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    China Business
     Jun 21, 2006
Playtime is over for China's toy industry
By April Mei

GUANGZHOU - Growing public concern at home and abroad over child safety, environmental protection and working conditions will soon force China's giant toy-manufacturing industry to restructure drastically.

China is now the world's largest toymaker and exporter. According to the China Toy Association, there are more than 8,000 toy manufacturers in China, producing more than 30,000 kinds of toys. Customs statistics state that China's toy exports in

2005 totaled US$15.18 billion, taking 70% of the world toy market.

China itself is a large toy market. There are more than 300 million children under 14 in the country, a quarter of whom live in cities. Industry insiders predict China's toy market will grow 40% annually in the next few years to become worth 100 billion yuan ($12.5 billion) by 2010.

However, Chinese-made toys do not have the best reputation. Many are regarded as substandard products or the products of "sweatshop" factories. Given growing public concerns over the quality and safety of toys, importer countries of China-made toys and China itself are soon to enforce new, stricter standards for Chinese manufacturers to follow.

The Ministry of Commerce predicts the country's toy industry will inevitably restructure, as toy importers and the Chinese governments impose tougher production standards. Wang Tie, secretary general of the Guangzhou Association of Toy and Gift Industries, said some substandard producers would go out of business or be taken over by others.

The southern province of Guangdong is China's largest toy-manufacturing center. More than 60%, or 5,000, of China's toymakers can be found there. The total output of Guangdong toymakers reached 107.5 billion yuan last year. Guangdong's toy exports totaled $11.93 billion, accounting for 78% of China's total toy exports in 2005.

Quality issues
Ahead of the June 1 Children's Day, the Guangdong quality inspection authority checked toys produced in the province and found only 63% of them met state quality and safety standards.

The European Union, the second-largest importer of Chinese-made toys after the United States, has become increasingly concerned with the shabby quality of toys imported from China. The US and EU take 70% of China's toy exports.

Two months ago, China's General Administration of Quality Supervision, Inspection and Quarantine and the EU's Health and Consumer Protection agency signed a draft Guide for the Strengthening of Sino-EU Cooperative Action for Toy Safety. An EU report pointed out that 25% of the "problematic imported products" identified by the Union's Rapid Alert System for Non-Food Products (RAPEX) are toy products, and 85% of such problematic toys come from China.

Next month, China and EU will hold a toy-safety forum on enforcing stricter quality and safety standards for toys that China exports to Europe. Meanwhile, the United States and the United Kingdom also plan to enforce set rules to boycott imported toys made in "sweatshop" factories.

Amid increasing complaints by both toy-importing countries and Chinese customers, the Chinese government has also imposed the China Compulsory Certification scheme on toymakers. Starting from June 1, 2007, only those toys that meet CCC standards will be allowed to sell at home and export to overseas markets.

The Ministry of Commerce has warned that toymakers in Guangdong and elsewhere in the country may face difficulties or suffer setbacks in exports of their products this year if they fail to meet the new requirements. It also expects the toy industry to undertake a restructuring with more compulsory standards, domestic and foreign, being imposed.

Wang Tie told the Chinese media that China's toymakers had no choice but to follow regulations of EU and the US as exports are vital to their business.

Wang agreed with the Ministry of Commerce that as tougher standards are introduced on toy exports, the industry will face a restructuring, with some small and medium-sized toy factories expected to go out of business or be merged with others.

Fundamental problems
Analysts have also pointed out various fundamental problems in the toy-export industry. Most Chinese toy producers do not have their own brands; usually, they are original equipment manufacturers (OEMs), who make products that are then sold abroad under a foreign company's label.

Furthermore, prices of many exported Chinese toys are lower than average, and much lower than toys exported from Japan. For example, a pair of roller-skates exported from China is priced at 16.8 euros ($21.15) on average, 3 euros lower than the average price in EU markets. The price is only a quarter of the price of a pair of roller-skates exported from Japan, which is set at 62.3 euros.

Though many traditional toy products such as stuffed toys and dolls have taken a substantial share of EU markets, many toy-importing countries have increased their demands for high-tech toys including electronic games and educational toys. However, most Chinese toymakers have failed to catch up with this trend. Among toys China exported to the EU last year, more than 80% were traditional toys, and high-tech toys accounted for less than 5%.

April Mei is a Chinese correspondent for Asia Times Online.

(Copyright 2006 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

Annual toy exports top US$15.18bn (Jun 14, '06) 

China requires compulsory certification for toys (Jun 3, '06) 

Certification to help toy industry (Apr 4, '06)

Toy exporters hit by thin profit margins (Mar 17, '06)

Hong Kong toy fair no fairy tale (Jan 18, '06)


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