Hasbro Moves Some Toy Manufacturing to India. Why and Why Now?

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There are very long and very deep relationships and friendships, some decades, between western and Chinese / Hong Kong companies.

 

Hasbro is making a bet on manufacturing in India and they aren't the only one.  So is Foxconn, who more than likely makes your smart phone and General Motors who, you may recall, makes cars. That is according to an article in The New York Times by Keith Bradsher.  The article, "India’s Manufacturing Sector Courts the World, but Pitfalls Remains," opens with this compelling statement:

[Hasbro] still sources expensive, complex toys like the electronic FurReal Friends from China, Hasbro has contracts for production in Turkey, Indonesia, Vietnam and Mexico. It has moved most aggressively into India, where Hasbro buys from several sizable factories, and another is planned."

But why are Hasbro and these other companies moving production to alternative countries after decades of turning out toys, cars, phones and textiles at inflation shattering prices?  And more importantly, why India and why now?

The first thing to understand is that moving manufacturing out of China is not an easy decision. China offers an outstanding infrastructure, savvy, veteran management teams and efficient systems.  I think, more importantly, there are very long and very deep relationships and friendships, some decades, between western and Chinese / Hong Kong companies.

Secondly, moving out of China is not a new idea.  Toy and other industries have been manufacturing in Viet Nam for years.  To make my point, here is a quote from an article, "Corporate America’s China plus one strategy," written January 31, 2008 about the notion that manufacturers should have at least one factory located in a country other than China:  "As China is getting wealthier, and its population older, it is getting more expensive to manufacture there. Wages are rising and so are the prices of commodities…" 

That description could largely describe the current conditions in China.  What's changed since 2008?   I will have some thoughts on that in my next posting.

3 thoughts

  1. Hasbro set up manufacturing in India through their joint venture partner in India way back in 1987 when toy imports in India were banned. In the same year Mattel also set up factory to manufacture their brands through partnership with a molded luggage manufacturer. The west taught China to manufacture toys 30 years ago and it is now the turn to do the same in India. When India manufacturers for Samsung, LG, Hyundai, Ford, GM motors, Ikea and soon for Apple, it will be child’s play for them to manufacture toys. With more than 30 years experience in the Indian Toy Industry I can confidently say the time for India to manufacture toys for the world has come now.

  2. Hi Richard
    If Moore’s law applied to the toy industry then china would still be the goto destination.
    However, The cost efficiencies can not be improved further in china. While India has a huge scope for improvement.
    The interest in India is not new. It has been on the radar for many years but has lost to china in high volume contract manufacturing.
    For low volume, niche (labour intensive) products it is better placed than china & other south east asian countries.
    The Make In India campaign has revitalized the interest & has highlighted success stories of various sectors.
    The growth on Indian participation in Nuremberg toy fair is in itself an example of the growing interest.
    Hasbro has set an example that others can emulate.
    Amitabh

  3. Hi Dear Richard,
    Interesting topic. I feel it is a positive step to look beyond
    China, the world of manufacturing is our oyster.
    I feel not only is India an option, but more so Pakistan. Both countries have up until now been overlooked for design and manufacturing – when in fact they are not only highly skilled but are also highly intelligent and creative minds that surpass a lot of others.
    I for one know this first hand having recently commissioned a company from Lahore, Pakistan to deliver an animated project for me. They are professional in all aspects and although it is tough to meet to discuss project details, Dubai from new Zealand is just fine.
    I believe that reaching out to the far off corners of anything always brings surprise, I feel what better way to put the icing on the toy world cake than to unite with cultures unlike our own through work and develop friendships never really thought possible.
    Janine Ross, New Zealand

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