HONG KONG, Jan 8, 2020 – (ACN Newswire) – E-commerce is driving transformation in the toys industry but bricks-and-mortar stores still have a unique role to play, delegates at the Hong Kong Toys Industry Conference 2020 heard. The conference covered a plethora of the industry’s pressing issues, trends and aspirations – from the persistence of global trade tensions to the pros and cons of relocating production out of Mainland China, and from STEM to CE marking – under the theme “Get Powered Up – Opportunities in the Toys Industry”.
The conference yesterday (7 January) was co-organised by the Hong Kong Trade Development Council (HKTDC), the Federation of Hong Kong Industries, the Hong Kong Toys Council and the Toy Manufacturers’ Association of Hong Kong Limited, running concurrently with the HKTDC Hong Kong Toys & Games Fair, the HKTDC Hong Kong Baby Products Fair and the Hong Kong International Stationery Fair.
Who’s not afraid of online toy stores?
The closure of some leading toy store chains has compelled the industry to face an existential question: in the internet age, has traditional toy retailing been turned on its head? Manu Sharma, who directs the global product strategy of the 260-year-old United Kingdom-based toy store Hamleys, said the answer is no – if you make the most of the irreplaceable benefits a physical store offers.
“We bring very strong experience in the stores, which is not provided anywhere else,” Mr Sharma, who is also Group Vice President, Business, Reliance Brands, told the conference. On the back of good pricing and a mix of e-commerce and bricks-and-mortar strategies, the face-to-face experiences such as character meet and greets, demonstrations, installations and parades are magnets for families. “As long as your doors are open for the kids to come and play, the customers will come back.”
The lessons from the world’s oldest toy shop-turned global franchise were echoed by HKTDC Economist Poon Cheuk-hong, who said a survey by HKTDC Research showed that online and offline channels are equally important when families in Mainland China choose and buy their toys. E-commerce has become an integral part of mainlanders’ lives but the late-2018 survey revealed that 72% of mainland parents bought toys on shopping websites, whereas as many as 71% did so in toy stores, followed by supermarkets and department stores. “Toy shops allow children to feel the toy and parents to test their quality,” Mr Poon said.
In e-commerce, do it the Chinese way
More and more retail brands realise the importance of an omni-channel strategy in the mainland but many do not know how to handle the online part, according to Josh Gardner, CEO of e-commerce consultant Kung Fu Data. He pointed out that the search-and-buy model, still a norm for e-commerce in the west, had fallen out of fashion in the mainland as platforms such as Tmall and JD have become embedded in the social media ecosystem. Foreign brands wanting to succeed in the mainland must build “a strong brand equity” by leveraging such integration tactics as co-branding, cross-platform selling and influencer marketing.
STEM shows promise
As mainland consumers become more willing to spend money on toys, Mr Poon stressed that the industry cannot afford to miss out on toys with STEM (science, technology, engineering and mathematics) concepts. An overwhelming 98% of mainland parents have bought or were interested in buying STEM toys for their children, he said, citing the survey, while the average price they are willing to pay for STEM toys was Rmb414 (US$60), well above the Rmb199 for general toys and presenting fatter profit margins for manufacturers. “It shows that Mainland Chinese parents are very concerned about their children’s education. If the toys can help with science grades, they are willing to pay more,” he said.
James Wang, President of Dream International USA, said rising labour costs in the mainland had left toy manufacturers wondering whether they should move their production out of the country. Dream International, which has for long diversified into Vietnam for production, said it does have a labour-cost advantage over the mainland but it is not without problems. Challenges include lower-skilled workers, which dampens productivity, along with tighter labour supply and rising costs as Vietnam continues to develop. The company is exploring the possibility of building plants in other Asian countries such as Cambodia, Myanmar and India.
Toy enterprises seeking business in Europe need to be aware of changes coming in the year ahead. Christian Wetterberg, Senior Director and Global Head, Product Safety & Compliance, at Toy Industries in Europe, noted that “tackling climate change has become a priority” after the European Parliament elections last year. Concerns are also growing over privacy issues amid the increasing popularity of toys with internet connections. He sees a potential review of the European Union’s Toy Safety Directive and other laws that may lead to bans on the use of non-sustainable materials in toys.
Brexit is becoming a reality but details of the UK-EU economic relationship remain uncertain, Mr Wetterberg said, and the market will be braced for related risks this year. Many in the industry were sceptical as to whether a trade deal can be successfully negotiated within 11 months after the UK formally withdraws from the bloc, he said. For the regulation of toy industries, he said post-Brexit Britain may replace the CE safety mark with a UKCA mark, but specific safety rules may undergo more amendments in the long run.
The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong’s trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via trade publications, research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus. Follow us on Twitter @hktdc and LinkedIn.
Sunny Ng, Tel: +852 2584 4357, Email: [email protected] Janet Chan, Tel: +852 2584 4369, Email: [email protected]
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