With almost 300 million kids under the age of 18 in 2023, the Chinese toy market is extremely profitable, and reached a revenue of more than 18.9 billion USD in 2022. Lego is among the major players in this sector, holding over 43% of the market share in the construction toy category as of 2021. Due to its marketing strategy and its ability to perfectly blend with the local cultural background, Lego is gaining lots of success in China, recording a 17% growth in revenue in 2022, reaching 3.5 billion USD. Lego is continuing to invest in building brick-and-mortar retail stores nationwide, with plans to open 145 new stores around the world, most of which would be in China.
From zero to hero: the history of Lego in China
The history of Lego (乐高) in China begins in 1993, when the Danish company opened its first store in Beijing. At that time, keeping a stable price over time was an extremely difficult challenge because the government imposed heavy taxes on every imported toy. Lego was considered a luxury item during that period, especially because of the sudden variations in the products’ retail prices. Back then, intellectual property rights didn’t exist in China, therefore, many industries tried to copycat the company’s products and sell them at lower prices. Lego survived to this ruthless competition and, in 2021, became one of the biggest toy producers in the country and in the world.
Huge investments show Lego’s long-term commitment to the Chinese market
Lego’s success in China can be largely attributed to the company’s significant investments in the country, particularly in opening new stores. In 2021 alone, out of 165 Lego stores opened across the globe, 90 were situated in China. This trend has continued in 2022, with 46 new store openings in the first six months of the year. The Danish company has also targeted lower-tier cities, which represent a significant portion of the Chinese consumer base. In fact, out of all the stores owned by Lego in China, around 40% are located in 2nd and 3rd tier cities. Lego’s expansion policy continues to this day. As of 2023, the company has more than 380 retail stores across China, and plans to open 80 new stores throughout the year.
Lego’s expansion in China: investments in retail, amusement parks, and manufacturing
Retail stores account for just a little part of all Lego’s investments in China. Partially due to the 2021 three-child policy, Lego began to ramp up investments in China. That same year, the Danish company announced the construction of one of the world’s largest Legoland resort, based in Shanghai. The park is estimated to cost about 550 million USD and it will be fully opened by 2024.
Lego is actually building three Legoland resorts in China simultaneously: beyond the one in Shanghai, other two big amusement parks will be opened in Shenzhen and in Sichuan. The Shenzhen-based Legoland, whose opening is due to 2024, will be the largest in the world, with a surface of around 580,000 square meters and a cost of more than 1 billion USD. Instead, the Sichuan resort will open in October 2023.
In addition to the investments in Legoland resorts, the group is also enhancing its production plants in the country. At the beginning of 2022, Lego announced the expansion of the manufacturing facility in Jiaxing (Zhejiang province). Opened in 2016, the factory will increase its size by 42,000 square meters. Although the project is well underway, it’s not expected to be completed until 2024.
Lego’s marketing strategy in China shifts to e-commerce and sustainability
For the past few years, Lego has been focusing on digitalizing every aspect of its business in China. After the pandemic, Lego has started a new phase of its digital transformation aiming to improve customer experience by collaborating with the biggest digital platforms, as well as investing for upgrading their products. To engage more with its customers, Lego began to develop its omni-channel retail ecosystem, as well as to sign partnerships with e-commerce platforms.
In 2020, The Danish company first renewed its strategic partnership with the tech giant Tencent: the two parties showed commitment to enhance the digital play experience and child safety while playing online videogames. Lego also invested in creating more eco-friendly set pieces. In 2021, the company revealed a prototype brick created by using recycled PET bottles and announced its goal to reduce reliance on non-renewable materials. Additionally, the company committed to achieving 100% sustainable packaging by 2025.
