Those of us who have traveled to Hong Kong over the decades have experienced it as a beautiful, hyper-energized, safe, and affluent city. That was then, and this is now, and the stories coming out of Hong Kong are a bit depressing.
One of my contacts has just returned from a trip to the city. Here is how he describes conditions in Tsim Sha Tsui area, the beating heart of the Hong Kong toy industry:
The Tsim Sha Tsui area has many shops closed, very few tourists, even though there are no restrictions, no quarantine, no tracing, no Covid testing and no mask required anywhere.
I feel bad for my friends in Hong Kong, but now is a good time to go because conditions like these mean that hotel room rates and dining out will be very reasonable for those on buying trips.
My contact goes on to report on the state of manufacturing; he writes:
Hong Kong manufacturers all told me that business is not very good. They blame high inventories, the Ukraine war (which has dried up the Russian business,) and a generally poor retail sales environment in Europe and USA.
Before it invaded Ukraine, the Russian toy business was robust. When I walked the show in Hong Kong, I would see products and packaging on display designed for the Russian market, complete with Cyrillic writing rather than English. Losing that business has to be painful for many factories.
Although this is hard news for the factories in China, it is good news for the rest of the world. China now has excess capacity with fewer buyers (thank you, Russia) and prices hovering near 2019 levels.
The bottom line, hotel rates should be down, food costs should be down, container rates are way down, and factory pricing should be as well. It’s a buyer’s market for the toy industry. Take advantage of the moment because you can bet things will change again.