1. TROUBLED TIMES OF THE
CHINESE TOY INDUSTRY

2. PREPARED BY
 Ankit Shah
 Bhumik Shah
 Bhavana Arora
 Kriti Deshpande
 Raj Goyal
 Anshul Holani

3. CONTENTS
 Introduction
 Case Overview
 Background
 Growth
 Problems
 Spate Of Recalls
 Other Problems
 SWOT Analysis
 Outlook
 Conclusion

4. INTRODUCTION
 The Consumer Product Safety Commission in the
U.S. recalled more than 500,000 toys made in
China on 4th October, 2007
 The reason being toys contained dangerous levels
of lead
 Apart the reason of excessive lead paint, the toys
had loose magnets which could be swallowed by
children
 The toys included in the withdrawal were the
„Pirates of the Caribbean‟ series, „Baby Einstein‟ ,
„Totally Me!‟ & „Funky Room Décor Set‟

5. BACKGROUND
 Toys had a prime place in Chinese society
 Folk toys made of wood, clay & paper were very popular
with the Chinese children
 Masks, in the shape of animals were found in the ruins
of Chinese Habitation
 Modern toys in China started in the 1900‟s
 Initially the toys were made of tin
 The industry picked up in 1919, with many factories set
up near Shanghai
 From 1930s Germany dominated the toy market
 After the WWII, China took over as most industries in
Germany were producing ammunition
 The Japanese toy industry gained popularity in 1950s

6. GROWTH OF CHINESE TOY INDUSTRY
 Benefited from the reforms initiated in China in
1979.
 Special economic zones attracted several
international toy makers.
 Scale Economies and cheap labour.
 Efficient network of supporting industries.
 Province, owing to its open industrial policy, got
new toy factories.
 In 1987, country‟s first toy design institute was set
up at Tianjin Science and Technology University.

7. CONT…
 Accession into World Trade Organisation.
 Organised its first international toy exposition in
October 2002.
 With more than 9,000 plants, the toy industry is now
one of the country's major industries employing
almost 3million people.
 Export value and growth rate of toys made in china,
2001-10.
 According to China Chambers of Commerce for
Import and Export of Light Industrial Products and
Arts-Crafts(CCCLA), China toys constituted 75% of
world toy outputs.

8. PROBLEMS
 Faced with dual pressure of rising costs and
declining prices.
 Raw material and labor costs were increasing.
 They forced to raise wages sometimes by digit
double rates.
 Accused of denying workers their legal rights.
 Violation include forced overtime, wage payment
below the minimum standard, failure to provide
social insurance, restriction of workers personal
freedom

9. OTHER PROBLEMS
 Shift the blame into western retailers and toy companies
saying they were squeezing their margins leaving them
with little money .
 Prices are too low so there are more serious problems in
industry.
 Prices of many exported Chinese toys were a fraction of
prices of similar toys manufactured in developed
countries.
 Limited inspection and evaluation of factories caused
lower productivity.

10.  International toy producers cancel the orders placed with
Chinese toy manufacturers unless secure the
international council of toy industries.
 Chinese government attempt to improve the quality of
Chinese toys imposed the scheme on toy makers. Only
toys are exported or sold in domestic market.
 Chinese suffered a loss when a EU Report state 25% of
problematic imported goods recognized by union‟s rapid
alert system.

11.  Children day in china, the quality inspection authority
checked boys produced in the province and 45% of them
did not meet quality and safety standards.
 There are the places in the world where you can get lower
labor costs but china has a very well labeled infrastructure,
well educated engineers, excellent transport and a
business friendly government.

12. OTHER ISSUES
 Threat from Vietnam and Eastern Europe
 Appreciation of YUAN
 Lack of brand power
 Weak market knowledge and product promotion
 Lack of designers
 Low level of technology
 Changing trends in toy industry

13. STRENGHTS
 Initiatives taken by the old market players in setting
up the industries.
 Efficient network of supporting industries.
 Local entrepreneurs also started setting up the
industries.
 Adoption of the industrial policy.
 Setting up of special economic zones.
 Product design & production planning was well
taken care of.

14. WEAKNESSES
 Pressure of rising Cost & Declining prices.
 Demand of keeping the prices low from the clients
kept increasing.
 Toy factories were branded as “sweatshops”
 Workers were forced to work overtime, less
payment of wages.
 Comparative cost of the toys manufactured was
very low.
 Chinese manufactures were weak in market
knowledge & product promotion and merely acted
as OEM‟s.

15. OPPORTUNITIES & THREATS
 Improvement of quality of toys.
 Hiring good designers for better designing.
 Adoption of high quality standards to meet the
market needs.
 Foreign market players who produced good quality
products comparatively.
 Recall of many of the toys produced with
complaints such as choking, High lead content,
battery leakage, and other customers saftey issues.

16. OUTLOOK
 Training sessions organized by the Chinese
government for quality control for the people of the
industry.
 The sessions also gave a brief about how to deal
with the design flaws and reduction in the lead
content of the toys.
 Suspension of the licenses of 764 factories.
 690 other factories were told to renovate their
plants.
 Expectation of the growth of the industry by nearly
40% to $12.5 billion by 2010.

17. CONCLUSION
 The Chinese toy industry had to go through tough
times but with the interest taken by the Chinese
government and the various initiatives taken by the
industry players the toy industry was able to create
a sustainable amount of image in the minds of the
people.
 A huge number of people were emotionally
attached to what they were doing, as Chinese toys
were the most famous in the world.
 The industry bounced back by correcting what they
were doing wrong and showed the world, what it is
capable of.