseas. with the lead of these players, more companies will follow," said Liang.
As for kids' wishlists for the holidays this year -- it's likely to be a mix of cutting edge and classic.
"There'll always be some traditional toys, like plush toys, car toys, wooden toys, that kids of a certain age will always like. for christmas, i think in europe and us, STEM toys are very popular, science tech, education and maths. parents like how these toys help kids' development," said Liang.
China's listed toymakers -- like Aofei, are posting strong earnings growth, as they expand from physical playthings to virtual entertainment worlds. that, according to lego, is the way to stay relevant, in this digital age.
China's per capita toy consumption--stands at a fraction of that of countries like the US and Japan. For China's 220 million children -- the fun is just getting started.
