Traditional Toys and Games in China

PROSPECTS

Ongoing strong growth due to toy store expansion and investment from manufacturers

China remained amongst the world’s fastest-growing major traditional toys and games markets in 2018, with robust growth driven by rising living standards and the ongoing expansion of major multinational manufacturers and retailers, including Lego, Hamleys and FAO Schwarz. Moreover, while the store network of the specialist retailer, Toys “R” Us, remained stable at the end of the review period, 2019 saw the company announce plans to open 50 new stores a year over three years.

Continued expansion of licensed products as foreign cartoons reach Chinese shores

China saw an ongoing rise in demand for licensed products at the end of the review period. This demand has been underpinned by the increasing exposure of preschool and school children to a variety of foreign cartoons, such as My Little Pony and Peppa Pig.

Countering the impact of falling birth rates with higher spend and purchases by adults, for adults

The falling birth rate in China is leading to limited demand for baby and infant toys and preschool toys. However, the increasing purchasing power available per child, bolstered by rising living standards, is leading to an upmarket trend in demand.

COMPETITIVE LANDSCAPE

Ever-popular Lego’s lead remains unshaken

Having overtaken Alpha Group to become the largest player in traditional toys and games in 2017, Lego extended its lead in the final year of the review period as it continued to increase its value share. The Danish company had 60 outlets in China at the end of 2018, including three flagship stores.

Increasing fragmentation having positive effect of innovation and diversification

While leader, Lego, increased its value share in 2018, China’s overall traditional toys and games market became slightly more fragmented towards the end of the review period, as a growing number of new entrants looked to tap into the market’s growth potential. These new entrants included Chinese manufacturers with an OEM/ODM (original equipment/design manufacturer) background that are gradually looking to establish their own brands and a rising number of foreign brands targeting the Chinese market.

Educational positioning underpins strong performances

Companies that have successfully established an educationally-orientated positioning were amongst the most successful players towards the end of the review period. These include both foreign multinationals, such as Lego and Vtech, and local companies, such as Shantou Chenghai Huaxin Plastic Mould Factory.

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