Hong Kong toy manufacturer Harbour Ring International Holdings is cautiously optimistic that sales in the United States - which takes 50 per cent of its output - will increase about 10 per cent this year. 'We believe the USA should be a little bit better than last year because most of our customers are predicting a better year than last year,' executive director Lewis Luk Tei said. This year Harbour Ring posted dismal results with net profit falling 67 per cent to $33.3 million mainly on the strength of a $70.1 million exceptional loss and a $23.4 million provision. Mr Luk said US retailer sentiment had improved last year but it was too early to predict a large increase in orders for toys. 'The number of orders is similar to last year,' he said. Improved economic performance of the US did not guarantee increased toy sales, he said. 'The toy market does not link with the performance of the economy of a country,' he said. 'Very often during a recession, if you have the right product you can sell very well. 'On the contrary if you don't have the right product then even though the economy is doing well, this does not means that sales will increase,' he said. Mr Luk said there was a possibility a single toy phenomenon - like the Cabbage Patch Dolls or the Teenage Mutant Ninja Turtles - could emerge once again to boost the fortunes of local toy producers. 'We expect that such a product may be coming in the next two years,' he said. Mr Luk said such toys were vital to the well-being of the industry because they allowed companies to achieve economies of scale. 'If there is such an item in the next two years it can help us to improve our profit margin,' he said. 'But on the other hand if we need to produce a lot of different varieties of toys, the profit margin will stay low.' Mr Luk did not expect the fall in regional currencies to bring much competition from other Asian countries. 'Traditionally they have not been a manufacturing base for toys,' he said. 'But if they can keep a low currency for a long time then it will be competition for local industry.' It would be impossible for these countries to build a toy industry from scratch in the short term, he said.