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February 04, 2008 01:00 AM

China likely to remain toy-making giant

Steve Toloken
Assistant Managing Editor
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    China's toy makers face higher costs and longer delivery times as a result of a flurry of new quality standards from industry and governments, but toy industry executives do not expect China to lose its place as the world's toy-making hub.

    Toy makers are considering countries such as Vietnam or India as potential manufacturing alternatives since the recalls of Chinese-made toys last year. But industry executives interviewed at the Hong Kong Toys & Games Fair, held Jan. 7-10, said that practical realities, such as the sheer scale of China's existing toy industry, could make it hard for challengers to develop.

    China, which makes more than 80 percent of America's toys, and the global toy brand marketers seem joined at the hip, whether they want to be or not.

    The head of the Toy Industry Association Inc. in New York said the industry wants to work with China to bring back consumer confidence.

    ``I have heard people discuss alternatives [to China] but I have not heard them say any of the alternatives are good alternatives,'' TIA President Carter Keithley said in an interview, after he delivered a speech on new U.S. quality requirements at the Hong Kong toy fair. ``They have every intention of working with the Chinese suppliers to figure out a way to restore confidence.

    ``For 30 years we've sourced high-quality products from our Chinese suppliers that meet our safety standards,'' he said. ``While there have been problems and we need to fix those problems, we don't think it is justifiable to say that Chinese manufacturers are not capable or qualified to produce our toys, because they are.''

    Lawrence Chan, chairman of the Hong Kong Toys Council, said toy makers are studying production relocation to places like Vietnam and India. But, he said, China's major advantage is a supply chain of components and raw material makers that it has developed over more than two decades.

    ``The supply chain is very important and the toy products keep changing so fast,'' Chan said. ``Without a good supply chain, it's almost impossible to continue to make good toys.''

    But governments and the toy industry are pushing for improved testing standards, with a particular focus on China.

    The U.S. government, in particular, is expected to enact a law early this year toughening quality and inspection requirements for all toys. At the same time, China's regulators are clamping down on quality. And the toy industry is developing its own beefed-up testing protocol with the American National Standards Institute of Washington.

    The new requirements are likely to add a week or two to product delivery, but that could benefit consumers overall, said Bernie Ting, general manager of toy maker and molder Qualidux Industrial Co. Ltd. in Hong Kong and vice chairman of the HKTC.

    ``In the past, I think the industry tried to squeeze lead times,'' Ting said. ``I think the trend is lengthening again, but that is healthy for consumers.''

    Richard O'Brien, director of international programs and intergovernmental affairs at the U.S. Consumer Product Safety Commission, said supply chains will have to become more sophisticated. The Washington group will play a key role in implementing new U.S. law.

    ``Up until now, you've essentially had the sophisticated players and the nonsophisticated players,'' he said. ``There are those who already have some sort of integrated supply chain management, [but] everybody is going to have to go that way. That's going to be the first big change.''

    O'Brien said the U.S. Congress is likely to adopt rules that effectively will ban lead from all products designed for children, require mandatory testing by qualified third-party labs and make manufacturers and importers keep detailed records of all firms that supplied components and materials, among other provisions.

    The new law should make it easier for U.S. government agencies to share information with counterparts in other governments, helping regulators to identify problems, he said.

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