Hong Kong and mainland Chinese toymakers dodge US-China trade war and Toys ‘R’ Us collapse with innovation, new markets
- Trend is seen at major toy fair in city where companies express pessimism over any breakthrough in trade dispute between superpowers
- Demise of Toys ‘R’ Us chain in America also influencing buying patterns of US importers
Toymakers in Hong Kong and mainland China are bucking the economic downturn of the US-China trade war and the demise of American chain Toys ‘R’ Us by innovating and branching into new markets.
At the 45th annual Toys and Games Fair in Hong Kong, Asia’s largest toy expo, companies told the Post they were bracing for a difficult year ahead as they did not have high hopes of a breakthrough in the trade war truce between the two superpowers.
Some said the demise of debt-ridden Toys ‘R’ Us in the United States had prompted American toy importers to be more cautious in sourcing, as they demand more for less on orders, including tighter delivery times and smaller quantities.
“I don’t think the trade war will go away, it is just a matter of what percentage of tariffs will be imposed on each other,” Ding Youzhong, deputy general manager for Shantou-based drone manufacturer Guangdong Shiji Technology said.
“While we wait to see the outcome of the talks, production capacity will be cut by 30 per cent this year compared with last year, and the number of drones we sold to the US is likely to drop 60 per cent to about 300,000.”
China and the US are holding vice-minister level, face-to-face talks in Beijing on Monday and Tuesday in an effort to defuse a full-blown trade war after reaching a 90-day truce on December 1.
The dark cloud of trade tensions was not the only challenge the four-day fair – which started on Monday and comprised more than 2,100 exhibitors from 42 regions – was grappling with.
Hong Kong-based Joy Rainbow International said American buyers had become very vigilant on orders since some 880 Toys ‘R’ Us stores in the US folded last year, putting about 30,000 employees out of work. The Asia operations of the chain, backed by Hong Kong tycoon Victor Fung Kwok-king’s Fung Retailing Group, completed its separation from the parent US firm in November.
“Bigger retailers are very cautious,” Henry Ng Hon-wah, director of Joy Rainbow said, adding that American retail chain Walmart had put on hold a HK$10 million (US$1.3 million) order for toys from his firm when news broke last March of Toys ‘R’ Us going bust.
“Even when some American retailers place orders, they demand delivery within a month compared with 60 days previously, and their orders are in smaller numbers,” he said.
Ng said he had not given up on the US market, which is the company’s largest. Joy Rainbow is developing its own brand and products with elements of science, technology, engineering, arts and mathematics – dubbed “STEAM”. He said the company would expand into European markets.
Gilbert Ng Hoi-pang, design director of Jiangsu-based Paragon Child Products, said American importers appeared to have the upper hand in sourcing since Toys ‘R’ Us, which was a large distribution platform, went under.
Almost nine in 10 toys sold in the US come from mainland China.
“Some put on the table, say, US$50 for an order item even though the product may cost far more,” he said. “Some become picky.”
There were noticeably few American buyers on the first day of the fair, with mainland Chinese, Russians and European merchandisers rubbing shoulders with industry players.
The Post approached six American visitors but all declined to comment.