Page 298 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
their demands for toys are beginning to change. There toys and toys incorporating light exercises. As opposed to
is a shift away from traditional, medium- to low-end adult males’ preferences, 27 percent of the adult females
battery-operated toys, construction sets and decorative interviewed expressed the desire for decorative items
toys toward innovative electronic toys, intelligent toys for the home that double as handheld toys. 13 percent
as well as upmarket plush toys and decorative cloth of elderly people interviewed indicated a preference for
toys. Nevertheless, industry players believe that many cuddly animal toys and dolls (HKTDC).
people are underestimating the spending power of
China’s low-income group. As average income is rising at Both Chinese and foreign manufacturers have been
a rate of 7-10 percent annually, the wage-earning class is investing heavily in automation and research and
having higher disposable income, so there will be more development to increase efficiency and offset rising
demand for inexpensive toys (HKTDC). The China Toy & labor costs. Additionally, the increasing popularity of
Juvenile Products Association projects that China’s toy more complex and higher-tech toys is fueling the need
market will grow by 9.2 percent in 2017 to reach 60.7 for more advanced technology and production methods,
billion yuan. China’s rapidly rising income levels have as well as higher skilled employees (Koty). In light of
made the country a giant consumer across a growing factors like declining external demands, escalating local
number of industries. However, it is not only soaring production costs and changes in the Renminbi exchange
wealth that is increasing toy consumption. The abolition rate, Chinese toy exporters are coming under tremendous
of the one-child policy in late 2015 in favor of a two- pressure. Many enterprises are increasingly looking to
child policy is expected to bring an influx of newborns, the domestic market for business opportunities. In recent
which should lead to increased demand for toys in the years, many brands have proactively set up sales channels
short to medium term. According to the Hong Kong to tap into the local market, among which are international
Trade and Development Council (HKTDC), the two-child brand names such as Disney and DreamWorks and local
policy will lead to an additional 2.4 million babies born in brands like Auldey and Goodbaby. Foreign products and
China each year, contributing 75 billion yuan to the toy products made by Sino-foreign joint ventures make up
industry. In total, the National Health and Family Planning the lion’s share of the domestic toy market (HKTDC).
Commission expects the number of newborns to hover
between 17.5 million and 21 million annually over the U.S. toymaker Mattel is expanding its partnership
next five years (Koty). with Alibaba, the Chinese E-commerce giant, to develop
new toys specifically for the growing market in China.
Manufacturers should not underestimate toys for According to Alizila, a website that specialises in news
adults. AR/VR headsets witnessed the fastest growth about Alibaba Group, Mattel aims to tap into Alibaba’s
in toys and games in 2016, with a growing number of huge resource of data and insights about Chinese
companies starting to enter this new area (Euromonitor). consumers to advance sales of its iconic brands, such
The adult toy market spells enormous potential, but as Fisher-Price and Barbie. In addition to gaining access
supply is limited. The market remains largely untapped. to the more than 440 million active buyers across
According to a market survey conducted by the Social Alibaba’s e-commerce platforms, Mattel will work with
Survey Institute of China in 2010, companies specialized Alibaba’s artificial intelligence research unit to develop
in making adult toys were already in operation in the U.S. innovative products to aid child development. “Play
a long time ago, and over 40 percent of these companies’ has a tremendous impact on a child’s cognitive, social
toys are designed for adults. In China, on the other and emotional growth,” said Margo Georgiadis, CEO of
hand, the toy industry is still much confined to meeting Mattel. “By combining Mattel’s unmatched expertise in
children’s demands, and adult toys can hardly be found childhood learning and development, with Alibaba’s
on the market. 62 percent of the respondents expressed immense reach and unique consumer insights, our goal
that they would consider buying toys if they are of good is to help parents in China raise children to be their
quality and meet their needs. Different adult consumer personal best.” The initiative follows recognition that the
groups have different demands for adult toys. 34 percent Chinese market differs from the West in that Chinese
of the young people interviewed indicated a preference parents prefer to spend any extra money they may have
for more complex, smart toys calling on their ability to for their children on educational pursuits (WARC).
