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China’s Toy Industry 2017: Beating the Odds

Against the odds, China’s toy-making industry keeps going strong. While China’s overall exports fell in 2016 from a year earlier, total toy exports grew by over 18 percent – only one sign of how the sector has weathered China’s “new normal” of slower growth and rising cost pressures. Growing domestic demand for higher-end toys is likely to continue stimulating development and growth in the industry.

However, swimming against the current has not been easy. Toy makers have had to either invest in productivity-boosting technologies, move up the value chain towards higher-margin toys, migrate to lower-cost cities – from Shenzhen to Shantou, for instance – or close down.

Meanwhile, foreign toy wholesalers and retailers sourcing in China, including many of Fiducia’s clients, are facing the following challenges:

  • Cost Pressures: Rising labor costs in China, higher compliance pressures internationally, and currency risks, mean sourcing companies must continually negotiate with suppliers and optimize costs along the value chain to ensure competitive prices.
  • A Changing Supplier Base: Not all manufacturers have been able to adapt to the new market conditions. As the industry upgrades and reshuffles, searching for new factories to diversify and strengthen your supplier base is crucial.

For advice on how to overcome these challenges and find the right suppliers in China’s rapidly-changing toy industry, contact Fiducia Management Consultants.

Content provided by Fiducia Management Consultants
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