Opportunities in the Toys Market in China
The toy market in China has experienced rapid growth in recent years and is now a vast and dynamic industry. Generating approximately 78.7 billion U.S. dollars in revenue, it is the largest toy market in the world, making it an essential player in the global toy industry. As this market continues to evolve, it presents both opportunities and challenges for businesses looking to enter or expand their presence in China.
In this post, we will explore key insights into China’s toy sector – from consumer behavior and factors driving its growth to emerging trends and strategies for entry into this exciting space. So let’s dive deeper into understanding what makes China’s toys market so fascinating!
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Background On The Global Toy Industry
Understanding the global toy industry is crucial before focusing on China’s market dominance. The industry has grown significantly in recent years, with a projected value of $230.64 billion by 2028 and a rising demand for toys from young adults.
China is a major player in the industry, accounting for 70% of global toy manufacturing and holding the title of the world’s largest toy market with $78.7 billion in revenue generated in 2022.
Overview Of China’s Toy Market
China’s toy market is the largest in the world, with a population of nearly 1.4 billion people and over 17% of them being children. The industry has seen significant growth in recent years, generating approximately $56 billion in revenue in 2022 alone. The market is expected to continue to grow, with an estimated value of $78.21 billion by 2027.
However, foreign businesses face challenges in penetrating this market due to cultural differences and regulatory compliance issues.
Key Players And Brands
To remain competitive and capitalize on opportunities for growth, it is crucial to monitor the prominent players and brands in China’s toy market. Here are some of the leading toy companies and their distinguishing features:
- Chaowan: Known for its innovative electronic toys, Chaowan is one of the top Chinese toy brands that cater to various age groups with engaging products.
- High-tech: Focusing on R&D, High-tech has emerged as a prominent player producing advanced toys with cutting-edge technology while owning proprietary intellectual property rights (IPR) and brand names.
- Dolls & Stuffed Toys: In 2019, this category showed substantial growth in value terms within China’s toy market, likely due to its increased popularity among children.
- Lego: This global toy giant has found success in the Chinese market by tailoring its offerings to local preferences and partnering with domestic e-commerce platforms for wider reach.
- Mattel: The American company behind popular brands like Barbie, Fisher-Price, and Hot Wheels has established a strong presence in China through strategic partnerships and marketing efforts catering to Chinese consumers.
- Hasbro: Another international heavyweight, Hasbro has made inroads into China’s toy industry by embracing cultural nuances and leveraging popular franchises like Transformers and My Little Pony.
Consumer Behavior In China’s Toy Market
Chinese consumers in the toy market are increasingly driven by online shopping, with mobile commerce accounting for a significant portion of their purchasing habits, and there is also high demand for educational toys that can help children learn while they play.
Consumer Buying Habits And Trends
Product safety regulations have become increasingly important due to past incidents involving dangerous or defective toys.
Pricing strategies are also crucial, with many consumers preferring affordable options without compromising quality.
However, premium prices can be justified if there are unique features such as educational value or eco-friendliness.
Moreover, with increasing access to smartphones and high-speed internet connections across China’s urban areas, e-commerce platforms have become an essential distribution channel for many brands targeting the country’s growing middle class.
Importance Of E-commerce And Mobile Commerce In China’s Toy Market
E-commerce and mobile commerce are crucial in China’s toy market, with online platforms like T-Mall and Taobao being major sales channels. Online shopping accounts for about one-third of all toy sales, making China the largest and most profitable online marketplace for toys in the world.
Mobile commerce is also significant, with Chinese consumers using mobile devices to purchase toys and other products.
Influence Of Chinese Culture On Toy Preferences
It’s important to understand the influence of Chinese culture on toy preferences in China. Younger Chinese consumers are driving a boom in popularity and prices for collectible toys, reflecting their strong attachment to traditional cultural values that prioritize social connections and respect for elders.
Understanding this cultural context is crucial when developing marketing strategies targeting Chinese consumers.
For example, leveraging popular TV shows or movie franchises can be successful, but it’s also necessary to consider how they align with local tastes and customs. With over half of global toy exports originating from China, there is no denying the powerful impact of Chinese culture in shaping toy preferences across the world market.
Factors Driving Growth In China’s Toy Market
Rising disposable income, the emerging middle class, and favorable government policies like the two-child policy are some of the key factors driving growth in China’s toy market.
Emerging Middle Class
As China’s economy grows, its middle class is emerging as a key factor in the growth of the toy market. With rising disposable incomes and changing consumption patterns among this demographic, there is an increasing demand for high-quality toys that provide educational and entertainment value.
In addition to traditional toys such as plush animals and puzzles, electronic toys like esports games are gaining popularity among Chinese consumers.
Two-child Policy And Its Impact
The two-child policy in China has led to an increase in the number of newborns added each year, resulting in a demographic shift and an increase in demand for products catering to children, including toys.
The toy industry is expected to benefit from this trend with sales projected to grow as more families welcome new additions, presenting a unique opportunity for businesses looking to enter or expand their presence in China’s toy market.
Strategies For Entry Into China’s Toy Market
To successfully enter China’s toy market, businesses must conduct research on the Chinese consumer and cultural nuances, carefully choose distribution channels such as e-commerce platforms or retail stores and consider collaborations or partnerships with local companies.
