1.2023 Analysis of the current development of China’s toy manufacturing industry
China is a large puzzle toy merchandising country, about 80% of the world’s toys are merchandised in China. China’s puzzle toy enterprises have significant regional distribution characteristics, mainly concentrated in Guangdong, Zhejiang, Jiangsu, Shanghai and other coastal areas, these provinces and cities are also the more mature areas of China’s toy industry development.
Guangdong is the largest toy production and export base in China, mainly concentrated in Shenzhen, Dongguan, Guangzhou, Shantou Chenghai, Foshan and other places. And Shantou, as one of the most concentrated toy production enterprises in Guangdong, with the highest technological innovation capacity and product technology content, has formed a more mature and complete industrial ecology, with obvious industrial cluster effect.
Most of the exports of China’s toy industry are processed and produced for foreign brands. Competition in the toy market of China is becoming increasingly fierce, with the high-end toy market dominated by foreign investors and the rest of the low-end and mid-price toy market dominated by local brands.
The world’s leading toy companies now have branch factories in the mainland or cooperate with domestic manufacturers to produce toys. Most of the world’s major toy companies have entered the market of China through sales agents or by setting up Chinese marketing departments, such as Mattel Group of the United States, Hasbro Group and Sega of Japan.
Due to the decline in the external market, rising domestic production costs, and changes in the exchange rate of the RMB, China’s toy exports are facing many pressures, and the development of the domestic market is being increasingly important to enterprises. In recent years, many brands have been actively building domestic sales pipelines, with international brands such as Disney and DreamWorks, and local brands such as Audi and Goodbaby.
In the mainland toy consumer market, foreign brand products and Sino-foreign joint venture products account for most of the market. Mainland local toys have a large price gap compared with international brands, so they have strong competitiveness in the middle and low-end market and basically monopolize the general wholesale market and sales pipeline such as hawkers.
As a major manufacturing country in the world, China’s toy manufacturing industry also holds a heavy weight in the world. The cheap and obedient labor force has laid a good foundation for the development of China’s toy manufacturing industry, and also provides a good advantage for China’s foreign trade in toys.
More than 85% of the existing toy manufacturing enterprises are exporters, the products are mainly exported, toy exports account for more than 50% of China’s toy output. After the financial crisis, the proportion of domestic sales of toys has increased, but foreign sales still occupy an important position. Therefore, the situation of toy exports largely reflects the development status of the whole industry.
From the perspective of export markets, North America is the largest area of China’s toy exports, accounting for 33.87% of China’s total toy exports; followed by Asia, accounting for 32.26% of total toy exports; Europe ranks third, accounting for 23.7% of total toy exports.
From the perspective of export provinces and cities, Guangdong, Zhejiang, Jiangsu, Shanghai, Shandong and Fujian are the main provinces and cities of China’s toy exports, accounting for 62.03%,14.88%,6.56%,3.82%,1.99%,1.97% of the total exports of toys, respectively. Among them, Guangdong Province is the largest toy production and export region in China.
With the release of the value of animation IP, the value of animation culture industry has accounted for more than 20% of the output value of the toy industry. From the experience of successful toy brand operation, toys and animation are a pair of natural twins, and the combination of toys and animation can create a good derivative value, such as the many mergers and acquisitions of Aofei Animation in the field of IP investment, the purpose is also in the establishment of an animation kingdom.
With the gradual increase in economic strength of emerging market countries, the concept of toy consumption is also gradually extended from mature Europe and the United States to emerging markets, Eastern Europe, South America, Asia and other regions toy consumption is growing rapidly. Among them, the Chinese toy market has shown a strong growth trend, and the market size of the Chinese toy industry will exceed 300 billion yuan by 2023.
China has 222 million children under the age of 14, and the implementation of the two-child policy is expected to bring 20 million new babies each year, thus causing toy consumption to enter a period of rapid growth. Through comparative research, it is found that traditional toys are still singing the lead role, and the mainstream products are still blocks, car models, dolls, etc., but many of these products have incorporated new technological elements, such as dolls that can talk to people, etc.
