Reading the Chinese People’s Daily; a valuable insight on the toy industry

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I like to read the People’s Daily, the official news organization of the Chinese Communist Party.  You can find little tidbits of information that give you some insight on what the government is doing and its potential impact on the toy industry.

I was reading an article entitled "RMB reform restarts, to aid China and world” when my eye caught the following words:

Now fairly ensured the global economic recovery is on a solid footing and its exports had rebounded since April, Beijing finally decided to enhance the RMB exchange rate flexibility, to help squeeze out low-value labor-intensive production, and to soothe rising outside cries that the RMB must be revalued.
 
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“Low-value labor-intensive production”???  That’s us.

The Chinese government does not want to make those inexpensive plastic toys anymore.  Just more proof that the end of the China era of toy production is, if not coming to a close, is likely entering the last act.

3 thoughts

  1. I’ve been hearing and participating in this discussion for decades. Remember the EU import license (quotas) for China goods in the early ’90’s? We were all scrambling for non-China toy sources; but guess what, with rare exception, we’re back in China. Yes, there are a few big factories in Thailand, Malyasia, Vietnam, and Mexico, but it took major support and investment by major companies (examples: Mattel in Mexico and Malaysia and McDonald’s and its agencies/suppliers in Vietnam). The true COGs calculation is inflated when you factor in the costs to support such a venture. Anyone heard about a success in India? I’ve heard about several dismal failures. Personally, I’ve visited many other “low-labor” countries, and have tried production in Mexico, Thailand, Vietnam, Philippines and elsewhere. It’s not just the cost and labor availability–and not just the expertise or infrastructure. It is also the culture that makes China the superior source for toys–with some exceptions (examples: high-cube, lower-labor content, lower quality requirements).

  2. Ultimately, this sort of thing will shoot China in the foot while being a major boon to domestic manufacturing in other countries. Mexican entrepeneurs could certainly seize on the opportunity and take advantage of the benefits of NAFTA to become a primary provider of toys and games to the US and Canada. However, I see India and Indonesia as likely trying to pick up any production gaps that China’s advancing economy may create.

  3. Squeezing out will not happen soon. Lower growth/ stagnation, maybe. Increasing prices, definitely
    Too much of skill upgradation is required to go up the value chain.
    Too many people to will have to learn Computers & english.
    See maximum 20% shift over the next 10 years
    Million $ question is shift to where

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