"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way…"
Charles Dickens; A Tale of Two Cities
If you want to get a sense of the both the hope and the fear, sometimes experienced at the same time, then there is no better place to find it then in Hong Kong Convention Centre and in the streets of Kowloon.
As most of you know, there are really two different toy events that take place in Hong Kong each January. One is the Hong Kong Toys & Games Fair, produced by the Hong Kong Trade Development Council, and taking place in the Hong Kong Convention Centre on Hong Kong Island. The other is the unofficial one that takes place in the hotel suites and showrooms of the Tsim Sha Tsui area of Kowloon.
The two events are separated by Hong Kong Harbor which can be traversed by ferry, subway or car. The Kowloon event is primarily visited by US buyers, sales representatives and toy companies. The Hong Kong event is extremely international yet features a large number of Chinese and Hong Kong toy companies.
My visits two both events provided me with a picture of an industry both hopeful yet still struggling with the impact of the loss of Toys R Us. Here are my impressions:
The Hong Kong Toys and Games Fair features roughly 3,000 exhibitors covering three floors of the convention center. As I walked the halls, I at times had difficulty making my way through the crowds. The energy felt good and it looked to me that there was a lot of buyer / seller interaction taking place.
Those I spoke with, particularly the Chinese, had concerns over U.S. / China relations. The U.S. marketplace is the largest in the world and the prospect of tariffs being placed by the U.S. government on Chinese finished goods is a real worry for factories that depend upon U.S. toy volume to keep their factories running.
On the other hand, the Chinese consumer market is rapidly growing and China is anticipated to be the largest consumer of play in the world by 2022. That shift in consumption patterns is giving Chinese businesspeople an alternative outlet for their products. It also provides potential new markets for U.S toy companies.
It is hard to know exactly how many companies and people work the Kowloon showrooms and hotels. No one actually organizes the activities in the Tsim Sha Tsui district so no exact numbers are available. Yet, you can get a feel for them by walking through the area's streets and seeing how many American toy industry sales representatives are walking between the buildings. They are, in their own way, the toy industry's canary in the coal mine.
Compared to prior years and based upon what I saw and was told, it appeared to me that the number of American salespeople was down. The biggest reason given is the absence of Toys R Us U.S.A. The compay's buyers used to show up in numbers and fanned out to visit the area's many showrooms.
Not only were sales rep numbers down but those I spoke with told me that there was a noticable decline in the number of new and innovative products being exhibited. That's undoubtedly a reaction to the Toys R Us bankruptcy.
Toys R Us, unlike their big box rivals, used to look for new and different products. With them gone, and with final numbers for 2018 not yet in, those who create and sell new products have to take a wait and see attitude. It would be too risky for a toy company to get too far out without knowing what kinds of commitments Target, Wal-Mart and other big box retailers are going to make to toys in 2019; commitments to both space and innovation.
This is an unfinished story. I need to continue collecting more information which I will do as I visit the Nuremberg and New York Toy Fairs over the coming weeks. I'll continue to report back as I learn more.