Made in Hong Kong

A small, porcelain vase, displayed in my grandmother's upstate New York home, is labeled “Made in British-occupied Hong Kong.” It's not often you see a “Made in…” label like this. These days, you're more likely to see “Made in China” on most products. And in the nine years since Great Britain handed Hong Kong back to China, business, namely the toy business, has changed within the city.

Surpassing traditional toy exporter hot spots like Japan, Germany and the U.K., Hong Kong is now the second largest toy exporter in the world. Yes, most Hong Kong toy makers have set up shop in Mainland China, but the role of the Hong Kong office has shifted to more quality control, marketing, product design and production planning. And it seems to be working.

Within the first 11 months of 2005 alone, Hong Kong exported $9.5 billion worth of toys, dolls and video games, a jump of 4 percent from the previous year. Helping propel that growth were exports to countries not historically significant when it came to toy shipments by Hong Kong-based manufacturers. Emerging markets for those toymakers' exports included Brazil with growth by 21 percent, Russia by 42 percent, Poland by 26 percent and Mexico with 19 percent, according to the Hong Kong Trade and Development Council (TDC).

And the TDC is on to something else. According to a recent study, electronic and interactive toys and video games will be some of the larger exports in 2006.

As I walked through the Hong Kong Toys and Games Fair this winter, I saw some familiar faces and more unfamiliar ones. But one thing was ubiquitous to all attendees who really looked around the booths—technology—as companies like V-Tech, Eastcolight, Manley and Hanzawa presented their upgraded offerings.

According to a report by the TDC on buyers attending the fair, sales of computer games and electronic toy are predicted to expand 18 percent in 2006. Close to 20 percent of respondents said this sector would grow by 16 to 30 percent.

More than 1,930 exhibitors knew the importance of face time at this year's fair, taking advantage of the opportunity to meet suppliers face-to-face. With 30,000 buyers from all around the world in attendance, getting product in front of decision-makers was of no small importance. Based on the show's end results, 90 percent of exhibitors and buyers interviewed expect the overall toy market growth to be similar or better in 2006. Most expect a 6 to 10 percent growth, while 10 percent anticipate an increase of at least 20 percent.

Chuck Quinn, vice president of marketing and sourcing for Franklin Sports, Stoughton, Mass., tells Playthings that being in Hong Kong gives the company a chance to make more contacts, establish themselves at the show and develop products. “It's an enormous opportunity to see where the trends are going and where production is going in the future,” he says.

Franklin's biggest markets outside of the U.S. are in Europe (specifically the U.K. and Germany), Canada and Mexico, Australia and Japan, where baseball products are big. This year, the company will continue to add to its licensed product lines with MLB, NHL and NFL sporting goods as well as more product for younger audiences. The Future Champs line will offer softer sports products like foam baseball bats and hockey shin guards. More licensed table games like foosball and air hockey will also be available this year. “We're not just a sporting goods company, we're a company of innovation,” Quinn says. “It's harder to make the same nickel as the toy industry, so we add value to the equation, try to work directly with factories from the U.S. and have a close relationship to key vendors.”

And who doesn't want to be the best? James Lim, director, COG, Hong Kong, wants to be the largest provider of dinosaur product in the U.S. The company boasts a line of scientific experiment kits. And there's cause for such optimism with more and more offerings in science, electronics, even magic playthings.

“Dinosaurs are popular in the West,” Lim tells Playthings. “We want to be the largest seller and have the largest range of product. We have games, toys for small children, room decorations, multi-media—we have the biggest selection, but the purpose is not just to sell, it's to educate about dinosaurs. It's not just T-Rex, there are other dinosaurs.”

COG will launch 150 products in the Dino Horizons line this year with more on the way in the fall and in 2007. A Glow in the Dark Pteranodon, Dino Exhibit models for collectors, A Flying Dino, Walking T-Rex that roars, an Allosuarus Museum-Quality Polystone Replica, Dino Chess, Checkers and Ludo are some of the products in the line. Crafts like Dino Silhouettes and 3-D Foam Dino are also available for younger explorer as well as various CD-ROM kits like Dino Tracker and Dino Explorer.

The multi-media options continue with Hanzawa, Hong Kong, which recently acquired licenses for DC's Justice League, Nick's Maya & Miguel, Universal's Curious George and Warner's Looney Tunes for its Startright early learning laptop computer. The company also has a Giggles line of recording devices that lets kids make their own tunes by adding music and other sounds to their vocals. The line also includes a Hyper Tambourine and other musical instruments for ages 5 and up that can record and use recorded vocals as you play them. The MP Free features six games with room for music.

Who knows what to expect in a year of unpredictable oil and gas prices and predicted low spending? An increase in the price of ABS plastic, used to make most toys, as well as unpredictable unemployment rates due to shifting export consumption are some national factors that may affect business in Hong Kong during 2006.

Things don't always come easy. Despite it all, it seems the toy industry will continue to be Hong Kong's economic backbone in 2006, according to those who attended this year's show. Stephen Ip, secretary for economic development and labor, said that “apart from the pleasure and convenience they provide, toys, games and stationery have made important contributions to our economy. Toy manufacturing has been a significant part of our economic development.”

Ip added, “We need to help each other. All along the chain, we are all partners. How do we survive? We make adjustments. We make consumers realize that it's not a long term situation.”

At this year's fair, several first-time exhibitors were from countries not previously represented at the show: Sri Lanka, Czech Republic, Macedonia, New Zealand, United Arab Emirates and the British Virgin Islands. The fair also featured eight group pavilions for larger exhibiting regions: Spain, Germany, Italy, Korea, Pakistan, Taiwan, Thailand and Mainland China. This year's show also swelled with 261 exhibitors from the Hong Kong International Stationery Fair—both shows were held at the convention center. And with new sections like the Candy and Paper Toys attracting additional manufacturers, it doesn't seem like things will slow down in Hong Kong any time soon.