The “Toy Capital of the World” under the pressure of financial crisis

Toys bring joy to people, but at the moment, most of their Chinese manufacturers are in unprecedented trouble.
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After a large toy company collapsed and more than 6,700 workers lost their jobs, Dongguan, Guangdong, habitually known as the “Toy Capital of the World,” seems to have become one of the latest victims of the financial tsunami sweeping the world.
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China produces 70% of the world’s toys, and Guangdong, represented by Dongguan, accounts for 70% of China’s total toy output value. People are worried that as the global market downturn continues and intensifies, local manufacturing companies closely related to world toy giants such as Mattel will collapse in large numbers, which will trigger violent fluctuations in the world toy market.
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However, many factors show that this concern may not become a reality. As an area with the highest concentration of toy companies in China, toy manufacturers and relevant experts in Dongguan said that despite experiencing unprecedented violent fluctuations in the past six months, the survival situation of local companies has now improved. tending to be stable. While a number of enterprises have withdrawn from the export market, the trend of enterprise enlargement is obvious. Enterprises with truly high management level are gaining new vitality.
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“Taking into account objective factors at home and abroad, I believe there will not be a large-scale wave of business closures in the local area,” said Li Zhuoming, executive vice president of the Guangdong Provincial Toy Association. “However, 2008 was the biggest difficulty the toy industry has encountered since China implemented reform and opening up in 1978. year.”
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“ One of the major events that drew attention to the toy industry in Dongguan and China was the collapse of Hejun.
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This Hong Kong-listed company suddenly closed two factories in Dongguan in mid-October and applied for a trading suspension. This directly resulted in more than 6,700 workers losing their jobs. In order to protect the lives of thousands of workers, the local government raised 23 million yuan to advance wages owed by companies.
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Many people are worried that the huge Hejun is just a sign that Dongguan and even Guangdong, the world’s largest toy production base, are experiencing a wave of corporate bankruptcies; some people are worried that the Chinese toy industry may become a victim of the global market downturn.
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Li Zhuoming categorically denied this. He said that Hejun was more like an accident than the so-called “first case of Chinese enterprise collapse in the financial tsunami.”
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Li Zhuoming said that compared with the market downturn, the United States implemented a large-scale recall of Chinese toy products in 2007, European and American countries successively improved the technical standards for toy product imports, as well as the appreciation of the renminbi, rising raw material prices, and increased labor wages. The difficulty.
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​ ​ ​ Toys are traditional labor-intensive products. Currently, as the world’s largest toy producer, China’s annual toy exports, including game consoles, have exceeded US$20 billion. The United States, the European Union, and Japan are the main export destinations, with the United States alone accounting for more than 20% of the total.
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Shi Xiaoguang, president of the China Toy Association, said that nearly 80% of China’s toy exports are processing trade. Guangdong is the largest export province, but processing trade accounts for more than 90%. Although the proportion of general trade is increasing year by year, the increase is very small.
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However, the grand scene of those years is no longer there. “The past two years have been the ‘life and death threshold’ for Dongguan’s toy industry.” Xiao Senlin, general manager of Dongguan Harbin Toy Factory, said with emotion, “Many have been eliminated.”
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The global market downturn caused by the international financial crisis has exacerbated this trend. Jiang Haitao, general manager of a small and medium-sized toy company in Dongguan, said that in previous years, the months before Christmas should have been the peak season for the toy industry, and toy factories were already busy. However, Christmas orders in 2008 were 1/3-1/2 less than in previous years. The share of Christmas tree orders alone has dropped by more than 30%. It is expected that toy orders will still drop sharply in 2009.
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According to customs statistics, compared with the same period in 2007 in the first three quarters of 2008, the number of companies in Guangdong with actual toy export records decreased from 4,820 to 1,554. Industry insiders said that this figure shows that the number of toy export companies in Guangdong has tended to be relatively stable, and at the same time, companies are becoming more large-scale.
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Despite the gloom, the “Toy Capital of the World” has not given up hope.
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Li Zhuoming said that Guangdong is the world’sThe largest toy production base, with the highest level of production technology and the most complete production chain, Guangdong’s toy industry has experienced tests such as the Asian financial crisis and U.S. recalls, and is fully capable of weathering the impact of the world financial crisis.
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There are some signs that the “Toy Capital of the World” is investing more in transformation and upgrading and creating independent brands. Longchang Toys Company, which has more than 8,000 employees, is a time-honored brand in Dongguan’s toy industry. Currently, its robots, which cost more than 2,000 yuan each, are their flagship products sold at home and abroad, and orders are scheduled until 2009. Company manager Liang Lin said that technological research and development and product quality are important weapons for companies to achieve performance in adversity. The company has a research and development team of more than 300 people and invests 30 million yuan in research and development funds every year.
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The Chinese government has also extended a helping hand to the toy industry. From November 1, 2008, the toy export tax rebate rate will be raised again from 11% to 14%. The implementation of this policy will undoubtedly have a positive effect on the recovery of the toy industry.
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In Dongguan, the local government department stated that it is establishing a support platform to guide the transformation and upgrading of enterprises, and provides on-site assessment, solutions, work suggestions and other services for the transformation and upgrading of processing trade enterprises.