India’s Prime Minister, Manmohan Singh recently visited China, nailing down the future bilateral trade of 60 billion US dollar. Would China’s toy industry reap a good profit out of it? It should be the focus of people in this circle. In view of this, TOY INDUSTRY has interviewed with people in toy circle of India, and collected related materials from India China Economic and Cultural Council (ICEC) and China’s Ministry of Commerce, so as to provide a good reference for those who intend to tap into this emerging market.
Populous nation, great potentials
Adjacent to Tibet, India boasts large population, which arrived at 1.09 billion in 2005. Furthermore, it is considered a “young” country, for average age is only around 30 years old and annual growth of population records 1.5 percent. In view of consumption per capita, Indian toy market has a magnificent foundation. However, we must notice: income per capita here can not be said high. According to statistics of World Bank, per capita income of Indian merely exceeded US$700 dollar in 2005. Asian Bank released a report on January, showing that, daily income per capita in the country is only US$1.551, far below Asian average.
But something should be attentive to. Since India’s economy these years has continued to growth by over 6 percent and rose to 9.2 percent in 2006, it is considered one of the BRIC in global economic environment, along with China, Brazil and Russia. It is believed that, rapid economic progress would improve people’s living standard accordingly.
By all appearances, we expect that great population and fast economic rise offer a potential market for toys, which are popular entertainment merchandise
A glimpse of Indian toys
How big is Indian market? Certain official from United Nations Industrial Development Organization (UNIDO) in India talked about India toy market in an informal press conference. GDP of toy business in the country is around 25 billion Rupees (around 630 million), he said. However, toys imported from China registered as high as 70 billion Rupees (around 1.76 billion US dollar). Nearly 80 percent of toys in Indian market come from China. Currently, local toy market is growing at the speed of about 15 to 20 percent.
We also find the following information in indianchild.com. India now houses over 800 toy makers and distributes. The most powerful rival for local toys is low-priced products from China. Mattel, Funskool and LEGO are biggest toy names in India.
According to China’s The Economic and Commercial Counsellor’s Office in India, during the financial years of 2006 and 2007, India’s toy retailing market amounted to around 620 million US dollar, half out of which comes from China’s export.
Riyaz, an India toy importer said that, the country actually has great demand on toys and China’s low –price toys are very attractive to local consumers. At present, consumers would consider two key factors when choosing toys, price and brand.
So far as production technique is concerned, India does not have strong manufacture power. The official with UNIDO in India indicated that, toy industry is run in a conservative way and operators are not willing to invest in research and production technique.
Though we see different views in local toy market, its potentials allow no deny. In view of this, some global makers have targeted at Indian market in earlier time. Hasbro, for example, entered the market two decades ago.
Certain personnel in Indian toy industry indicated that, India faces with sever pirate problem and government has not related investigation right now. On the other hand, brand products are not the major choice for kids. Statistics from Toy Association of India shows that, 90 percent of the 4.2-billion-yuan toy market is unorganized. It means that only 420 million RMB yuan of market shares is available. Leading names like Hasbro and Mattel touch an only small part of it, despite of their effort during a dozen of year.
Generally speaking, status quo of Indian market is as the same with a distributor’s words: “toy is one of the industries that gain leap-and-bounce growth, coming with great potentials. However, due to the weakness of local manufacture for toys, international makers aim at India. ”
Operation environment for foreign-funded business
It is known that, India has embarked on the second stage of economic reform. Except for agriculture (not inducing tea planting), atomic energy, railway, real estate, retailing and media, most of control on foreign trade, foreign investment and foreign exchange has been loosen and abolished. Private investment in granted in nearly all kinds of business. Rupee can be exchanged in current account now, and will be realized in capital account in the future. Prevailing basic tariff is expected to be lowered to 20 percent from 35 percent in three years.
India’s Prime Minister, Manmohan Singh recently visited China. In the future, he noted, Sino-India trade in energy, software, textile and other aspects would see wider development room. In the two years to come, Sino-India trade volume would exceed 50 billion US dollar. Medical facilities, toys, construction machinery and package machinery would have good market in India, added Manmohan Singh.
Secretary-general of Federation of Indian Chambers of Commerce and Industry (FICCI) eagerly invite Chinese investment in India. “We will invest 440 billion US dollar for infrastructure,” he said. Furthermore, he suggested Chinese side to invest in or buy stock of Indian companies.
To propel Sino-India trade, China has opened three frontier trading places and markets in Tibet.
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