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Toy industry expects products "Created in China"
Last Updated(Beijing Time):2006-06-12 11:07

By Su Min

As shown in Data, China is the largest producer and exporter of toys in the world. At present, there are altogether over 8,000 enterprises manufacturing toys involving over 3.5 million employees. Various toys of over 30,000 kinds are being sold in over 100 countries and regions. Over 75 percent of toy products in the world are from China. In every corner of the whole world, it is almost always possible for you to see various toys "made in China". Nevertheless, relevant experts appeal that in face of the new marketing environment, it is urgently expected that China's toy industry can realize the transformation from "Made in China" to "Created in China" as soon as possible.

Changes to be occur in the toy market

Since the beginning of reform and opening-up, China's toy industry has been developing rapidly with the industrial scale and manufacturing enterprises growing incessantly. In 2005, sales of toys exported by China increased by 26 percent to US$15.18 billion. However, experts point out that there will appear major changes in the international and domestic toy markets in a few years.

Data provided by relevant institutions show that China's toy industry has been maintaining the state of a labor-intensive industry; as the products of most toy enterprises rely on samples imported and processing with customer's materials while their product design, raw materials and processing equipment rely on imports, there lack the capability of technical innovation and technical improvement, the advantages in product designing and R&D, as well as brands with independent intellectual rights. Thus, in the international industrial division, the Chinese toy industry simply lies at the end of the industrial value chain with comparatively low added values. Since 2004, domestic enterprises' costs for the production of toys have increased by 30~40 percent while the processing fees and trading prices have only risen by 10~20 percent, thus the profit margin has dwindled greatly.

At the same time, tariff barriers, technical barriers and anti-dumping barriers have been launched in succession in the international market; thus, China's exports of toys are becoming increasingly difficult. Domestic toy makers' repeated construction for years has also resulted in a surplus production capability. In order to win the favors of purchasers, domestic manufacturers vie to lower their prices. In regions where toy enterprises are comparatively concentrated, the export prices for toys produced by some enterprises are simply calculated with a formula of "export price=prices of raw materials×weight of raw materials+processing fees". Obviously, what Chinese enterprises earn from the production is just processing fees that only provide a slender profit. For some of the toys manufactured with comparatively simple production process, the processing fees for a single article are only a few cents.

With a low profit rate, it becomes more difficult for enterprises to get themselves transformed into a technology-intensive industry. As they cannot design, develop and research independently, there is no way to consider their products with high added values. Such a cycle can only prick up the vicious competition in the toy industry incessantly

Overseas brands coming in succession

China's toy market has huge potentials for development. The over 300 million people under 14 in China have formed a huge group of toy consumers. As forecast by experts, China's toy market will grow at a rate of 40 percent annually, which will bring huge opportunities for the development of the toy industry.

However, the competition in the domestic market is getting more and more intense with overseas toy brands entering into China. In markets and toy stores, various sized Mickey Mice and Duck Donalds have occupied the most eye-striking positions. Blond Bobbies are sold in special counters. Trans-former, Spiderman, Robot Cat, Ultraman …are almost all imports, and there are few toy products with a Chinese brand. In the great consumption market with a scale of tens of billions of RMB yuan, domestically produced toys only seize 16 percent of shares.

Having seized the domestic market of high-end toys, various overseas famous toy manufacturers have expedited their further expansion in the Chinese market. The expansion in the market is approaching the secondary market along with the expansion of foreign-funded supermarkets.

Independent brands coming out

In recent years, the market for traditional toys has dwindled gradually while high-tech electronic toys are getting more popular. Interactive electronic toys with a comparatively high technological content have become the mainstream in the market. Intellectual Toys for children, which can cultivate the imagination, creativity, and capability of manual operations, have led a trend for development. Toys getting education and joys integrated are winning favors from children and their parents.

A batch of domestic high-tech toy manufacturers with independent intellectual property rights have come out to meet challenges, China's toys with a national brand have appeared in the market. During the June 1 International Children's Day, PP Bear, a kind of digital intellectual toy for children originating in China that was successfully developed in Shenzhen, comes out to meet children all over the country.

PP Bear can recite poems of the Tang Dynasty and teach English, it can sing and laugh when playing, burst into a cry if being beaten, get into a huff if neglected, it will go to sleep if lying down, but it will protest that "the nose is staved" if it bends over on the floor and calls for "Help" if being put upside down. Industrial insiders commented that PP Bear, which can perceive people's attitude while being good at imitating the happiness, angers, sorrows, and joys of human beings, had taken the lead in the production of digital intellectual toys for children, thus having realized the transformation from "made in China" to "Created in China".

Hu Lantian, Chairman of the Shenzhen PP Bear Toy Co., Ltd., introduced that PP Bear, the scheming and design of which took three years, was the first intellectual toy successfully developed with digitalization technology for children that can imitate the emotions of human beings at home and abroad. It is known that Shenzhen PP Bear Toy Co., Ltd., which is featured by "Independent innovation and development with brands", is a newly emerging toy manufacturer. It is the company's invention to have toys provided with the function to perceive the body posture, human emotions, and the function of teaching. At the very beginning, the company included independent innovation and protection of intellectual property rights into its development strategy; thus, the company has registered a "PP Bear" trademark at the governmental department, declared invention patents, and implemented its application for PCT international patents.

It is universally believed inside China's toy industry that to implement a brand strategy is an important measure to have the pattern of economic growth transformed. Only toy enterprises can win the upper hand in the market by attaching importance to the development of electronic toys, dynamic toys, or intellectual toys with a high content of technology, managing to set up their own brands, shape up their own intellectual property rights, and have the added values of their products raised. 
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