Danish toymaker Lego builds its empire in China brick by brick, store by store
- The Danish toymaker, known for its multicoloured building bricks, will open 80 stores, mostly in third and fourth tier cities in mainland China
- China continues to be a bright spot for Lego, which saw revenue grow in the double digits compared to the low single digits in its main markets of US and Europe
Legendary Danish toymaker Lego, one of the world’s top three toy brands famed for its multicoloured building bricks, figures and elements, is planning a massive expansion in China, the company’s most promising market, said CEO Niels Christiansen.
Christiansen, was appointed CEO in October 2017, said that the company, which had 50 stores in China last year, planned to open another 80 in 2019 in 18 cities, with the main focus on third and fourth tier cities. Overall, the company’s stores would be in place in 30 cities.
Lego operates two “flagship” stores in Shanghai, and on February 22 opened its first flagship outlet in Beijing. Flagship stores are owned and operated by Lego, while Lego Certified Stores are operated by local partners. Of the 400 or so stores, about 240 are Lego Certified Stores.
During a press conference to present the company’s annual results on Wednesday, Christiansen said that Lego would benefit as China’s market of 200 million children increasingly entered the middle class.
Lego’s production facility in Jiaxing – one of five production sites worldwide – about 100 kilometres from Shanghai, serves China and accounts for about 70 per cent of its products sold in Asia. The €100 million (US$113.6 million) factory opened in 2016, the same year as its first flagship store in Shanghai, according to a company spokesman.
From 2011 to 2015, Lego’s revenues rose 91 per cent, and net profit rose from €557 million to €1.23 billion. But in 2017, after years of fast-paced growth, Lego reported its first decline in profit and revenues since 2004.
In 2018, Lego enjoyed a 4 per cent rise in revenue to €4.87 billion, and a 4 per cent rise in net profit to €1.08 billion. Net profit fell 14 per cent from its peak in 2016 of €1.26 billion.