China’s toy towns are in the doldrums. With Christmas approaching, the slumping world economy means falling orders.
The Chinese state news agency says more than half of the country’s 3,600 toymakers went bankrupt in the first seven months of this year.
Analysts see more factory closures over the next two to three years. Companies are just trying to survive.
Jacky Qian, Assistant Manager at the Shanghai Xujing Red Triangle Plush Toy Factory said: “Ten years ago in the toy industry, it was relatively easy to generate 10 percent profit margins. But now, for toy factories like us, we’re happy if we don’t make a loss. We can still make two to five percent profit on some products, but with others, we’re just covering our production costs.”
The industry was already under pressure as the Beijing government tightened up on loans and responded to tough new product safety regulations introduced in Europe and the US.
Labour and raw materials costs have also risen and China’s currency has strengthened, making the country’s products more expensive for foreign buyers.