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Hasbro continues move out of China; targets 50 per cent or under by 2020

Hasbro could see its manufacturing out of China fall to 50 per cent or under by the end of next year, following what CEO Brian Goldner has called a positive shift for the firm out of the region.

The firm claims to have spotted an opportunity now that has fuelled the belief that by 2023, Hasbro’s manufacturing operations in China could be under a third.

Speaking with CNBC this week, Goldner stated that Hasbro’s shift of business out of China has been positive for the company. 

“It’s gone very well for us,” he told the network.

The toy company has been focused on diversifying its manufacturing operations since 2012 due to “enterprise risk reasons,” said the CEO.

“We’re seeing great opportunities in Vietnam, India and other territories like Mexico. We’re doing even more in the US. We brought Play-Doh back to the US last year.”

The statement comes just as the US-China trade dispute intensifies and follows another Trump tweet in which he urged US companies to leave China. His tweet read: “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

It’s doubtful that it has been Trump’s demands that have spurred Hasbro’s shifts, given that the firm has been making the move since 2012 – when 90 per cent of its business was coming out of the region.

“In the US, we produce about 20 per cent of our revenues for our US business,” said Goldner. “Globally, it’s about two-thirds of our business coming put of China, but that’s down substantially from nearly 90 per cent in 2012.

“We’re seeing an opportunity that will lead us, by the end of 2020, to be at about 50 per cent or under for the US market coming out of China. We believe by 2023, we should be under a third.”

Despite the gradual move, Hasbro still expects to be hit with the ten per cent tariffs that Trump announced this month, but later delayed until December. On that topic, Goldner stated that Hasbro will bear the costs of those tariffs.

“We’re having conversations with our retailers and of course, we will pass along those costs,” he said. 

He told CNBC that the company hopes to ‘effectively pass on those costs,’ by mitigating the margin internally. However, “ultimately they will be borne by the customer over time.”

He said: “With time, you can redesign and redevelop your product lines with those tariffs in mind but in the short term, you do need to pass along those costs.”

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