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Domestic and Overseas Suppliers Target Surging China Toy Market

The end of the one-child policy, combined with higher levels of disposable income and the largesse of parents and grandparents when it comes to gift giving, has ushered in a golden period in China's highly competitive toy market.

Photo: The China Toy Expo 2017: Bigger than ever and more domestically-focused.
The China Toy Expo 2017: Bigger than ever and more domestically-focused.
Photo: The China Toy Expo 2017: Bigger than ever and more domestically-focused.
The China Toy Expo 2017: Bigger than ever and more domestically-focused.

The sheer size of its population has long made China a huge market for the toy industry. Of late, though, its appeal has grown still further, largely on account of the relaxation of its 38-year-old one-child policy. Other factors have also played a part, including higher levels of disposable income and an abiding penchant on the part of both parents and grandparents to buy gifts for the family's youngest members.

Given the happy convergence of all of these elements, it should really be of little surprise that this year's China Toy Expo – or, to give the Shanghai-hosted event its more formal title, The 17th International Trade Fair For Toys and Preschool Educational Resources – attracted a record number of attendees.

Despite the buoyancy of the sector, though, certain businesses are still struggling to turn a profit. This is especially true of those manufacturers producing the more traditional kind of toy, many of which are finding it hard to compete with the digital, interactive playthings that top the wish list of a growing number of children.

One company facing that very challenge was Shantou-based Lelia Toys, which has been manufacturing dolls since 1998. Explaining how the business has set about retaining its relevance, Sales Representative Cana Choi said: "As parents now look for a certain functionality in the toys they purchase, we have introduced a number of customisable elements to our doll range.

"For us, this year's show has been better than the 2016 event, largely because more foreign buyers have attended. I suspect this was because this event was scheduled very close to the dates of some of the major Guangzhou and Hong Kong toy fairs, allowing buyers to visit all three."

In addition to dolls and dolls' houses, the company also offers a range of 'DIY' toys, items a child can interact with and use to construct whatever their imaginations allow. Although it principally services the domestic market, it also exports to Russia, South Korea and several other Southeast Asian nations.

A fellow Shantou business – and one taking a similarly low-tech approach – was Tungtay Chemical and Construction, which had made its way to Shanghai to showcase its 3D Painting Pen. Intended to nurture any child's inner artist, the pen extrudes resin as images are created, with the finished work then hardened by exposure to UV light. Launched last year, the pen is the latest addition to the range of inspirationally creative toys the company has produced over the past 17 years.

Reflecting on the company's experience at this year's event, a member of its on-stall sales team said: "We actually have relatively few competitors, so we've done quite well over the course of the past few days. We primarily focus on the mainland educational sector, but we are currently looking at moving into a number of export markets."

Despite the widely acknowledged scale of the domestic market, a number of exhibitors confessed that they remained firmly focused on export opportunities. In this regard, Pepperell Crafts – a Ningbo-based affiliate of the Pepperell Braiding Company, a Massachusetts-headquartered specialist in the craft sector – was far from unusual.

This year was the first time the company had exhibited its animal-themed range of make-it-yourself toys at the Shanghai event. To date, it has primarily focused on the US market, with Michael's, the Dallas-headquartered craft products retail chain, being by far its largest customer.

Explaining his company's reluctance to focus on the mainland market, Sales Manager Robin Ye said: "In China, there is too much attention on academic achievement, although I think that is finally beginning to change. The younger generation of Chinese parents have now recognised the importance of nurturing their child's creativity.

"Despite that, I don't think we will get many orders at this event as a cultural change always takes a long time to take root in China. On top of that, I reckon that only about 10% of the buyers here represent overseas companies."

Photo: Goula: Wooden toys for kids and their grandparents.
Goula: Wooden toys for kids and their grandparents.
Photo: Goula: Wooden toys for kids and their grandparents.
Goula: Wooden toys for kids and their grandparents.
Photo: Safari: Building dino awareness through fetching figurines.
Safari: Building dino awareness through fetching figurines.
Photo: Safari: Building dino awareness through fetching figurines.
Safari: Building dino awareness through fetching figurines.

