In early 2008, Chinese authorities banned 600 toy makers from exporting, as part of a drive to increase quality. The weakening economy and rising costs have since forced thousands more out of business, throwing the Chinese industry into some turmoil and leading to riots by laid off workers at toy factories in Southern China.
A Chinese government report in October, for example, said that 3,600 of the country's slightly more than 7,000 licensed toy exporters went out of business in the first seven months of the year.
Most of them were smaller firms, with the report from the General Administration of Customs saying that the industry suffered because of the rising Chinese yuan, increasing trade protectionism in overseas markets, and the inability of smaller firms to adjust to changes.
Some countries, including the United States, adopted tougher toy-quality standards, and Chinese government officials tightened controls on toy exporters.
Chinese, American and European toy regulators met last month for the first time to try to better synchronize toy safety standards.
One Chinese toy industry executive said the recall of Mattel toys last year prompted the Chinese government to implement much tougher controls on toy exports.
``After the recall, everyone was really concerned about how to upgrade their management and how to set up their facility,'' said Leung Chung Ming, managing director of Hong Kong-based toy maker Lung Cheong International Holdings Ltd. and vice president of the Beijing-based China Toys Association. ``This was a bad case but it is a good thing to upgrade the toy industry.''
Some Chinese and Hong Kong officials have said that the toy recalls were confined to only a very small percentage of toys, and in the case of Mattel, said some of the recalls were prompted by poor toy design from Mattel, not Chinese quality problems.
C.K. Yeung, vice chairman of Hong Kong-based Blue Box Holdings Ltd. and executive vice president of the Toy Manufacturers' Association of Hong Kong, said that the industry has made improvements. The additional testing, in particular, has raised toy costs, he said.
``With all the things now happening with the new regulations and laws and the enforcement by the Chinese government, and the improvement now made by the industry sector, I would say the Chinese toys are absolutely safe,'' Yeung said.