Lego is enhancing brand awareness in China
One of the most important events for Lego over the latest years was its participation to the China International Import Expo (CIIE). The Expo represents the perfect occasions for foreign companies to find local partners and stakeholders. In 2022, Lego celebrated the 90th anniversary since its foundation with the initiative “90 years of play”. Moreover, to underline how much families and children mean for the company, Lego built a 78,700 bricks playground on its CIIE pavilion. They also did not forget to celebrate the Chinese culture and traditions, and released five Lego sets representing Chinese festivities and symbols, such as the “Chinese Lunar New Year Display”, the “Lunar New Year Parade”, and the “Money Tree”. The Danish company is not new to this Expo, as it was its 5th consecutive year of participation. During the 2021 CIIE, Lego released other seven new sets, three of which inspired by Chinese culture.
Lego aims to build a better future for the next generations
While the 5th Shanghai CIIE was taking place, Lego also announced a strategic partnership with the China Development Research Foundation called “prescription for play”. The program consists in supporting the development of parental behaviors by making children learn how to play at home. The Covid-19 pandemic heavily affected the vision of Lego’s marketing strategy in China, which is now also focusing on building safe spaces for children and their families. Apart from distributing playing materials and bricks to local healthcare centers, the initiative will provide in-depths instructions for an improved and healthier parent-child relationship.
In 2021, Lego continued its tradition of collaborations at the Shanghai Expo by partnering with the the Shanghai Chenshan Botanical Garden to involve more children in sustainability. The project provided children with the opportunity to share their ideas on what a sustainable future would look like. For the event, the company also built an installation consisting in a 2.5 tons installation called the “garden of creativity”.
Exploring Lego’s initiatives in China: sustainability, creativity, and innovation
Between the end of 2022 and the beginning of 2023, Lego has launched two big events on Weibo, the famous Twitter-like Chinese platform. In September 2022, the company launched the campaign “Small World Creates Big Ideas”. The initiative was an immersive experience aimed to encourage children to create a better and more colorful world. The campaign was launched along with a video of some children using their creativity to build every sort of Lego construction in the real world. The marketing campaign aimed to demonstrate how adding Lego bricks can transform the appearance of buildings such as houses, schools, and benches in Shanghai. This project proved to be a successful strategy for Lego. As of 2023, the official hashtag of the campaign (#小世界造出大创想#) vaunted more than 1 million views on Weibo.
Lego’s latest initiative was announced on March the 10th 2023, when a Lego technic supercar exposition video appeared on the official Weibo account of the company. The exhibition took place from March the 11th to March the 29th in Shanghai and attracted waves of Lego and supercar enthusiasts. The show not only hosted more than 30 vehicles, including 8 new Lego products, but it also collected the works created by Lego fans. The project was designed for children too, inviting them to create their own race cars in the Lego’s workshop. The Weibo hashtags launched by the Danish company have collected tons of views in just a few days. The hashtag “Lego Technic” (#乐高机械组#) reached almost 14 million views, while “Supercar Real Player” (#超跑真玩家#), the official hashtag of the initiative, gained more than 1.9 million views.
Lego’s expansion and marketing strategies in China
- Lego has a significant presence in China’s toy market, holding 43% of the construction toy market share in the country.
- The company has invested heavily in China, particularly in offline retail stores. As of 2023, the company already has 380 stores spread across China.
- Lego targets Chinese families as its primary consumer base, and it is building 3 huge Legoland resorts, which are due to open between 2023 and 2024.
- After the pandemic, Lego has started a new digitalization process focused more on improving the e-commerce retail system and the sustainability of its products.
- The Shanghai CIIE represents an annual opportunity for Lego to show its new products and engage more with its consumers. During the 4th and the 5th edition of the Expo, the company also celebrated the Chinese culture and tradition by releasing Chinese-New-Year-themed Lego sets.
- During the 2021 and 2022 CIIE, Lego signed strategic partnerships with the China Development Research Foundation and with the Shanghai Chenshan Botanical Garden to create a safer play environment for children and introduce them to the concepts of sustainability.
- Lego’s marketing strategy in China does not end here. Recently, Lego launched two huge campaigns on Weibo aimed to increase its brand awareness. Both projects had the objective of stimulating children’s creativity, the first one through improving already-existing buildings with Lego bricks, and the other with “Do It Yourself” Lego supercars.
Author: Lorenzo Linguerri