With supply problems, toy sellers consider their dependence on China

With supply problems, toy sellers consider their dependence on China


The colorful piñata, which usually hangs on the ceiling of Jennie Hogg’s Cachao Toys store in Moosewell Hill, London, is impossible to find this Christmas.

“My supplier said it was too expensive for them to come over,” Hogg said. Although supply chain disruptions and higher transportation costs make piñatas out of reach, “customers will still get what they need, they just need to keep an open mind,” she added.

The tightening of global supply chains has caused retailers from grocery stores to toy stores to warn of product shortages and price increases. China’s recent manufacturing delays have increased the pressure, causing some in the US$95 billion global toy market to reconsider their dependence on China.

Lego, the world’s largest toy manufacturer, said that the geographic distribution of its manufacturing has helped it to get rid of interruptions and hit a record high. First half profit This year. Thanks to its manufacturing facilities in Europe and Mexico, the company has responded to high demand from lockdowns and pandemic supply pressures.This week, the Danish group announced a $1 billion investmentt Provides local production in Vietnam for neighboring Asian markets.

China accounts for about 80% of global toy exports, but Alain Joly, founder of Doudou et Compagnie, a major French teddy bear seller, said the problems caused by the pandemic provide an “economic justification” for increasing local production.


The proportion of global toy exports from China

Most of Doudou et Compagnie’s products are produced in factories in China. But in 2019, the company acquired Maïlou Tradition, which produces high-quality plush toys in Brittany.

“We plan to produce 10% of our products in France. Now, our goal is 20% to 25%,” Jolly said. It hopes to achieve this goal in the middle of 2023.

The price of Doudou et Compagnie’s French-made products is no more than 40% more expensive than high-quality toys from China. Jolly believes that the demand for homemade teddy bears will be high.

Alain Inberg, head of the French Toy Creators and Manufacturers Association, said that the “Made in France” toy movement is growing, from 8% of the French market in 2014 to 15% today. “I’m not saying everything will come back, but we will reach 20% [in five years],” He said.

Frédérique Tutt, a global toy industry analyst at the market research firm NPD Group, said that due to the shipping crisis, “the story of localization and the willingness to reindustrialize the industry” are taking root elsewhere.

Shipping costs have soared. According to data from data provider Xeneta, the cost of a 40-foot container shipped from China to the UK peaked at over US$15,000 in October, almost seven times what it was a year ago.

Jennie Hogg (Jennie Hogg) in her shop in London. She said customers “need to keep an open mind” when buying gifts this Christmas. ©Ian Johnston/FT

Xeneta chief analyst Peter Sand said that costs have fallen slightly, but port congestion, ship delays and container shortages still exist. “For container transportation, the arrival of Omicron is another obstacle,” he said.

Character Options’ brands include Peppa Pig and Fireman Sam, and its toys are produced in subcontract factories in China. Group marketing director Jerry Healy said the company “cannot wait” and ordered 95% of its total inventory requirements by the end of March, two to three months earlier than usual.

But the long delivery time means that it cannot replace unexpectedly strong performances, such as Moon Shoes-strap-on elastic shoes known as “two-foot trampolines.”

“This happened to five or six lines of toys, and our product line was clearly in short supply,” Healy said. “We predicted a number that is not big enough.”

Bar chart of 40-foot container (USD) shipped from China to the UK shows short-term freight rates soaring

He added that those missed opportunities are equivalent to “several millions” of pounds in lost revenue. “We have the potential to have a good year, and we had a pretty good year. It could have been much better.”

According to logistics group Kuehne+Nagel, after about 40% of China’s imports into the United States arrive at the Port of Los Angeles, about 75 container ships are waiting to dock, some of which have been stuck for several weeks.

Ynon Kreiz, chief executive of Barbie doll maker Mattel, was one of the business leaders who attended the White House last month to discuss the issue. In recent years, Mattel has closed factories in Asia, Canada, and Mexico, but it still has some of its own factories in China, whose scale helps meet supply challenges.

Smaller competitors, such as model train manufacturer Hornby, which outsourced production to China in 1995, do not have this control. After supply problems affected profits, the company has diversified its business to a number of Chinese suppliers in recent years. However, compared to last year, the demand for its Scalextric kits has increased by 35%, and they are in short supply in some British toy stores.

However, CEO Lyndon Davies said the company has no plans to repatriate production due to high labor costs and skills shortages.

Healy of Character Options said, “If the logistics challenge continues, more companies will pay attention to it,” but also admitted that “there is no quick solution”. He said that for low-margin toys with a retail price of less than £20, the increase in local manufacturing costs is offensive.

But China’s manufacturing industry is not as cheap as before. Rising shipping, energy and raw material costs mean that prices will rise further. Tutt predicts that next year’s growth rate will be as high as 12%, especially for larger toys, where fewer toys can be packed in containers.

“Retailers don’t have that much leeway,” she said. “They are likely to pass on some or all of it to consumers.”

Additional report by Harry Dempsey

Source link

More to explorer

Understanding Key Factors in Accidents

Pedestrian Safety Statistics Pedestrian safety is an urgent concern worldwide, with over 1.3 million people dying in traffic accidents annually. Pedestrians account