Perhaps Pepperell should have taken a lead from Hong Kong's Chap Mei Plastics Toys, whose investment in a larger stand this year seemed to pay dividends in terms of heightened visitor attention. Launched in 1974, the Kowloon-based company primarily exports its range of models and action figures to Europe and the US. This year, it was particularly looking to promote its latest collection, which extended from pirate and dinosaur figures to more military-themed items and a special Ocean Quest under-the-sea series.

Assessing the company's overall experience at the 2017 show, Sales Manager Charles Xin said: "We've definitely secured more orders this year than ever before. I can only think that that is down to the fact that we've upped the scale of our presence."

With export orders clearly of vital importance to many exhibitors, it made sense for one business to be particularly prominent – TÜVRheinland, a Cologne-headquartered testing and certification provider with a speciality in ensuring toys comply with the required international standards.

The company also runs a number of proprietary certification schemes, including the Toy Proof Mark. This is said have far more strenuous requirements than the EU's officially-adopted CE standard, particularly with regard to random sampling and factory inspections.

Highlighting the company's achievements and challenges, Gary Zhu, TÜVRheinland's Shanghai representative, said: "At present, Lidl and Aldi are two of our largest clients. Typically, they rely on our product certification rather than on any provided by the Chinese manufacturers they source from.

"In China, though, we are limited as to exactly what we can do. Test's relating to China's mandatory CCC [China Compulsory Certification] system, for instance, can only be conducted by a small number of specially-designated mainland-based service providers."

For some toy companies, it was this very lack of CCC approval that was hampering their expansion into the mainland market. In the case of Florida-based Safari, although it has more than 1,000 product lines, only about 100 have secured the required certification. Frustratingly for the company, this restriction only applies because its products are produced in China and sold straight from the factory. If they were produced elsewhere and then imported, the CCC requirement would be waived.

A family-owned company, it opened its doors in 1982, originally operating as the US distributor for a range of playing cards highlighting the plights of various endangered species. Since then, under its guiding principle – "Toys that Teach" – it has graduated to producing hand-painted animal figurines.

Outlining the thinking behind its range, Jamie Greene, the company's International Sales Manager, said: "Through play, we hope that children will become more informed about endangered species and grow up to become environmentally responsible.

"In terms of this particular event, this is the first time we have exhibited here for several years. In the interim, it's grown considerably and there are now far more Chinese brands and distributors participating."

One company that had clearly got its CCC compliance sorted out was Think & Act Strategic, a toy distributor operating out of Hong Kong's Quarry Bay district. In 2012, the business started life as a sourcing agent for Barcelona-based Goula, a manufacturer of traditional wooden toys. Seeing a niche in the market, it subsequently took on the role of the Spanish brand's mainland distributor.

Explaining the company's evolution, Senior Merchandising Manager Karen Tong said: "We saw an opportunity to introduce good-quality, safe toys to China at a time when many of the country's consumers were becoming more aware of international brands."

Originally targeted solely at children up to the age of six, the market for these simple playthings has diversified somewhat over recent years. Perhaps most surprisingly, a number of elderly care homes have joined the company's customer list.

Expanding upon this latest development, Tong said: "In Hong Kong, they have proved effective in stimulating care-home patients, helping elderly residents to maintain their dexterity and retain their communication skills. They have found a similar application at the Education University of Hong Kong, where they are used as part of therapeutic processes for children with special educational needs."

Photo: All under one roof: Digital distractions and delightful dollies from a bygone age.
All under one roof: Digital distractions and delightful dollies from a bygone age.
Photo: All under one roof: Digital distractions and delightful dollies from a bygone age.
All under one roof: Digital distractions and delightful dollies from a bygone age.

China Toy Expo (the 17th International Trade Fair for Toys and Preschool Educational Resources) was held from the 18-20 October at the Shanghai New International Expo Center.

Chen Rong, Special Correspondent, Shanghai

Content provided by Picture: HKTDC Research
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