Plastic processor Sunshine Inflatable Toys Co. Ltd. is like a lot of smaller Chinese manufacturers these days, staring at sharply rising labor costs and weaker export markets.
But the company is hoping a 36 million Chinese yuan investment in a new factory and capacity expansion, including adding 20,000 metric tons of annual capacity for PVC sheet production, will help it combat that.
The Jiangmen, Guangdong province-based company announced in early May that it more than doubled its size with a new 28,000 square meter factory, part of a strategy to lower costs by vertically integrating into PVC rolls production.
Sunshine is also looking at some new ventures, including expanding its range of inflatable furniture and having its sister company, P&D Plastic Manufacture Co. Ltd., also in Jiangmen, become certified under a global toy industry program for ethical manufacturing.
With its export markets weak and buyers in overseas markets becoming choosier, Sunshine believes that over time only the larger, better-managed factories in China will survive, said Marketing and Development Manager Angel Wong.
The expansion, which can support more than 1,000 employees, has made Sunshine into one of the largest companies making inflatable products in Guangdong province, the company said. Guangdong is China's hub for manufacturing toys.
Sunshine currently focuses on overseas markets, and together with P&D, the two companies export about $20 million worth of products a year.
But Wong also said the company plans to start manufacturing products targeting the Chinese market under two new brand names: "Bangel" toys, swimming products and other goods for babies and parents, and "Bluestyle," consisting of inflatable water sport, camping and leisure furniture for adults.
"We are sure the domestic market will become more and more important," she said.
P&D, which shares some of the same ownership with Sunshine, said its customers include global retail giants like Wal-Mart, K-Mart and Tesco, and Disney.
The company said in late April it had received certification under the International Council of Toy Industries CARE program and believes it will help it expand its business in Europe. The program evaluates factories on compliance with fair labor treatment and health and safety standards.
"Achieving ICTI Certification will enable us to gain greater acceptance with famous European customers," P&D said in a statement. "We are confident in our ability to increase penetration and capture more market share in European markets with our strong partners and innovative products."