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Push For Hi-Tech Toys(HKTDC Toys & Games , Vol 02,2000)

Vol 2 2000


27th Hong Kong Toys & Games Fair

Riding On Euphoria

An Event Not To Be Missed

Step Inside The Toy Zone

Push For Hi-Tech Toys

Making A Play For Business

Why The World Sources From Hong Kong


Push For Hi-Tech Toys

MANUFACTURERS are linking toys with the cyber world, amid the increased use of the Internet in all functions of life. Says Grand Smart Industries Ltd director Benjamin Choi: "One of the new trends is Internet-related toys, because the Internet is now widely used and a lot of communication is made via the Internet.

"We encourage the use of the Internet in interesting ways," adds Choi, whose company has developed Web-linked teddy bears, which are expected to be the manufacturer's hottest-selling items this year.

"The bear has software for downloading information from the Internet. Through the toy, the user can access the content provided by a US Web development company," he explains.

The teddy bear can tell stories and play music. "Its owner can also send a message to another owner of such a teddy," Choi says.

The Internet-linked teddies, targeted at children and teenagers, are among the latest lines from Grand Smart, whose products include plush toys, stuffed toys and educational games.

Choi says Hong Kong's toy manufacturers can cater to the Internet passion with the support of the region's advanced technology, which also draws buyers' attention to Hong Kong products.

Silverlit Toys Mfy Ltd also spots the Web trend. "More toys will tend to have Internet functions in the future," says Patrick Fong, marketing director at Silverlit, which makes electronic toys with IC chips.

The cyber-toy development is part of the general trend towards interactive toys, which answer the needs of children who get easily bored. Distinct from conventional toys, interactive toys respond to signals from their owners.

Industry players expect interactive items will remain a mainstay, along with more application of new technology, including robotic technology. Some robotic playthings respond to the owner's voice with life-like actions, emotions and sounds.

"Interactive toys have started to become popular. Robots are among our top sellers, for example," Fong says. "People now accept computerised products. Interactive toys give response and they seem to have feelings. That appeals."

Benjamin Choi agrees, pointing out that some interactive toys are traditional items enhanced with new technology. "It's combining the old economy with the new economy."

Apart from hi-tech toys, playthings based on characters from movies, television series, children's books and famous brands are expected to remain popular. "There are more and more licensees of those products. Promotion is needed for newly created products, but licensed characters such as those in dramas and films are already well-known," Fong says.

Blockbuster movies, such as Titan A.E. and X-Men, are likely to boost the sales of action figures, according to industry players.

Exhibitors and buyers at the Hong Kong Toys and Games Fair 2000 cited Pocket Monsters as the top licensed toy characters in 2000, followed by Disney characters. Other popular characters are Hello Kitty, Winnie the Pooh and Snoopy.

Plush toys are another fast-growing area, and the infant and pre-school segment should continue to fare well.

There are also popular non-mainstream toys targeted at niche markets. May Cheong Toy Products Fty Ltd, for instance, makes collectible model cars of various sizes based on the latest Mercedes, Porsche and Ford models. More Hong Kong manufacturers are buying licences for the toys they produce, and are installing more advanced functions to tap the high-end market.

Making A Play For Business

EXHIBITORS at the biggest toy show in Asia are not just out to close deals, but are hoping to make useful business connections while showing their new collections.

"We have been an exhibitor in the fair for more than 20 years. We make use of this opportunity to get in touch with [existing] customers, and hopefully meet new customers," says Katherine Ngan, executive director of May Cheong Toy Products Fty Ltd, which makes collectible model cars with die-cast metal and plastic.

"We'll be able to see all our existing customers there. New customers will make inquiries and take our catalogues. They may not place orders right away, but may get back to us later," notes Ngan, who is also a member of the TDC Toys Advisory Committee.

Another long-time exhibitor is Silverlit Toys Mfy Ltd, which makes electronic toys with IC chips. "We've participated for many years," says marketing director Patrick Fong. "This is the biggest and most important toy fair in Asia. The fair is a very good channel for us to show our products because it draws buyers from all over the world."

The 2001 event is expected to attract 26,000 buyers from around the world. For Ngan, the attraction is that visitors come not just from major markets such as the US and Europe, but also from smaller, emerging markets which May Cheong Toy Products is developing. "In recent years, more buyers from South America and Southeast Asia have visited the toy fair. And those are the markets I want to develop."

