China is the World’s Largest Toys market
China has taken the place as the world’s largest toy maker and exporter in recent years. There are over 1300 large-scale toy manufacturers in China which are responsible for producing nearly three-quarters of total toys in the world. The major manufacturing and export bases of toys in China are concentrated in southern provinces and coastal cities such as Guangdong, Jiangsu, Shanghai, Shandong, Zhejiang and Fujian, etc, among which, Guangdong and Fujian bases are specialized in electronic and plastic toys, Jiangsu and Shanghai are focused on stuffed toys, and Zhejiang is wooden toys. According to relevant statistics, even though toys market in China pressed on at a slightly slow pace in2012, the export amount achieved 11.45 billion USD, up 5.8% compared with that in 2011. In 2013, China’s toy industry generated an output value of around CNY 130.764 billion, 15.72% rise compared with last year. And the main business revenue was CNY 166.44 billion, with accumulative year-on-year rises of 14.3%. Those above mentioned promising numbers couldn’t be reached if not taking advantage of relatively cheap raw materials and labor cost. That to some extent explains the characteristics of exported toys from China as OEM (original equipment manufacturer) focused lack of highly creative products and the added profit reduction of export cost.
Challenges and opportunities in the Toys Market in China
However, challenges and opportunities have co-existed in toys market in China for the past decade. Raw materials prices and exchange rates are rising up, so is the labor cost; on the contrary, demand from the overseas market has been continuously depressed due to global financial crisis effect, although it is also in the process of slowly recovering from the impact. Meanwhile, lack of highly creative toys put domestic toy makers in a very unfavorable position, given that constant upgrading taste and demand from domestic and overseas consuming market. Marching forward its way progressively, branding of Chinese toys is still the challenge toys market in China is facing. And yet the toy industry also faces the huge development opportunities brought by the rising disposable income of urban dwellers in China’s local market caused by the progress of urbanization, improving quality of life, changes of lifestyle and consumption upgrading, for instance, the awareness of the importance of early education. According to relevant statistics, at present consumption groups of traditional toys, educational toys, and DIY toys each accounts for 55%, 25% and 20% respectively, besides, the market share of educational toys has increased from 10% of four years ago to 25% by far in 2014.
Development trend and investment prospect in Toys Market in China
There are a variety of toys presenting in China’s market which can be classified broadly into electronic, mechanical, plastic and wooden toys. Traditionally the toy market was filled with medium or low-quality battery-operated gadgets, construction site, and decorative products, now it has shifted to innovative electronic toys, intelligent toys as well as upmarket plush toys and decorative cloth toys. In fact, the market becomes so wide and diversified with models, licensed toys (movie spin-offs, cartoon characters, etc), dolls, high-tech toys, educational toys, internet-compatible toys, it also creates toys for adults’ recreation and entertainment.
Kids are still the major consumers for toys. Under one child policy there are around 223 million children under the age of 14 in Chinese mainland. However, a policy has been issued by the Communist Party in 2013 titled the Decision of the Central Community of the Communist Party of People’s republic of China on Some Major Issues Concerning Comprehensively Deepening the Reform, relaxing the previous one child policy and allowing married couples to have two children if either parent is an only child. There are some 16 million newborns per year on the mainland. According to projections by the Institute of Population and Labor Economics, Chinese Academy of Social Sciences (IPLE-CASS), there would be an additional one to two million newborns in China each year following the relaxation of relevant policies.
Electronic toys, especially high-tech ones with interactive function have become a major craze in the past few years. Educational toys become another growth area. In China, parents are paying more attention to children’s early education in order to cultivate creativity and hands-on skills. Educational toys that are designed to inspire children’s imagination and innovative ability and enhancing their hands-on skills but nothing short of fun are welcomed and well-received children and parents alike. For plush toys: the plush toys market is marked by the following features:
- Plush toys in novel and unique designs and especially popular TV drama characters and animation characters have been sought after in the past few years.
- Integrating electronic toys with plush toys has become the latest trend.
- Plush toys that double as household decorative items have gained favor among many households.
There is also big potential for adult toys sales in China’s market. Compared to US toy market in which many companies started making adult toys at a much earlier time and have been in operation of specializing adult toys making, toys market in China seems to confine itself to the traditional children toy designing, so adult market demand is ignored and missed. According to a market survey conducted by the Social Survey Institute of China (SSIC) in 2010, 62% of the respondents expressed that they would consider buying toys if they are of good quality and meet their needs. There is big potential to tap in the coming future.
A promising future for Toys Market in China
In such circumstance, toys market in China has broad development prospects. As the market continuously perfects and keeps in order it will inevitably become the continuous motivation to promote the toy products to release the market demand, which will be the opportunity for the future development of China’s toy industry and an unprecedented golden period.
Daxue Consulting Expertise
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