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Early Goals(HKTDC Toys & Games , Vol 01,2006)

Lung Cheong Int'l Holdings Ltd

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Lung Cheong Int'l Holdings Ltd has been a long-time player in the toys industry and was listed on the Hong Kong stock exchange in 1997
When Lung Cheong Int'l Holdings Ltd began negotiations in 2005 for the European and Asia-Pacific franchises to make flexible football player figurines for the 2006 FIFA World Cup in Germany, it was "playing the game" far in advance of its competitors, according to executive director Andy Wong.

"We already hold the franchises for figurines for the four biggest spectator sports in the US - major league baseball, the National Basketball Association, the National Ice Hockey League and major league soccer," Wong adds.

"In addition, we have more than 40 years' experience in toy-making. We previously bought-out and now operate Kid Galaxy - a US company in the specialty toy field - selling to many thousands of outlets across North America, and across Europe, Asia, especially Japan, and Australasia. We strive to be the most innovative toys maker."

The company's franchise for the footballer figurines excludes Japan, which has a separate agreement with FIFA. Lung Cheong expects to produce at least one million figurines for the football festival that sees 32 national teams vying for sporting glory.

Wong believes the Chinese mainland will form one of its biggest markets for these figures - which, besides being icons for football-mad fans, also double as penholders, business cardholders or a holder for a photograph "and anything else adults or kids may think of".

Football aside, the company's toys cover seemingly every possible activity children are likely to be interested in. "The range includes items for swimming, tennis, gymnastics, skiing and skating," says Wong.

"We also offer everything imaginable on wheels such as cars, scooters, motorcycles, trucks - and traffic cops to chase them - radio-controlled (RC) road racers; single- and double-engine RC planes with bendable and virtually unbreakable wings; the sorts of animals you'd find on safari or at a farm - plus most of the better-known dinosaurs, sea creatures and lots of novelty items; fun figurine collectibles and so forth," he adds.

In addition, in 2005 Lung Cheong branched out into non-toy products such as educational and professional wireless robotics and Bluetooth earphones - with an "overwhelming response" from overseas customers.

The firm has 7,000 full-time workers at two factories in Dongguan on the mainland and a smaller factory near Jakarta, Indonesia that serves lower-cost toy market needs.

"We are also now completing a large new factory building at Changping, about 25km east of Dongguan, where most of the design, engineering and manufacturing processes will be grouped under one roof, bringing greater efficiency," Wong reveals. "We will also require 1,000 more staff, which usually means nimble-fingered girls."

Lung Cheong also draws heavily on 200 R&D staff, mainly designers, engineers and technicians and imaginative people with bright ideas.

"The ideas may appear to be the easy part, but are essential to growth," says Wong. "Thereafter, it's important to refine the concept so the item can be mass-produced."

He says that while Lung Cheong has been a long-time player in OEM business, it now leans more toward ODM and OBM lines. The company was listed on the Hong Kong stock exchange in 1997.

Although the group had a record turnover of almost US$100m for the fiscal year ending March 31, 2005, the firm's chairman, Leung Lun, realistically points to several issues regarding the business:

  • Extreme swings in the cost of plastic resin, the firm's main product base, because of soaring oil prices. He also notes that prices have also risen for metal parts and other components
  • The 2% appreciation in the value of the Chinese RMB, which is already affecting the company's cost of goods and production
  • The need for the group to offer better rates of pay and working conditions to counter fewer unskilled labourers arriving from the provinces

However, the chairman also has good news, noting that the prudent installation of generators has allowed the firm to mostly overcome the power shortages that curtailed production across the Pearl River Delta factory belt.

WRITTEN BY GEOFFREY SOMERS

Lung Cheong Int'l Holdings Ltd

Lung Cheong Bldg,
1 Lok Yip Rd, Fan Ling,
New Territories, Hong Kong
Tel: 852-2677-6699
Fax: 852-2676-7964
Email:
fionan@kidgalaxy.com
Web: www.e-lci.com