Under the guidance of national industrial policy, domestic cartoons have ushered in a period of rapid development, thus fostering children’s identification with cartoon characters and the user stickiness of derivatives, allowing companies that hold the core cartoon image IP to benefit; currently, brand enterprises are even more through the layout of artificial intelligence, cut into the field of school and family education.
China’s puzzle toy enterprises have significant regional distribution characteristics, mainly concentrated in Guangdong, Zhejiang, Jiangsu, Shanghai and other coastal areas, these provinces and cities are also the development of China’s toy industry is more mature areas.
Guangdong is the largest toy production and export base in China, and Shantou, as one of the areas with the highest concentration of toy manufacturing enterprises and the highest technological innovation capacity and product technological content in Guangdong, has formed a more mature and complete industrial ecology, with an obvious industrial cluster effect.
Among them, Guangdong Province, as the largest toy manufacturing and exporting province in China, has formed a complete upstream and downstream industrial chain in the toy industry region, with supporting upstream material supply chains such as mould design and manufacturing, plastics, electronics, packaging materials and hardware, professional toy showrooms, domestic and international distributors and logistics enterprises providing services to toy enterprises, all gathered in areas where puzzle toy enterprises are concentrated.
In general, countries are increasingly demanding and strict in terms of quality, environmental protection and safety in the toy industry, a trend that will continue and tighten in the long term as people’s living standards and quality improve.
The cultural industry is like the spiritual food of a country, and countries all over the world attach great importance to this, especially for the introduction or export of foreign content related to the control is quite strict. This trend will continue, given the shape of China’s society and the country’s institutional system.
Drawing on the experience of mature markets in Europe and the United States, the market share of companies with their own brands and larger scale in the Chinese toy market is expected to further expand, with the concentration of the industry gradually increasing.
2.2023 Analysis of the current situation and prospects of the toy market
With the steady development of China’s economy and rising per capita disposable income, China’s puzzle toy industry has been developing well in recent years. Driven by a combination of factors such as increasing resident income, rising toy consumption concepts and technological upgrades, the toy industry is expected to continue to grow, with the market size of China’s toy industry expected to reach RMB 91.8 billion in 2022 and RMB 119.5 billion in 2026.
Toys have 3 basic characteristics: entertainment, education and safety. They come in a wide variety and are classified in different ways. According to the raw materials and technology, they are divided into metal toys, plastic toys, wood and bamboo toys, cloth and plush toys, paper toys and folk toys.
According to the age, they are divided into nursery toys, baby toys, toddler toys, children’s toys and adult toys; according to the function, they are divided into sports toys, puzzlew toys, science and education toys, early education toys and decorative toys.
From the perspective of the industry chain, the upstream of the toy industry is mainly the hardware industry, electronic parts industry, packaging industry, plastic industry, etc. The main raw materials include plastic, wood, metal, cloth, etc.; the midstream is the design and development of toys and production and processing; the downstream sales channels mainly include direct sales, distribution, e-commerce, export sales, etc., flowing to the end consumers of toy products.
As China’s national economy continues to develop steadily, the consumption level of residents continues to improve, and the demographic changes and urbanization process in China in recent years have brought about an increase in the level of disposable income of residents, the scale of China’s puzzle toy market continues to grow.
In terms of consumer spending, consumers’ requirements for product categories and functions have become more diversified, and demand for personalised and fashionable products has increased significantly.
In terms of the overall industry, driven by the rapid development of the social economy, the growing income of residents and the upgrading of consumption, the market size of children’s toys and outdoor products and other children’s goods will maintain a continuous growth trend in the future.
And China’s sustained economic development has provided puzzle toy enterprises with a broad market space and high product demand. Therefore, in the future, China’s puzzle toys of children and outdoor products and other children’s goods industry will continue to maintain rapid growth.
In recent years, the number of children aged 0-14 in China has been on an overall growth trend, with the number of people aged 0-14 nationwide reaching 253 million in 2020, an increase of 26.26 million compared to 2014.
With the opening of the fertility policy and the gradual implementation of the incentive policy for three children, the number of young children in China will increase significantly, and the toy industry will have a broader market in the future, and the market size will have a broad space for growth.
