Lego builds presence in China toy market

Denmark-based toy manufacturer Lego is making a strong play for the mainland's increasingly affluent middle class with construction of a new factory in Zhejiang province that will pit the company against challenges from locally made knockoff products.

The plant, in the city of Jiaxing, will be the company's third-largest worldwide, employing 1,500 workers when it is fully operational by 2017.

Lego, known for its namesake interlocking plastic blocks, recorded growth of 50 per cent on the mainland last year, and chief executive Jorgen Vig Knudstorp said the country had become its fastest-growing market.

"We are now significantly putting the flag on the Chinese market and in the society," Knudstorp said yesterday. "We want to be part of the modernisaton of China."

The production site in Jiaxing, 100 kilometres from Shanghai, will cover an area of 315,000 square metres with the establishment of moulding, decoration and packaging facilities.

Lego said there was room for further expansion. It declined to say how much it was investing in the factory, other than to say it was more than €100 million (HK$1.1 billion).

The company will also set up a distribution centre in Shanghai for the Asia markets. Some of the output of the Jiaxing factory will be exported to other markets including Japan and South Korea.