World traveler Jay Foreman, President and CEO of Basic Fun, makes his first trip to China in four years. That plus Jay gives his impressions of the toy industry scene in Hong Kong and Los Angeles.
With LA and the spring previews now squarely in the rearview mirror, the race to deliver the fall 2023 product range and, in some startling cases, still get final orders for Q4 is in full sprint. At least this year, it’s not the steeple chase from hell that it’s been the last two years! All in addition to finalizing the turnover for spring 24′ and the planning ready for the fall previews and NY Toy Fair.
Everyone not in our business always asks about the months after Christmas if we get to sit back and relax for a while, and most of us know that it really never ends. The work goes on all year as one season bleeds into another. As we’ve all experienced in these last years, one more bumpy road still seems to be around every corner! Hopefully, the road will straighten out soon, but we may have to wait until next year!
Basic Fun wrapped up its third week of meetings out of the past five in LA, with the final week being the busiest. It featured a solid group of retailers, international distributors, and many friends from the licensing industry. All in all, for the final week, we had about 60 appointments which were way up from five in week one and about 12 in week two. So over the course of the marathon month plus we had quality and worthwhile quantity, as well as racking up a lot of hotel nights!
Clearly, the inventory backlog is still working itself down, but buyers in LA were shopping, looking to solidify what’s working and add a bit of new for the spring. One theme washing up on the shores of the LA previews was the reality in some cases this fall and next spring setting later than usual. The truth is that shelves don’t get cleared off by January 15th, leading to some retailers giving more time to move the fall product off the shelves after the end of the holiday season. We’ll learn how that will shake out this time next year, but it probably means less shipping FOB and domestically of spring goods in late Q4, but likely more in Q1. Also, retail seems to be returning to the concept of “just in time” shipments and leaning more than in the past few years on domestic backup inventory for replenishment. Fortunately, ocean freight rates are at record lows and show no sign of budging off the bottom for the foreseeable future.
All in all, except for the length of time those of us not permanently in LA need to spend out in LA, the previews offer solid value for vendors and buyers. The big question will be later this year when the fall final week of LA previews winds up a week before the new New York Toy Fair. Given that NYTF 23′ is 95%+ sold out and almost all the traditional vendors, from the biggest in Lego and Mattel to the smallest, will be on hand as usual, it’s clear the industry is still behind a major showcase in NY. With the new timing, we get a two-for-one by being able to shout about what’s hot for the holidays this year and show next year’s goodies behind closed doors. Those of us previewing in LA will do much of the groundwork there and look to finish up in NY and make some noise. Those not in LA have this new early showcase to set the table for the coming year.
After three years of no major toy fair, it will be great to return to NY as an industry with 900+ toy companies at the Javits Center.
While my team was finishing the last week in LA, I made my third trip to Asia in the past six months. Each time things opened up more and more to the point where Hong Kong is now wide open: no masks, no tests, and no QR codes to enter restaurants. While I was in town, the May Day Golden Week holiday was happening, and the city was packed. The Kowloon Shangri La Hotel, home away from home for many in the toy industry, was sold out during my entire stay.
This time of year in Asia, it’s all about making sure the current fall product is rolling and taking the comments and reactions from the spring previews back to make changes, finalize pricing, and get ready to release tooling for the first of the 24′ lines.
I also made my first foray into mainland China in almost four years. Like Hong Kong, the borders are open, and barriers are down. They are even accepting preexisting visas! I made two separate trips over two weeks, flying into central China to one of our largest plush factories where we make Care Bears and Cutetitos and, the second week taking the bullet train up to the Canton Fair and then off to the northern border of Guangzhou province to visit our Tonka and Littlest Pet Shop factory. What I found were vendors very hungry for business and plenty of capacity as, like us, the China vendors are feeling the hangover from 22′. The factories, many of whom are moving further into the interior of China to keep costs low, are also automating more than ever to keep prices in line. There is so much capacity in China that it’s hard to imagine the need to source elsewhere outside of fears about the current geopolitical strife.
The sentiment from the vendors is head down, give me an order, and we’ll do the work! They, as do I, see the tension as purely philosophical and political and not practical. Not only do both sides have too much to lose if things get out of hand, but one very wise local friend said something that struck me. He said don’t worry. “Chinese people will never go to war with Chinese people. It just won’t happen. We are all brothers.” That really hit me like a thunderbolt.
He went on to explain that while the US and China are economically tied together, China and Taiwan are connected in so many more ways. Not just in business, but almost everyone’s family in Taiwan came from mainland China, and all still have family there. They have built businesses and schools and have ancestral homes on the mainland, and many Chinese companies have branches in Taiwan. They both speak the same language and, in the end, are the same people, so “don’t imagine there is going to be an attack or a war,” he said.
No war means no interruption of trade between China and the world! Let’s hope he’s right. I think he is. Hot air is easy; a hot war is hard. Just ask Putin about that!
So, with previews and the supply chain problems behind us and sorted out, my fingers are crossed for a soft landing for the economy this year. At some point, the consumer will be slowing down on the travel and dinners out and certainly returning to buying more toys!
Viva Las Vegas, and see you at licensing show!
