5 Jan 2007
Playful & Profitable(HKTDC Toys & Games , Vol 01,2007)
Kwong Fei Expectation Mfg Ltd
|Kwong Fei Expectation Mfg Ltd makes a range of educational and plush toys that mimic real-world products|
Wilson Hsu, managing director of Kwong Fei Expectation Mfg Ltd, has come a long way since he first started assembling LCD watches some 20 years ago shortly after arriving in Hong Kong. Today, he runs one of the biggest toy factories in Fujian Province on the Chinese mainland.
Back in 1985, when Hsu started his business, he was mostly trading, buying and selling watch parts. He started his own simple assembly operation at home, and by 1989 had a small factory operating on the mainland.
Unsurprisingly, early products were digital watches and sports timers. "However, I could not compete as watches were too easy to assemble and there were too many people in the same business," he recalls. "That's when I decided to try electronic toys, and my first product was a cell phone in 1990."
In order to succeed, Hsu says he took a calculated risk to price his toy phones below cost because he anticipated a drop in costs the following year. "I was losing about HK$1m at one time," he says. "But, far from being a disaster, so many people wanted to buy this toy cell phone that we sold so many we eventually made a profit."
He says his model became a prototype for other manufacturers to copy. "The problem for them was that buyers also wanted the same number that appeared on the screen - 28890929 - but that was my company's telephone number," he laughs.
Hsu followed up with CD player and Walkman look-alikes, with innovative extras. "While the user might have thought the music was coming from the spinning disc, in reality the tunes came from an IC chip," he reveals. "Many others also copied this item, but again we sold a great many, and included the concept in a range of musical boxes."
Today, Kwong Fei makes a range of electronic and plush toys incorporating electronic devices and controls. "Educational toys that mimic what is going on in the real world are also in demand," he adds. "Toy notebook computers and coin sorters, for example, are highly popular. We tend to offer items with lots of movement, with motors and mechanical functions and so on."
Typical of this approach is the firm's robot. "We spent almost a year developing this item," says Hsu. "It is mechanically advanced because apart from moving it really does walk, which is not easy to achieve, and it took us a year to overcome all the problems."
With a production area of 430,000 square metres, Kwong Fei ranks among the largest toys factories in Fujian, and employs 1,200-2,000 people according to the season.
Almost the entire administrative operation, including a strong R&D department, was moved to Shenzhen four years ago, leaving a small staff of five in Hong Kong. "This was done to minimise operational costs," says Hsu. "We now have some 50 people in R&D and another 60 or so in marketing, sales and administration at our Shenzhen office."
Kwong Fei faces similar problems as many other manufacturers on the Chinese mainland: rising costs of raw materials, a labour shortage and rising wages, and the increasing value of the yuan.
"There are many headaches because we can't raise prices once set," Hsu points out. "For regular customers with existing or ongoing orders we try and maintain the price, but new clients get up-to-date quotations."
He says he is also looking to strengthen the R&D department. "We used to develop 20 items a year, but with only 2-3 of them actually proving to be successful money-spinners. Now we have to be more careful and make sure a project has a promising future. We must also be acutely aware of people's tastes and market demands."
He says it is important to always stay ahead of the competition. "To do that, we need to be fast off the mark and not wait," he declares. "We must also make sure a product is fully developed before presenting it to the market, and that no information is released until the R&D is at a mature stage."
Hsu also wants designs that are more interactive and practical. "We are finding that the toy market is decreasing in terms of sales and that something more is needed," he observes. "There must be added value, and that means interactivity and educational features. Young people are telling us something and we need to listen."
With such dedication, Kwong Fei should be able to cope with demands for many years to come.
WRITTEN BY TONY HENDERSON
Kwong Fei Expectation Mfg Ltd