Maybe the best that could be said for China's export-oriented plastic toy makers is that they are hopeful for a rebound this year.
With retail toy sales in their largest market, the United States, falling 3 percent in 2008, many find themselves in a position like that of injection molder New Element Toys Co. Ltd., which recently slashed its workforce from 300 to less than 200.
The firm, in Shantou, one of China's toy-making hubs, is closely watching foreign markets for signs of growth. But it's also branching into new areas, hoping for sales from China's still-growing domestic toy market and a line of Barbie-like dolls sold under the Belinda brand.
General Manager Masen Chen said he's bracing for a tough year.
I will try to keep sales the same but it is very difficult, he said in an April 8 interview at the Guangzhou International Toys and Hobby Fair. If I can keep it the same, it will be a successful year.
Others, like Hong Kong-based Galey Industrial Co. Ltd., have made big pushes into the domestic market. The injection molding firm has taken toys once sold overseas and launched a new brand name in China, recouping more than half its lost overseas business, executives said.
Some Chinese toy firms see opportunities at home, but still face a tough time.
Hong Kong-based injection molder Palco International Ltd., which has several factories in Dongguan, has reduced its workforce to about 500 since the slowdown, compared with about 2,000 in 2006. Product designer Alen Fung said the company sees opportunities as global toy brand owners cut their own labor forces and look to Chinese firms for product ideas.
Fung said Palco, which does most of its business in the United States, thinks China's economy is more stable at the moment.
But he employed some dark humor to describe the current state of China's toy industry, where he said companies are watching competitors drop and hoping to pick up business: It's like a last man standing game.
Guangzhou Geniusstella Toys Co. Ltd., which has a license to make toys with the popular Japanese cartoon character Ultraman, reported an uptick in orders in mid-February, after the Chinese New Year. Right now is not so good, but we believe maybe the next half of this year may be better, a spokesman said. The company employs about 1,000 in an injection molding factory just outside Guangzhou, and only had to cut its workforce by about 10 percent during the downturn.
Companies reported that educational toys were also selling well, said Cassidy Chen, sales manager for Jia Li Toys Factory in Shantou, a sister company of New Element.
But companies also reported that their profit margins are being squeezed by new U.S. safety standards that took effect Feb. 1, restricting phthalates in PVC toys and heavy metals such as lead.
Chen said testing and certification may add 10 percent to the price of a toy, but brand owners will only pay another 5-8 percent. His company has had to absorb the difference in lower profits.
Chen said that even after the 2007 quality scandal that resulted in millions of Chinese-made toys being recalled or destroyed worldwide, brand owners remain focused on cutting prices, which he said opens the door to a return of quality-control problems.