Sales of traditional toys and games in China are projected to grow by 9% in 2023, a strong recovery after a sharp decline in 2022 at the height of the COVID-19 pandemic. Despite a weak economic outlook for China over the forecast period, growth of traditional toys and games is poised to remain robust, driven by emerging consumer trends, policy initiatives, product innovations and channel restructuring.
Rise of domestic cultural consciousness
Licensed toys will continue to be the backbone of growth and are set to account for more than a quarter of the total value sales of traditional toys and games in China by 2027. While globalisation has made various IPs a huge hit in regions across the world, the rise in domestic cultural consciousness in China and many other emerging markets is prompting global toy companies to develop localised products catering to the more cultured taste of new generations of consumers. Lego has launched products inspired by traditional Chinese festivals annually during the holiday season, aiming particularly at younger age groups. The Gansu Provincial Museum, in a bid to creatively showcase traditional culture, launched an amusing plush toy modelled after ancient artefact, the Flying Horse, which has gained wide popularity on social media.
Source: Gansu Provincial Museum
Local toy companies like 52TOYS, eyeing the pop toy segment, have collaborated with the hit film, The Wandering Earth II, to make replica toys of popular characters available through crowdfunding. The key to success is predicated on two central factors: carefully selecting IPs that can resonate with a large group of local consumers, no matter where these IPs originated, and thoughtfully designing products that can actualise the power behind these IPs. Digital marketing that can help toys reach a wider audience is also key especially at the peak of the heat generated by other IP-related products and activities.
Hands-on toys that encourage interaction
Toys like construction, plush, and games and puzzles are not merely objects to be played with, but also unparalleled sources of mental wellbeing where solitude is softened and stress relieved through more “hands-on” experiences. The post-pandemic era may see further growth of these categories, as people can share these toys and interact with close friends and families through the joy of collective activities.
The Chinese government has introduced a series of policy guidelines aiming at constraining the rampant penetration of blind collectibles since June 2023
Source: Euromonitor International
The State Administration of Market Regulation, the country’s principal market regulator, stipulated that blind collectibles cannot be sold to children under the age of eight and that mechanisms should be in place to prevent overindulgences of minors. Such policy initiatives will likely boost the sales of construction and scientific/educational toys that are also popular among children and favoured by concerned parents due to their educational values.
Fast-growing e-commerce sales and the value of offline penetration for toys
The pandemic has accelerated the shift in toy purchasing pattern for Chinese consumers.
Toy sales have shifted from offline stores to online platforms, resulting in a 44% e-commerce share of total value sales for traditional toys and games in China in 2022
Source: Euromonitor International
Nevertheless, not all offline channels have seen their revenue in decline. Traditional toys and games stores, thanks to their specialised positioning and vast collections of toys, have become a key source of growth for companies seeking to increase exposure and, in turn, sales. As offline traffic returns in 2023, the traditional toys and games stores channel in China is forecast to grow by 5.5% in value sales terms, compared with the double-digit decline in 2022, while e-commerce penetration deepens and continues to take up more share in the total channel split.
Leading players in traditional toys and games have not been slacking in exploiting the potential of penetrating into new channels and utilising innovative marketing methods. Pop Mart, the Chinese trendy toy giant, has been targeting lower-tier cities and the direct-to-consumer (D2C) channel as new sources of growth. Kayou, an emerging Chinese toy company specialising in trading card games, has been proactively promoting its products through an omnichannel strategy of maximising appearances in convenience stores, supermarkets, toy stores and non-grocery variety shops. By opening several flagship stores in major cities, Kayou also opened flagship stores in Guangzhou, Chongqing and Shenzhen to reach a bigger customer base.
Positive prospect of growth for toys in China going forward
Although the pandemic has brought about a hit on overall purchasing power for consumers in China, the future for traditional toys and games in the market still looks bright. Emerging consumer trends, policy initiatives, product innovations and channel restructuring are unleashing new dynamism for the industry. While the competition will remain intense, the market as a whole is still set to witness a bullish outlook in the coming years.
Learn more about traditional toys and games in China in our report, Toys and Games in China, to explore industry trends and potential areas of growth.