Toy Industry in Hong Kong

Toy Industry in Hong Kong

Hong Kong produces a wide range of toys with particular strength in plastic toys, including dolls, doll houses and other accessories, action figures, construction sets, toy guns, make-believe toys and gimmicks such as beauty kits and doctor's kits. Other major categories are electronic toys and games, radio/remote controlled toys, battery-operated toys and metal toys. Taken together with re-exports, Hong Kong was the world’s second largest toy exporter in 2018.

Hong Kong exporters are known for producing high-quality toys, with a large share of industry revenues generated from contract manufacturing with overseas manufacturers and license holders. To reduce operation costs and stay competitive, the majority of Hong Kong toy makers have set up production facilities offshore, mainly in mainland China. The role of their Hong Kong office has shifted towards quality control, management, marketing, product design and production planning.

Amid growing concern over product safety and environmental protection in overseas market, toy safety standards and regulations have become increasingly stringent. Hong Kong toy exporters are advised to keep themselves informed of the regulatory changes in different markets and comply with the new requirements.

Industry Features

Hong Kong toy makers produce a wide range of items, including dolls, doll houses and other accessories, action figures, construction sets, toy guns, makebelieve toys (toy versions of adult "objects", e.g., kitchen implements, vacuum cleaners, etc.) and gimmicks such as beauty kits and doctor's kits. Other major categories are electronic toys and games, radio/remote controlled toys, batteryoperated toys and metal toys.

To reduce operation costs and stay competitive, most Hong Kong toy makers have set up production facilities offshore, mainly in mainland China. As such, many toy companies in Hong Kong have been reclassified as importexport establishments, contributing to the apparent decline in the number of toy makers locating in Hong Kong.

Meanwhile, the role of their offices in Hong Kong shifts towards quality control, management, marketing, finance and accounts, product design, and production management. This skew towards higher valueadded activities is sharpening the competitive edge of Hong Kong toy makers, while expanding production capacity through relocation.

Production on the mainland has been facilitated by an efficient network of supporting industries and services. This has greatly enhanced the competitiveness of Hong Kong toys in terms of its productivity, quality, reliability and delivery. Building on the base of plastic molded toys, Hong Kong toy manufacturers have added production skills from the clothing industry, the electronics industry and the metal goods industry.

The toy industry employs a wide range of manufacturing technologies. Computer aided design and manufacturing systems (CAD/CAM) are most commonly used. Many manufacturers have earned the International Organisation for Standardisation (ISO) 9000 certification and some have the CARE Seal of Compliance certificate.

Competition remains keen, especially from indigenous Chinese enterprises in open items. The rapid expansion of production capacity on the mainland set up by Hong Kong manufacturers also put much downward pressure on prices and profit margins. Orders received are smaller in lot size, and shorter delivery lead time is generally required.

Sales Channels

Hong Kong exporters are known for producing highquality toys. A large share of industry revenues are generated from contract manufacturing with overseas industry giants, brand owners and licence holders, such as
Disney, Hasbro, Mattel
and
Warner Bros. in the US,
Zapf
in Germany, as well as
Bandai
and
Takara Tomy
in Japan. Production specifications and product designs are usually provided by these overseas buyers. This type of arrangement, in effect, minimises local manufacturers' risks relating to product designs, inventory taking and marketing. However, Hong Kong manufacturers have increasingly offered expertise in design, engineering, modeling, tooling, quality control and other technical knowhow to its customers, and developed their own brands. Some wellknown brands of Hong Kong companies include
Hero Cross, Playmates
and
Vtech. On the other hand, some manufacturers also export generic products as open items. Trading companies source a wide range of open items from different small manufacturers.

In order to expand business networks, explore market opportunities, and promote product image as well as brandnames abroad, Hong Kong toy makers participate in wellorganised and influential international trade fairs. Below is a list of some major trade fairs:

Sets out provisions for supervision and management of the recall of defective import and export toys that may cause injuries to children. Since May 2019, the
General Administration of Customs (GAC)
has been designated as the governing body for the inspection and supervision of imported and exported toys. For the import of all toys listed in the
Catalogue of Products Subject to Compulsory Product Certification (the “Catalogue”), original
CCC
certificates are now required by the
GAC. Otherwise, they will remain subject to spotchecks in accordance with the prevailing
GAC
regulations.