Ten years ago, Hong Kong ended its history of colonial domination, which had lasted for as long as 150 years. After it has returned to China, it not only maintains its position as the financial and shipping center in the world, but also becomes one of the most energetic regions in economy. Though it’s striking achievement, but it is no doubt a smooth way. So does the toy industry, one of the supporting industries for Hong Kong. What has the decade enlighten us?
Be steadfast in adversity
The year of 1999 when Hong Kong returning to China coincided the financial crisis in Asia. Toy industry of Hong Kong and Guangdong was severely affected, forcing output to decline. Toy export of Guangdong in the year was 3.8 billion USD (statistics in small scope for definition of toy, the same below), lower than not only than the figure of 1998, even than that of 1997. This had not been experienced during the 20 years after the reform and opening-up policy.
However, toy circle in the two sides was convinced that, it would be a temporary hardness. Instead of withdrawing factories, some companies increased their investment to production, slowing down the downtrend. In 2000, toy export of Guangdong rose again, gaining a growth of 7.3 percent.
In the harsh days of SARS, rumor from some media spread, claiming that “100% toys are contaminated by germ”, which would be pestiferous. They advocated “germproof toy revolution” and “use germproof and germfree materials to produce toys”. Contradicting the fallacy, toy circle raised anti-SARS battle as a measure to propel environmental protection in factories and improve workers’ life, refreshing both their factories and production.
Create a small environment inside a big one
Asian financial crisis imposed great impact on the whole world. We believed that, a major market for Hong Kong and Guangdong’s toys was in European and US, which made up around 80 percent of total export, while South Asia market did not constitute great shares. When we do well in Europe and US market, it seemed that toy production in Hong Kong and Guangdong would not be affected too much. Cementing communication with clients in Europe and US and trying to receive more orders from the part, we made great effort to expand market in variation and promote out products in various pattern.
On one hand, we strengthened investigation on markets of Europe and US—only Guangdong Toy Association (GDTA) had organized four investigation groups. On the other hand, we provided strong support for toy companies to display themselves in overseas markets. Toy shows in Hong Kong, Nuremberg, New York and other regions were good platform for us. Guangzhou Int’l Toys & Gifts Fair, which is held by GDTA also enhanced its strength in inviting overseas buyers. Hong Kong’s advantage in receiving orders was brought into full play to welcome orders from Europe and US. To adapt to the target market, product design and quality were improved, and various certification and audit such as ISO9000 and ICTI CARE Process were promoted. Makers and distributors in Hong Kong and Guangdong joint hands in creating chance to expand orders.
Finally, domestic sales has been encouraged. Mainland China is a market less struck by financial crisis. At the same time, income standard here sees comparatively high progress. Increasingly growth of domestic sales compensates some companies for the short in export with domestic achievement.
Turn pressure into impetus
Rising oil price and salary and higher threshold of EU have increased cost for toy industry of Hong Kong and Guangdong, of which plastic toys are major products. Many makers felt can hardly bear the difficulty in raising price quotation. Along with toy companies, we have being tried to seek countermeasures, so as to change all pressure into impetus. Strengthen management, tapping potential and saving energy, toy industry tries to eliminate unhealthy factors. Higher-grade toys made by means of product innovation have gotten recognition of clients, who may be easily to accept higher price point.
In order to reduce cost, Hong Kong’s toy companies move all their production lines to mainland, furthermore, some have even brought scientific research, design and processing on mold and key components to mainland. Creativeness, high quality and speediness are translated into great progress on production, management, quality and scientific level during the decade.
Before Hong Kong’s returning, 1996 recorded 2.994 billion US for toy export of Guangdong. When it comes to 2006, the figure rose to 4.854 billion, coming with a growth of 62.12%. What’s more important, during these 10 years, high-tech toys have made great leap on export. Before 1997, plush toys and simple plastic toys were leading actors, with a small number of electronic toys. However, high-tech electrical and electronic toys with high added-value constitute a major part now. Export of electronic toys in 2006 registered 8.002 billion USD.
Achieve mutual benefit with respective advantages
In the environment of economic globalization, toy circles of Hong Kong and Guangdong actively propel the integration of toy business of the two sides, making use of two kinds of resources and markets. From receiving orders to supplying raw materials and accessories, from organizing production, business managing to providing technical guidance and marketing, are all involved in an organic whole.
From its beginning of founding, GDTA has always been active in connecting with toy companies of Hong Kong in studying business. It successfully bridges between Guangdong and Hong Kong, as well as companies and government. Hong Kong has its advantages in various realms, such as information, credit, funds, technique, legal system, transportation and marketing channel, while Guangdong, the province as a neighbor of Hong Kong, is superior in lower cost on ground rent, factory, electric power and labor. The two sides highly complement each other. Fact tells us that, only this kind of combination could win sustained development for the two.
During the passing 10 years, joint effort of Hong Kong and Guangdong has laid a solid foundation. We see a bulk of top-ranking toy companies with large or medium scale, while small business are keeping welling up. A complete industry chain has been formed.
It can be anticipated that, in the 10 years to come, toy industry of the two sides would see further integration. Guangdong is to face adjustment on regional structure and industrial structure, which will be shaped into a strong province with innovation idea. Bringing forwards its strongpoint in scientific research, information and marketing, Hong Kong will evolve into a high-class transit base for toy wholesales. Many large toy factories directly operated by Hong Kongese will continue to lead the developing current of global toys. With solid foundation, Guangdong and Hong Kong will maintain their position as the largest production and distribution area in the world.
Writer’s bio
Yang Kaimao, former section deputy director of Economics & Trade Commission of Guangdong Province, founder of Guangdong Toy Association |