China is a large toy producing country, with a large number of toy manufacturing enterprises, is the main concentration of global toy production, and is also the world’s largest toy exporter. However, compared with developed countries, the market concentration of China’s toy industry is low, and the popularity of brands is not high, the scale of enterprises is small, the history is short, and there is more room for market integration.
The main consumer group of toys is children aged 0-14. In 2015, China implemented the two-child policy, and in 2021 voted for a three-child policy, bringing favourable factors for the development of the toy industry. At the same time, with the deepening of the concept of “education and fun”, the diversified needs of infants and children for puzzle toys will continue to stimulate the development of the toy market in the coming period.
As a major toy producing country, China has a large number of puzzle toy manufacturing enterprises. Compared to developed countries, the market concentration in China’s puzzle toy industry is relatively low. With some domestic enterprises making breakthroughs in R&D capability, technology level, branding and IP design, market share has subsequently increased, competitiveness is growing and brand awareness is increasing.
In the future, as more domestic toy manufacturers continue to enhance their branding, the leading pattern in the industry will be further formed and the concentration of the industry will be further enhanced.
With the opening of the fertility policy and the gradual implementation of the incentive policy for three children, the number of young children in China will increase significantly, the future market of theChina’s puzzle toy industry will be more extensive, the market size also has a broad space for growth.
In recent years, China’s economic situation has been steadily improving, the standard of living of residents has been improving, per capita consumption expenditure has increased, and social consumption patterns have been upgrading.
The current economic situation in China is improving, the future of per capita disposable income and consumer spending is a continuous growth trend, people’s consumption needs will continue to increase, consumption patterns will also be upgraded and diversified, the willingness to consume toys will also increase.
3 The concept and classification of China’s puzzle toys
Toys can be classified according to material, function and animation, which can be classified according to material as plastic toys, plush toys, cloth toys, wooden toys, metal toys; classified according to function as educational toys, motor toys, electric toys, electronic toys, puzzle toys; classified according to animation as animation toys, non-animation toys.
China’s puzzle toys, as the name implies, are toys that develop intelligence and grow wisdom in the process of playing. Strictly speaking, China’s puzzle toys should be divided into educational toys for children and puzzle toys for adults, although the boundary between the two is not very obvious, but still should be distinguished. Do puzzle toys really have an educational function?
According to a study by the Royal Academy of Science, people who regularly play with puzzle toys have an average IQ 11 points higher than those who do not. The ability of the brain to think openly is high; American medical experts also found that the incidence of dementia in people who started playing with adult puzzle toys before the age of 50 was only 32% of the general population, while the incidence of people who played with educational toys from childhood was less than 1% of the incidence of the general population.
For younger children, puzzle toys can be used as a family companion, a vehicle for initiation and training, and a bridge for parents and children to communicate and grow together. For older teenage children, puzzle toys can take on a richer function of interest development and nurturing.
4 The current market situation and market scale of China’s puzzle toys
The upstream of the puzzle toy industry chain is mainly based on raw materials such as plastics, hardware, electronic parts and chips; the midstream of the industry is for China’s puzzle toy manufacturers; the downstream is for consumer channels and consumer terminals, through shops, suppliers, supermarkets, e-commerce platforms and other channels to sell products and finally reach consumers.
The increase in the overall number of children aged 0-14 in China has laid the foundation for the expansion of the market size of the smart toy industry in terms of consumer groups. According to data from the 7th National Census, the country’s population totals 1,411.78 million people, of which 253.38 million are aged O-14, accounting for 17.95% of the total population.
With the increase in the number of children in China, the demand for China’s puzzle toys is also rising. According to the data, the size of China’s puzzle toys market has been rising year by year, from 66.25 billion yuan in 2014 to 150 billion yuan in 2020, up 15.65% year-on-year in 2019. The size of the market will increase in the future as families place greater emphasis on the intellectual development of their children.
In fact, apart from developing intelligence, puzzle toys have functions. For example, to stimulate functional development, puzzle toys designed with bright colours and attractive lines can stimulate a child’s vision; while a grip on the “ring”, keys on the sound of a variety of animal sounds “small piano” can stimulate the child’s sense of hearing; The child’s sense of touch is developed. Therefore, different puzzle toys are effective tools to help children learn about the world, helping them to match the responses of their senses to encounter and perceive new and exciting things.