Understand The Chinese Consumer And Cultural Nuances
To succeed in China’s toy market, it is crucial to understand the customs and cultural nuances of Chinese consumers. Unlike Western markets, China has unique cultural values and social customs that greatly influence consumer behavior.
For example, family plays a prominent role in Chinese society, which means products that promote family bonding or collectivism are more likely to resonate with Chinese consumers.
Another key factor to consider when targeting Chinese consumers is their preference for local brands over foreign ones. Brands that cater to local tastes by using traditionally-inspired designs or collaborating with popular local celebrities tend to perform better than those that do not acknowledge these nuances.
Choosing The Right Distribution Channels (E-commerce Platforms, Retail Stores, Etc.)
When entering China’s toy market, selecting the appropriate distribution channels is essential. Here are some key considerations:
- E-commerce platforms: Online sales are essential for success in China’s toy market, as e-commerce is the largest and most profitable market in the country. Consider partnering with popular platforms such as Alibaba’s Tmall or JD.com to reach a wider audience.
- Retail stores: While online sales dominate, retail stores still play a significant role in China’s toy market. Partnering with established retailers like Walmart or Toy’R’Us can help to attract new customers.
- Other online platforms: Beyond traditional e-commerce sites, consider other online platforms such as social commerce apps like WeChat or Douyin (the Chinese version of TikTok) to promote products and engage with potential customers.
Ultimately, choosing the right distribution channels requires careful consideration of target audience, budget, and long-term goals for growth and expansion in China’s toy market.
Increase your Toys’ Brand Awareness with Chinese Social media
The Chinese social media market is a behemoth. More than 90% of the population there has an account on one or more networks, and having a strong presence will increase your chances of becoming viral through those channels. For this to happen, you can share content across both WeChat and Weibo’s large platforms in China.
Digital marketing in China has its pros and cons. Different social media are used for different purposes, but most importantly an official account on these platforms is necessary to appear more legitimate than those who do not have one. These channels allow companies to share stories with their audience as well as advertise themselves through paid content if they choose- the sky’s the limit!
Collaborations And Partnerships
One potential strategy for businesses considering entering China’s toy market is to pursue collaborations and partnerships with existing players in the industry.
This approach not only helps companies gain access to established distribution channels and networks, but also provides opportunities to tap into local expertise and cultural insights.
For example, foreign brands like Lego have successfully entered the Chinese toy market by partnering with e-commerce giant Alibaba Group’s Tmall platform and creating exclusive product offerings tailored for Chinese consumers.
Additionally, there are various opportunities for collaboration within emerging trends in the Chinese toy market such as designer toys. According to a recent report by Euromonitor International, this subcategory of collectible toys has gained popularity among young adults in China seeking unique products that reflect their personalities and interests.
Foreign firms can leverage partnerships with local designers or manufacturers specializing in designer toys to introduce new products that resonate with this consumer segment.
Localization: the Lego Case Study
Lego has been in China for a really long time (1993) and has encountered many challenges, the main one being to compete against counterfeit selling at a much cheaper price. Not only does Lego work on its reputation in the country: safety first but also focused on offering China a fully localized experience and product line.
In terms of localization, it’s important to mention Lego’s Chinese name. Lego’s Chinese name, “Legao,” is the result of playing with words in both English and Mandarin. The two characters used to form Lego are 乐高 which when translated from Mandarin means happiness or cheerfulness. This adds a sense of joy that translates well into our home-building toys! (We can help you come up with a great Chinese name for your brand as well!)
The iconic Danish toy company Lego invested a lot of time and effort to broaden its product range in China. In 2000, they began producing watches, umbrellas, and posters as well as featuring adverts for the toys in the Chinese children’s magazine “Milaoshu”.
Lego’s designers in China have a new idea to attract more attention – what if people could play with the Lego products before they buy them? The 1st store was opened in Beijing with 2/3 of its space dedicated to playing with all sorts of cool toys followed by another one in Shanghai. These initiatives seem successful because their sales increased by about 50% between 2010 and 2012!
In 2018, Lego went from 10 stores to 60. The brand has ambitious plans to release new Chinese culture-inspired sets and is working on having 300 Lego stores in mainland China by the end of 2021.
It is not the first time Lego China releases China Edition sets. One example is sets of blocks that portray scenes such as the Dragon Dance and a traditional New Year celebration. The company also added constructions like China’s Great Wall or Shanghai.
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In summary, the toys market in China offers a lucrative opportunity for businesses looking to enter this industry. The market has immense growth potential, thanks to the country’s large population, burgeoning middle class, increasing disposable income, and supportive government policies.
However, it is crucial to understand consumer behavior and cultural nuances and adopt effective marketing strategies.
GMA, a digital marketing agency located in Shanghai specializes in the development and elaboration of the marketing and digital strategies of companies to help the latter to develop and promote their activities in China. Our international team of 40 experts makes us an ideal agency to develop your interests in China.
Great article, congrats. 80% of toy are made in China in Europe for sure.
And now, it is time for Chinese people to play with the toy .
Toy business is really great , according to experts that come to my club.