think and explore as well as toys made for decorative and
appreciation purposes; 29 percent of the middle-aged The deals mark a shift for Mattel, which has built its
respondents said they have a penchant for recreational business selling Barbie and Ken dolls in brick-and-mortar
298
their demands for toys are beginning to change. There toys and toys incorporating light exercises. As opposed to
is a shift away from traditional, medium- to low-end adult males’ preferences, 27 percent of the adult females
battery-operated toys, construction sets and decorative interviewed expressed the desire for decorative items
toys toward innovative electronic toys, intelligent toys for the home that double as handheld toys. 13 percent
as well as upmarket plush toys and decorative cloth of elderly people interviewed indicated a preference for
toys. Nevertheless, industry players believe that many cuddly animal toys and dolls (HKTDC).
people are underestimating the spending power of
China’s low-income group. As average income is rising at Both Chinese and foreign manufacturers have been
a rate of 7-10 percent annually, the wage-earning class is investing heavily in automation and research and
having higher disposable income, so there will be more development to increase efficiency and offset rising
demand for inexpensive toys (HKTDC). The China Toy & labor costs. Additionally, the increasing popularity of
Juvenile Products Association projects that China’s toy more complex and higher-tech toys is fueling the need
market will grow by 9.2 percent in 2017 to reach 60.7 for more advanced technology and production methods,
billion yuan. China’s rapidly rising income levels have as well as higher skilled employees (Koty). In light of
made the country a giant consumer across a growing factors like declining external demands, escalating local
number of industries. However, it is not only soaring production costs and changes in the Renminbi exchange
wealth that is increasing toy consumption. The abolition rate, Chinese toy exporters are coming under tremendous
of the one-child policy in late 2015 in favor of a two- pressure. Many enterprises are increasingly looking to
child policy is expected to bring an influx of newborns, the domestic market for business opportunities. In recent
which should lead to increased demand for toys in the years, many brands have proactively set up sales channels
short to medium term. According to the Hong Kong to tap into the local market, among which are international
Trade and Development Council (HKTDC), the two-child brand names such as Disney and DreamWorks and local
policy will lead to an additional 2.4 million babies born in brands like Auldey and Goodbaby. Foreign products and
China each year, contributing 75 billion yuan to the toy products made by Sino-foreign joint ventures make up
industry. In total, the National Health and Family Planning the lion’s share of the domestic toy market (HKTDC).
Commission expects the number of newborns to hover
between 17.5 million and 21 million annually over the U.S. toymaker Mattel is expanding its partnership
next five years (Koty). with Alibaba, the Chinese E-commerce giant, to develop
new toys specifically for the growing market in China.
Manufacturers should not underestimate toys for According to Alizila, a website that specialises in news
adults. AR/VR headsets witnessed the fastest growth about Alibaba Group, Mattel aims to tap into Alibaba’s
in toys and games in 2016, with a growing number of huge resource of data and insights about Chinese
companies starting to enter this new area (Euromonitor). consumers to advance sales of its iconic brands, such
The adult toy market spells enormous potential, but as Fisher-Price and Barbie. In addition to gaining access
supply is limited. The market remains largely untapped. to the more than 440 million active buyers across
According to a market survey conducted by the Social Alibaba’s e-commerce platforms, Mattel will work with
Survey Institute of China in 2010, companies specialized Alibaba’s artificial intelligence research unit to develop
in making adult toys were already in operation in the U.S. innovative products to aid child development. “Play
a long time ago, and over 40 percent of these companies’ has a tremendous impact on a child’s cognitive, social
toys are designed for adults. In China, on the other and emotional growth,” said Margo Georgiadis, CEO of
hand, the toy industry is still much confined to meeting Mattel. “By combining Mattel’s unmatched expertise in
children’s demands, and adult toys can hardly be found childhood learning and development, with Alibaba’s
on the market. 62 percent of the respondents expressed immense reach and unique consumer insights, our goal
that they would consider buying toys if they are of good is to help parents in China raise children to be their
quality and meet their needs. Different adult consumer personal best.” The initiative follows recognition that the
groups have different demands for adult toys. 34 percent Chinese market differs from the West in that Chinese
of the young people interviewed indicated a preference parents prefer to spend any extra money they may have
for more complex, smart toys calling on their ability to for their children on educational pursuits (WARC).
think and explore as well as toys made for decorative and
appreciation purposes; 29 percent of the middle-aged The deals mark a shift for Mattel, which has built its
respondents said they have a penchant for recreational business selling Barbie and Ken dolls in brick-and-mortar
298
