In China's toy industry, Guangdong is the leader; and in Guangdong, Chenghai is the leader. The Chenghai Toy City in the Shantou Special Economic Zone has seen rapid expansion in just a few years.
Its toys are exported to overseas markets - the Middle East, Southeast Asia, Europe and the US. Toy makers in Chenghai are currently shifting to the development and production of high-end toys, particularly high-tech battery-operated, personalised and intelligent toys.
Over 70% of the toys produced in Chenghai are exported, accounting for 10% of total national toy exports.
China's toys and gifts city in Chenghai is located at the estuary of Han River in Shantou, commanding a position half-way between the Xiamen-Fuzhou area in Fujian and the Pearl River Delta (PRD) in Guangdong.
According to the secretary-general of Chenghai Toys Association, Cai Jiechen, about 2,800 toy manufacturers and related factories operate in the town, employing more than 100,000 workers.
With an annual production output of Rmb13 billion, exports have hit Rmb9 billion. Chenghai produces more than 100,000 types of toys which are sold in over 100 countries and regions.
The Chenghai Toys Association is a voluntary, non-profit organisation established by enterprises and individuals engaged in the production, R&D, design and sale of toys. It aims to foster the growth of the toy industry through coordinated operations, guidance and services.
The Chenghai industry and commerce administration says the centre has grown to become the largest wholesale market for plastic toys in eastern Guangdong.
Toy exports are primarily channeled through border trade marts along the Sino-Vietnamese border, across the Sino-Russian border trade, as well as through Guangzhou and Hong Kong. Some toys are re-exported to Southeast Asia and the Middle East via Hong Kong.
More than 100 toy wholesalers and exporters are clustered around the building, where the Chenghai Toys Association office is located.
According to the manager of Jiecheng Plastic Toy Store, wholesalers have their own business connections and sales channels. They source from different local toy factories to meet the needs of their clients from all over the world.
Developing new, trendy toys
Mr Lin from the property management team of Chenghai Toy City reckons that the strength of Chenghai's toy industry lies in its production. As the international toy market becomes increasingly regulated, local toy factories are gradually moving from original equipment manufacturing (OEM) to own brand manufacturing (OBM) to meet market demand.
As such, more R&D efforts are devoted to developing new products. For instance, when the "Super Female Voice" contest organised by Hunan TV Station was all the rage in 2006, Huawei Toys Co Ltd in Chenghai and its associates jointly developed the "Super Doll" series which was an instant success when it hit the market.
Auldey Toy Industry Co, a toy company which first started as a simple, plastic toy maker, is now offering battery-operated, remote-controlled, and intelligent digital toys as major product categories.
The production plant for Auldey Toy Industry.
Luo Yumin, assistant to general manager for Auldey, says the company has invested more than Rmb10 million on new product R&D annually over the past three years. To cater to changing market demand, Auldey has set up a creative and design department and an engineering unit. With its own design team, the company can offer proprietary "concept" designs for the functions, design, structure and game specifications for its toys.
It is understood that increasing numbers of toy makers in the Chenghai toy industrial zone have established their own R&D facilities. About 30 of them have obtained ISO certifications, and more than 80 have received the Conformity Certification of Toy Products (CCTP) for China.
Sixty-six toy makers (including Auldey and Huawei) have received a total of 234 CCCs (China Compulsory Certificates) for metal toys to date.
Closer cooperation with Hong Kong firms
According to Cai Jiechen of the China Toys Association, the toys and gifts city in Chenghai has certain advantages.
For a start, most of the toy makers in Chenghai are indigenous private enterprises which began as family workshops. As they accumulated more capital and technical resources, they expanded their scale of production.
Also, Chenghai has an integrated industrial chain comprising supporting industries, such as raw materials and parts and components, offering complete support involved in every stage of development - from product concept and design to manufacturing and sales. These supporting industries have contributed to the booming toy sector.
Besides, machinery and electronics suppliers from the PRD, Hong Kong and Taiwan also provide Chenghai's toys and gifts industry with needed support.
However, labour shortages in Guangdong have posed a growing challenge for toy makers in Chenghai. "The acute shortage of workers in eastern Guangdong has, to a certain extent, taken its toll on the production capacity of the local toy factories. However, it has also forced some toy makers to upgrade their technology and equipment and stop using inefficient and labour-intensive production lines," says Cai.
He adds that toy factories which are able to offer better remuneration packages to workers (including better living and working environment) and still find it relatively easy to hire workers and maintain a high level of productivity.
Export-oriented toy makers have to keep abreast of the latest trends in the international market to understand changing consumer preferences and demands.
Although large toy makers such as Auldey, Huawei and Xinning have set up direct sales outlets or offices abroad, the majority of small- and medium-sized toy makers in Chenghai still don't have ready access to international market intelligence.
Industry players reckon that if Hong Kong toy wholesalers and market research institutions can cooperate with these toy makers, it can boost the competitiveness of Chenghai toys in the international markets.
Hong Kong companies that offer easy access to information and extensive distribution channels can help to a huge degree.
"We look forward to closer cooperation with counterparts from Hong Kong and overseas in different respects, such as in product R&D and market development, based on mutual benefits," says Luo of Auldey. The company's Hong Kong office is currently expanding its product R&D and design teams.
Some Chenghai toy makers point out that the Chenghai industrial zone is still lacking in information services tailored to local small- and medium-sized enterprises (SMEs).
The toy city urgently needs to build an information service platform catering to SMEs, offering network-based e-commerce and enterprise management services. Hong Kong companies have a definite edge in providing these support services.
International Toy Expo opens in April
China Chenghai International Toys and Gifts Fair is one of the most internationalism and commercialism professional toys exhibition in Chinese mainland, which has been held for nine sessions successfully. And it has attracted the professional purchasers from more than 50 countries or areas such as USA , Japan , Korea , Russia , Cuba , South Africa , the Middle East, Southeast Asia and so on, as well as domestic provinces including Hong Kong , Macao and Taiwan . In last session, the conferred deal is up to more than 1 billion.
The Chenghai district government has pledged to strengthen investment software and to attract foreign investment by offering a level playing field.
The Shantou customs has also exercised flexibility in processing export shipments by grouping toys using the same description but different HS codes under "broad product categories", so that toy exporters can save money.
Also, customs officials have implemented a series of customs clearance facilitation measures, such as a round-the-year service, 24-hour supervision by appointment, door-to-door cargo inspection and a release service.