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A Model Business

Journey to the West: one of the earliest animated model kids
Journey to the West: one of the earliest animated model kids (photo: Xinhua News Agency)

While the term "model kit" has traditionally been taken to generically refer to a broad range of scaled-down toy products, particularly cars or aircraft, a more specific use was coined in 2004 by ACTtoys.net, China's leading animated toy platform. This saw "model kit" come to refer solely to models, toys, props and other merchandise related to cartoons, films, television series and games. As such, the term is now widely used throughout the industry.

Unlike traditional self-assembly models, remote-control kits and unlicensed children's toys in general, the term "model kit" refers to products that have an established pedigree within the spectrum of relevant cartoons, films, television series or games. Typically fashioned from PVC, resin, organic plastics or other alloys, such products tend to be finely detailed and produced to a high standard. Usually portable and posable, many such toys also incorporate sound and lighting effects associated with the characters in other media, most notably in the case of Gundam and Dragon Ball merchandise.

Model kits previously were perceived as high-end toys by many Chinese mainland consumers, a positioning that limited their popularity. But this perception has become less of a problem, partly because many anime fans have reached the age when they are earning in their own right, and partly because disposable income levels generally are higher all around.

Many model kits, however, are still quite costly. Manufacturers say this is due to the complicated production processes involved and the high standard of workmanship required. However, certain kits, if maintained in a reasonably pristine condition, may appreciate in value over time. The target market for these more collectable items tends to be discerning anime fans in the 18 to 35 age group, who have independent spending power.

Set on China's east coast, Qingdao is typical of many mainland cities in that, despite being home to a sizable number of model-kit enthusiasts, there are few high-street outlets specialising in such items, and those that do are small and scattered. As a result, there is little networking between such collectors, with the majority conducting their pastime individually, and no easily accessible sales channels targetted at such individuals.

Even in today's digitally-connected world, many model-kit websites still rely on word-of-mouth and their own promotional initiatives to drive traffic. Overall, there are several challenges faced by many of the e-tailers active in the sector. Among them is the lack of real online or offline support from many of the sector's leading manufacturers, which feeds into the bigger problem of fake products being sold online.

Coordinated Distribution

Japanese model kits: eminently collectible
Japanese model kits: eminently collectible (photo: Shuuterstock.com/smild.ch)

Overall, the sector would clearly benefit from greater cooperation between the domestic and overseas manufacturers currently producing model kits. This would help to develop properly stocked and managed high-street outlets with a focus on the sector, while providing greater opportunities for feedback on to future designs, production preferences, and new product development.

In the case of Qingdao, for instance, this would include coordinating with the established Qingdao International Animation and Game Industrial Park, a specialist enterprise zone to the east of the city centre. Wider integration of the park into the commercial and cultural life in the region could boost Qingdao's prosperity as well as that of Shandong province overall.

To expand the wider sector, larger manufacturers should consider closer alliances with specialty stores. Securing the endorsement of companies such as Japan's Bandai Namco and the United States’ Hasbro and Mattel, which produce many of the most sought-after models, would certainly boost retailers in the sector. Active involvement of many mainland-based manufacturers – notably Auldey, Lingdong and Machine Boy – all of whom started out as OEM contractors for several of the industry's leading brands, would also raise the profile of many retailers, while giving such companies the kind of feedback they need to refine their product design initiatives.

Looking further afield, both Hong Kong and Taiwan are home to model-kit industries that are considerably more sophisticated than their mainland counterparts. Apart from producing kits that tie-in with Japan's anime sector, several Hong Kong manufacturers, for instance, also create a range of licensed merchandise for high-profile mainland animated properties, such as Jade Dynasty, the hugely-popular multi-player online role-playing game.

Other Hong Kong-based manufacturers, such as Dragon Models, which has won considerable acclaim for its military model kits, have succeeded because of their greater overall affinity with Chinese culture, despite their workmanship being less regarded compared with the US and Japan-based market leaders. Still, a closer alignment between such manufacturers and those on the retail frontline would clearly help legitimise the overall sector.

Staging major trade events focusing on model kits could also prove to be a huge step forward for the sector. While Hong Kong plays host to the HKTDC Toys and Games Fair every January, similar events of a comparable scale are rare on the mainland. Even though the China Import and Export Fair – the mainland’s largest trade event, also known as the Canton Fair – has a dedicated toy section, it has no particular focus on model kits, with footfall, accordingly, on the low side.

However plans are underway to stage several sizable toy and model expos in northern China in the next few years, with the expectation that the pilot events could eventually be held annually, benefitting the overall industry and region.

For more China market opportunities, please visit: http://research.hktdc.com

Content provided by Hong Kong Trade Development Council
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