With a small but rapidly growing domestic toy market and plans now underway for the country to overhaul its position in the global toy industry to become an international hub for toy design and manufacture, India is becoming an increasingly important player on the global toy market stage.
Here, Kids Brand Insights’ Steve Reece draws upon his depth of knowledge of the region and his own work within the territory’s toy manufacturing space, to explore just how important India is going to be for the toy industry going forward.
I’ve been travelling to India since 2014, when it became clear that major shifts lay ahead in the position of China as the world’s predominant toy manufacturing hub.
The writing was on the wall for a long time in terms of production shifting outside of China due to the country’s magnificent – and meteoric – rise in living standards and economic development. Since toy manufacturing relies on cheap production line labour, it was clear that China would no longer be the dominant toy manufacturing hub going forward.
Their’s was an economy moving upwards and onwards.
“India has already become one of three primary manufacturing hubs for toys today and will continue to grow rapidly over the next decade.”
In the meantime, a significant chunk of manufacturing moved from China to Vietnam, albeit mostly with the same supply chain and factory ownership. Vietnam has now become a reliable source of cost-effective manufacturing for the toy industry. The challenge though, is that it does not have either the same vast population as China or the same latent industrial capacity.
Therefore, while Vietnam is part of an effective sourcing strategy, it can’t offer enough capacity to meet demand.
Which brings us to India. And from the start, let’s be frank, India is not a perfect alternative to China… yet.
The culture is hugely different, the working practices are different, and the discipline so inherent in Chinese society and culture is definitely not the norm in India. Of the many toy companies – big and small – who have moved production to India, I have not spoken to any who have not had their fair share of teething troubles and learning curves.
Those people at the front of the sourcing pivot to India have experienced challenges, as India’s toy factories learn about standards of compliance, customer service and reliability. These challenges don’t change two fundamental facts though: Our industry can’t avoid India due to cheap and abundant labour on offer there, and, moreover, in an industry with constant downward pressures from customers on pricing and ever upwards pressure on manufacturing costs, India is likely to offer lower cost manufacturing versus China on products which need substantial labour assembly.
For those products which sell year on year, automation and robotics may allow China to remain the primary source, but for other products, India has already become one of three primary manufacturing hubs for toys today and will continue to grow rapidly over the next decade.
When you factor in the small, but rapidly growing Indian domestic toy market, which offers ongoing long term growth potential for mature companies seeking ongoing growth, then India is clearly going to be increasingly important to the toy industry going forward.
Steve Reece is the founder of the toy expert consultancy, Kids Brand Insight and part of the ToyTeamIndia venture, a business that has introduced five out of the 10 biggest global toy companies to Indian factories.