With the development of China’s puzzle toy industry, the number of domestic puzzle toy production enterprises has gradually increased, and the total output of toys in the country has been rising. According to statistics, China’s total toy production reached 7,458,200 tons in 2021, with a growth rate of nearly 11%, an increase of 737,000 tons compared to the previous year’s toy production.
According to relevant data, the main decision-making reasons for consumers to choose toys in China in 2021 are fun and educational effect, accounting for 40.4% and 36.1% of the consumer share respectively. Lego is the market leader in China’s puzzle toy industry by virtue of its product quality and design, accounting for 42.3%. There is still a large gap between domestic puzzle toy brands that want to break through, and domestic companies should build their own brand image.
In addition, puzzle toys also have the role of coordination of physical functions, such as children will be a box of blocks to build out graphics, in addition to the brain, but also with the hands, so that by playing puzzle toys, training and gradually build up the child’s hand-foot coordination, hand-eye coordination and other physical functions.
With the role of practice social activities, children in the process of playing puzzle toys with peers or parents, unknowingly in the development of social relationships, even if Even though they are prone to arguments and quarrels during cooperation or competition, they are actually developing a cooperative spirit and learning to share with others, laying the foundation for their future integration into society.
At the same time, language skills, emotional release and hands-on skills are all improved. 2021 national toy industry demand reaches 3,537,500 tonnes, an increase of nearly 1.12 million tonnes compared to total national toy demand in 2011.
Data show that the China’s puzzle toy company, Bon Bao Puzzle 2020 total assets of 103012.48 million yuan, compared to 2019, a decrease of 9,925,400 yuan, down 0.95%; net assets of 780,133,900 yuan, compared to 2019, an increase of 3,990,100 yuan, an increase of 5.39%.
2020 Bon Bao Puzzle operating income of The net profit attributable to the parent company of BonBao Puzzle in 2020 is RMB 399,201,000, a decrease of RMB 35,951,300 or 6.62% compared to 2019. million, a decrease of 47.38% year-on-year. Earnings per share were RMB0.13.
China’s puzzle toys exports are greater than imports, indicating that China’s puzzle toys market is mature and not dependent on imports, according to the data, China’s puzzle toys exports are rising year by year, with China’s puzzle toys exports amounting to 1,731,997,000 sets and imports amounting to 25,784,800 sets from January to October 2022.
As the puzzle toy market becomes increasingly active, the capital market has also paid more attention to puzzle toys. In recent years, China’s puzzle toy brands have received frequent investment. In May last year, Bruco announced the completion of 600 million yuan of Series B financing. In January this year, Qiaohe Tenon Dao completed an angel round of financing of tens of millions of yuan, and in February, Senbao Building Blocks completed a Series A round of financing of hundreds of millions of yuan.
The top ten export trading countries in the national toy industry are: the United States, the United Kingdom, Hong Kong, the Philippines, Singapore, Japan, Germany, South Korea, the Netherlands, Australia. Among them: exports to the United States accounted for 31.76%; exports to the United Kingdom accounted for 5.77%; exports to Hong Kong accounted for 5.22%%; exports to the Philippines accounted for 4.96%; exports to Singapore accounted for 4.06%; exports to Japan accounted for 3.65%; exports to Germany accounted for 3.41%; exports to South Korea accounted for 3.33%; exports to the Netherlands accounted for 3.07%; exports to Australia Exports to Australia accounted for 2.41%.
From the regional distribution, Guangdong Province has the largest number of toy-related enterprises, more than 590,000; followed by Zhejiang Province and Shaanxi Province. In the past ten years, China’s toy-related enterprises (all enterprise status) registration volume rose year by year. Among them, more than 1.73 million were registered in 2021, a record high; more than 100,000 have been registered so far in 2022, equivalent to an average of more than 2,700 established every day.
From the perspective of export provinces and cities, Guangdong, Zhejiang, Jiangsu, Shanghai, Shandong and Fujian are the main provinces and cities of China’s puzzle toy exports, accounting for 62.03%,14.88%,6.56%,3.82%,1.99% and 1.97% of total toy exports respectively. Among them, Guangdong Province is the largest puzzle toy manufacturing and exporting region in China.