Hong Kong — Amid positive news at the massive Hong Kong Toys & Games Fair — Hong Kong's exports of toys jumped 8.6 percent in the first eight months of 2018 to $4.1 billion — industry nabobs and show-floor exhibitors alike fretted over navigating the increasingly choppy oceans of the world economy.
The No. 1 uncertainty, considering that China makes an estimated 85 percent of the world's toys, is the China-U.S. trade war.
Attendees at the show, which draws close to 50,000 buyers and is one of the world's largest toy fairs, were not necessarily predicting that President Donald Trump would risk angering a nation of Walmart-shopping parents by slapping tariffs on finished toys from China.
A 25 percent tariff like that would be "a shock to the entire system," said Richard Gottlieb, head of New York-based consultancy Global Toy Experts. "We need zero tariffs on toys."
But tariffs the Trump administration has placed on chemicals and metals have hurt U.S. toymakers who buy materials from China, Gottlieb said.
An unpredictable President Trump and economic uncertainty were giving a bad case of the jitters to toy execs already fretting over cutthroat competition, rising labor costs in China and a patchwork of international safety standards.
At the fair's flagship conference, an economist with the fair organizer, the Hong Kong Trade Development Council, urged companies manufacturing in China to weigh "What if?" scenarios.
"Many more buyers from the U.S. ... will ask if you have an alternate production base outside China, just to play safe," Louis Chan said.
In a recent council survey, toy industry respondents were "more gloomy about the prospects for the first quarter of this year," Chan said.
Most respondents have found buyers cutting back on order sizes and aggressively asking for discounts, he said.
This view was echoed on the show floor. Buyers are more cautious, placing small orders and only following up if sales are strong, Gigi Che, director of Hong Kong-based toy trader Merx Ltd., said.