Ngan is looking forward to gaining an insight into global product trends from the event. She also anticipates meeting a large number of potential customers within a short time.

She may join the China Toys Retail Market Study Tour, a day-trip to major toys and games retail and wholesale centres in Guangzhou, to learn about the promotional methods, product range and tastes of the Chinese mainland retail market.

The toys show is the ideal venue for launching new products, and Grand Smart Industries Ltd, whose products include plush toys, stuffed toys and educational games, is not missing this opportunity to reach a large number of buyers in one venue. "It is a chance to launch and promote our products -- including new and existing lines," says Grand Smart director Benjamin Choi. "It's also a window to the products of different manufacturers."

The company launched hi-tech plush toys with downloadable features during the Hong Kong Toys & Games Fair in January 2000.

Why The World Sources From Hong Kong

BUYERS have long known that Hong Kong is the ideal one-stop source for toys, dolls and games -- and not without good reason. "Hong Kong's toys industry has been developing in the past decades," says Katherine Ngan, executive director of May Cheong Toy Products Fty Ltd and a member of the TDC Toys Advisory Committee. "Hong Kong has an edge in Southeast Asia. Hong Kong manufacturers are quick in product development and production, and we have the support from the Chinese mainland."

Because many Hong Kong manufacturers have moved their production bases to the mainland to take advantage of the lower costs of land and labour, Hong Kong's toys and games businesses offer competitive prices.

The industry also benefits from Hong Kong's efficient infrastructure and well-developed support services such as banking, transportation and R&D. "Communication can be fast in Hong Kong," Ngan cites as an example.

"The production of toys involves electronics and plastics. Hong Kong has a big plastics industry, a good electronics industry, a good moulding industry and a good textile and clothing industry," says TDC assistant chief economist Daniel Poon. "Besides, Hong Kong has decades of experience in the toys industry and has established good contacts overseas."

In a TDC survey, 66.1% of 751 exhibitors interviewed at the Hong Kong Toys and Games Fair 2000 forecast an average increase of 17.6% in business in 2000. They based their projections on encouraging Christmas sales and a growing number of orders from major toy markets in 1999.

Hong Kong's total toy exports dropped 1% to HK$85.57bn [US$10.97bn] in 1999, partly due to the continued structural shift from re-exports to offshore trade and the downward pressure on export prices. But export figures for January to March 2000 totalled HK$14.9bn [US$1.91bn], a 13% increase from the same period in 1999.

Toy exports to the US -- Hong Kong's biggest market, accounting for about half of overseas sales -- edged down 3% in 1999. But exports to the EU -- Hong Kong's second-largest market -- increased 8%, with sales to the UK and Germany staging particularly strong growth.

Ngan expects Hong Kong's toys and games industry to post single-digit growth in 2000, and further growth in 2001 with expected recovery in the European market. "The US market is doing well, but Europe is slower mainly because of the weak euro, which makes Hong Kong products expensive there," she says.

The recovery of Asian markets is also contributing to the bullish sentiments among Hong Kong manufacturers. Says Benjamin Choi, director of Grand Smart Industries Ltd, which makes hi-tech plush toys: "The Asian economies have started to recover and the US economy is stable. I have good expectations of the industry, especially with the support of new technology."

Choi expects a 15% growth in Hong Kong's toy exports in 2000, and an even bigger increase in 2001.

However, the toys industry faces many challenges and must work harder to keep its top spot on the export rankings. "The greater concentration in the retail sector in overseas markets has resulted in a continued squeeze on prices, while the shorter life cycle of toys has increased the risk of product development," Poon says.

"The popularity of e-commerce is changing the modality of operation. It offers new channels for direct retailing as well as business-to-business communications. However, on-line retailing may imply even smaller orders and shorter delivery lead time."

Hong Kong toy companies are using technology to keep their competitive edge, as well as increasing ODM and licensing of well-known characters such as the Pocket Monsters and Disney characters.

Because the Chinese mainland's accession to the World Trade Organisation would create a level playing field for international companies in the mainland market, 72% of respondents in the TDC survey ranked the mainland as the biggest retail market for toys in the future, after the US and EU.


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