June 1st this year sees the implementation of toy 3C (China Compulsory Certification). Within the passing month, its influence on the whole industry has gradually emerged; some are external and visual, but some are deep and unknown. Circulation is the most active and significant sector in the whole industry, which is greatly affected by 3C. TOY INDSUTRY, along with some people in the trade, makes a study into various possibilities.

Function of wholesales market weaken to some extent

With strong production capacity, China sees over 100 billion RMB yuan for annual productive value, around 15 percent of which is sold in domestic market. Presently, wholesales market is one of the main circulation channels. Places like Yide Road in Guangzhou, Guangdong, Yiwu International Trade City in Zhejiang, Tianyi Small Commodities Wholesales Market and Hongqiao Tianle Toy Market in Beijing, Baigou Small Merchandise Town in Hebei and Chengdu Hehuachi Wholesales Market in Sichuan, all are influential distribution centers that spread their business to the surroundings. They have always been thought a lot of by toy makers.

Wholesales market features large quantity in flow of goods, most of which is mid- or low-end products. Lots of products are distributed to second or third-grade cities and towns. Since it is somewhat difficult for supervision, these areas had been burrow for inferior products made by non-certificated makers.

Wang Renbing, marketing manager of Chenghai-based Songyang Toys. To know more about the market, he recently visits nearly 10 cities. He believes that, any industries are developing from being disordered to order. When distribution scale of an industry exceeds 10 billion RMB yuan, the nation is sure to gear up for the administrative legislation. Toy 3C materializes China’s determination of rectifying the industry and promoting healthy and order growth of it. As a key source of market circulation, wholesales market would not be neglected. In fact, various regions have seen greater strength on supervision, urging some wholesalers to adjust product mix in large scale and seek for new suppliers. On the other hand, inconsistent yardstick in executing practice becomes a sensitive topic for wholesalers.

Some people involved in the trade analyse that, since toy 3C requires products to bear label with name and address of factories, it results in some department stores and supermarkets’ directly getting supply from makers, which weakens wholesalers’ function as intermediate merchants. In the future, wholesalers may possibly focus on export or supplying to small stores or stall-keepers in towns.

Big department stores cerement brand identification

When consumers are buying foods now, subconsciously they will see whether there is QS mark on package. It is one the obvious changes during the 6 years when China implement entry system for foods. Those with no such a mark have nearly no surviving room. After the travail at the very beginning, the system benefits the foods industry a lot.

As the implementation of toy 3C, some indicate that, consumers will have more recognition on brands when making purchasing decision. Big sellers, who keep on the course of high end and high quality, will be the best platform for demonstration of toy brands.

Known from many sides, I find that, in the passing sales peak in Children’s Day, department stores in cites like Beijing, Guangzhou, Shanghai, Shenyang, Jinan and Guilin have all gained good achievement, while big brands have markedly boosted sales.

Li Wei, working with kid department of Guilin-based Weixiaotang Shopping Store tells TOY INDUSTRY their sales this year records a year-on-year growth of 20 percent. Strong media support has been carried out before head, as a result, on the Children’s Day, lots of consumers only choose products with 3C mark. The store has taken precautions for it, making adjustment to products on shelves.

Along with improving of people’s living standard and strengthening of consciousness on toy safety, Li Wei holds, people would pay more recognition to brand toys when making purchasing decision, putting back price factor. It is well seen especially during holidays. His store is willing to sell brand toys, in view of warranted quality and high profit.

After the toy 3C is brought into effect, I think that, as key for supervision of industry and commerce departments, department stores will be careful in making decision on product mix, and will try to protect their status and image as main channel for distribution of high-end products. Besides improving service and shopping environment, exalting repute and fostering stores’ brands, department stores would also release some special terms to assure exclusive rights for some toys.

Supermarkets maintain status of big channel for termination

During these years, supermarkets have made leap and bound progress, surpassing traditional department stores to be the largest channel for terminal toy sales. Supermarkets pursue high quality, reasonable price and high popularity when arranging product mix, and “miscellaneous brands”, or, “second- and third-tier brands”, hold a great part. Toy 3C has washed out many small brands in supermarket. Then what can fill up the blank? And whether the function of supermarket as big channel for terminal sales would be weakened?

Some senior experts in the circle hold that, marketing mode of supermarket and hyper mart has gone deep into people’ mind. Their advantage of great consumer flow volume and large supply can still be seen. When it comes to toy 3C, supermarkets should adjust product mix and seek new suppliers as soon as possible. Toy’s distribution in supermarket will continue to see an uptrend. However, affected by changing in relationship between supply and demand, comparatively harsh cooperative term of supermarket may possibly sees some changes.

Li Qi with merchandising department of Trust-Mart in South China, tells TOY INDUSTRY that, toy sales in his store during the Children’s Day rises by 5 percent against the same period of last year. In order to answer for toy 3C, a bulk of low-end products have retired, substituted by categories with higher her quality and price. At the same time, dealers also actively assist in various campaign. Though sales volume drops for a little, sales value has rise instead.

Some big brands that previously were not interested in selling in supermarket, now contact with Li on their own initiative, concerning the affair of supplying. In fact, makers with no 3C certification yet feel anxious now, and are getting into the swing of certification. Every time when they receive a certificate, they immediately send to the store for related procedure.

Regional agent become major supplying pattern

When visiting Chenghai, the famous toy production base in Guangdong this June, Zheng Hui, who is in charge for merchandising with Guangzhou-based Junneng Development Company found it surprising to see energetic toy makers who are applying for 3C certificates, especially those with good popularity and market shares. Some makers note that, business will see great difference between makers with 3C certificate and those without. After a long period for observation, they could no more restrain taking action.

It is known that, every item costs over 30,000 RMB yuan for 3C certificate. But most of makers choose to digest the expense themselves, instead of calculating it in product cost. Price for products has not been raised. However, it has been a common sense that, makers are more prudential in choosing distributors and developing national distribution network.

A senior expert believes that, regional agent would become a major supplying pattern for toy makers. It can be considered a collective revival to brand.