In view of current economic situation of Pearl River Delta (PRD), should toy makers seek development in other place? And where? Opinions vary. Our company—Forward Winsome Industries Ltd. has established its factory in Lianzhou, Guangdong for 11 years, which has 3,000 employees. Experiencing the joys and sorrows in PRD and mountainous area, I find that, moving to mountainous area and east or west wing is a new challenge to toy makers in PRD brought by Guangdong’s economic development. Great difficulties confront those plan to move, since it is an attempt for new course of development.

An inevitable road

   In mid 1990s, PRD became the largest production cluster for the world’s toys, appearing marked dominance. Close to Hong Kong and Macau, the region boast s advanced transportation in seas, land and air. Raw materials and supporting parts are in full supply. Meanwhile, it gathers elite professionals. On the other hand, Canton Fair and Guangzhou Int’l Toys and Gifts Fair are both excellent platform for promoting toy business to the outsides world. The toy wholesales market in Yide Road, Guangzhou ranks one of the top toy distribution centers of China.

   However, when it comes to 21st century, economic environment, policy, labor force and salary have imposed great pressures upon toy industry in PRD.

   Before the opening-up and reform policy, PRD relied on agriculture. Afterwards, industry rose to supporting business, especially light industry. Therefore, labor-intensive industry gained rapid growth in those days. Currently, PRD has grown up. Primary industry only composes 2.76%, while second industry records as high as 50.92%. Third industry makes up 46.32%.

   Under economic status quo, surviving room for labor-intensive industry with low added value in PRD has been restricted. It is necessary to advance industrial grade and optimize industrial mix.

   Furthermore, launching regional coordination policy, Guangdong government emphasizes electronic information, machinery equipment and automobile, and develop moderately petrochemical processing and steel industry. At the same time, new energy, new materials and biomedicine are now cultivated. Low-end industry pattern is to be changed.

   This March, Guangdong’s labor and social security department noted that Guangdong now lack civil workers severely. Companies are required to fulfill the followings: Firstly, salary and treatment should be better than local average. Secondly, living standard should be improved. Finally, they must show respect to civil works come from other provinces and offer them chance of training.

   In doing so, companies have to increase expense. However, toy industry has already been forced to an era of meager profit.

   According to professional estimate, toy industry in Guangdong is in lack of 100,000 workers, especially skilled workers.

   Moreover, pressures from increased salary standard and insufficiency of power is urging toy industry in PRD to seek new road and room.

A long long way for exploration

   From the 1980s to mid 1990s, Hong Kong had made great success on moving its toy industry to PRD. During the two decades, a largest toy production base has been well constructed. However, the present cannot compare with the past. Moving from PRD to other regions will meet much more toughness.

   Toy manufacture is comprehensive industry that require support from various aspects. With 20 years of operation and development, toy industry in PRD has developed perfect industry chain that corresponds with production capacity. Previous moving was focused in PRD, when raw materials and accessories makers moved along with toy factories. However, now moving might not target in a certain place so it is difficulty to form a new industrial chain. With no following-up raw materials and accessories sector, production cost will rise.

   It would be an extended transportation route. Take Forward Winsome for example, every standard container cost 2,500 RMB yuan from Nanhai to Yantian. But it cost us 4,500 from Lianzhou to the same destination.

   Logistics service might be laggard. Lianzhou has not enough land transportation units. Moreover, bumping along in mountainous area might affect quality of products.

   Labor force in moutainous area might be in shortage as well. At the same time, workers’ quality is generally not as good as those in PRD.

   In pasting days, market competition was not as keen as now. With great profit, makers could easily allocate fund for infrastructure. Moreover, when one was in lack of fund, he could just rent a factory. However, it is hard to rent one in mountainous area now.

   Furthermore, applying for inspection and to customs now consumes a lot in both procedure and time.

The way would be found by ourselves

   A way is made by ourselves. It is a pressing task for toy industry to improve quality and lower production cost. Moving requires manpower and capital. But seeing from a long term, it will bring in new room for our development and lower cost.

   I believe, we should firstly make a good selection on place, which should be most suitable for our development. Convenient transportation is essential. Northern Guangdong, as well as east and west wing of Guangdong would be good choice. Secondly, southeastern Guangxi, southern Hunan and Southern Jiangxi would be next option. Vietnam, India and Cambodian are last choice.

   Advantage of mountainous area of northern Guangdong should be brought to full play, including transportation rate, price on land, water and power, as well as expense in government.

   It is critical to attract supporting industry to move along. It is hard to survive for a medium or small company who moving to a place with no other toy companies or supporting business. Therefore, after confirming an appropriate location, it would be better to organize a whole group there to form a complete industrial chain. Since it is a tough work, association may be a good resort.

   Headquarter should be maintained in PRD. Only production line is expected to move out, instead of headquarter. Domestic sales, overseas sales, receiving orders, new product design, importing materials and accessories, PR and many other affairs should be carried out by headquarter.

   I feel words of Yang Kaimao, founder of Guangdong Toy Association, is rather relevant. “It is strongly advocated for toy makers’ moving to mountainous area,” he once indicates. “It stagebystage moving is also a necessary trend for toy production base.”

WRITER’S BIO