A tug of war between exhibitors and buyers has flared at the Hong Kong Toys and Games Fair, the world's second largest of its kind, as soaring costs prompted many producers to lift selling prices.
Many of the 2,000 exhibitors at the four-day fair lasting until Thursday sought to pass on to buyers a portion of their rising costs in raw materials, wages and quality checks. They also wanted buyers to share some of the burden of higher income tax and a rising yuan.
However, amid the backdrop of a rash of recalls in the United States on defective and hazardous toys and weakened US consumer demand, many buyers were cautious about placing orders at the annual fair.
Hong Kong Toys Council executive vice-president Yeung Chi-kong expects a rise in overall costs of at least 15 per cent this year.
Legislator Jeffrey Lam Kin-fung, who runs a toy factory in Guangdong, believes some smaller factories could be forced to close due to the cost pressures. 'It can't be ruled out that some toymakers may not be able to survive,' he said yesterday.
Jessica Hsiung, sales manager of Taiwanese-owned Perfect Toys International with production facilities in Dongguan, said the toy-car maker was raising prices to offset an expected 20 per cent jump in costs this year.
'We don't think all the extra costs can be passed on to our customers, and at best the price increase will be a single digit,' she said. 'We try to give some incentives to merchandisers, say, the sooner they place an order and the bigger the volume of the order, the smaller the price increase.'
Ms Hsiung said the sharpest increases in costs were related to labour and quality checks on products as a result of the mainland's new labour contract law and global concerns over safety standards of mainland-made toys.
Fred DaMert, of US-based toy distributor Toysmith, said he was being more cautious about spending partly because of a 5 to 10 per cent rise in prices and the safety issue.
Mr DaMert, who has dealt with mainland manufacturers for about 20 years and sources 90 per cent of the firm's toys from China, said he would adjust his shopping list by shifting to smaller toys. 'China may not produce the cheapest toys but it is a place where you can get the best quality,' he said. 'In terms of the safety issue, US importers should pay attention and constantly test the products.'
He said he was looking for toys made with environmentally friendly materials.
The Hong Kong Toys Council estimate of the rise in overall costs this year: 15%