Fifteen years ago, 20 percent profit was less than the market average for toy exporters in Guangdong. But right now, just staying in business is success. Chonggao Toy Products Factory in Zhongshan city -- which, according to rumor, is cutting headcount and experiencing hard times -- said it will not go down.

The company said its 2008 sales will reach HK$700 million (US$90 million), slightly up from previous years. But undeniably, the balance sheet is still in the red, due to rising costs and the strengthening yuan.

Meantime, Chonggao is confident that its 2009 sales will be no less than HK$500 million (US$65 million). "That would be the worst scenario. If governmental bail out plans across the world lead to economic progress, our revenue will easily reach this year's level."

But the company needs to regain profitability. The way to do it, according to Managing Director Cen Lecheng, is to make a foray into the Chinese domestic market.

A long-time export-exclusive contact manufacturer, Chonggan doesn't have its own brands to sell in the domestic market. Cen said he is doing research and will get ready to contract manufacture toys for Chinese consumers.

Maybe he can start with his existing customers like Mattel? China is an underdeveloped market for Mattel, itself. Perhaps it's time to change that.

[This blog post is based on a news report published in the Nov. 28 Zhongshan Daily.]