The slump was partly because of an increase in the value of the Yuan and mounting production costs. Between January and March, China exported $1.5bn worth of toys, a growth of 3.3 percent on the same period of last year, sources with the General Administration of Customs said on Thursday.
The growth rate was 20.6 per cent lower than the year-earlier level, the sources added.
Quality issues gave China's toy industry some tough times during the second half of 2007. Western countries raised quality standards and issued several recalls on Chinese toys.
The first three months of this year saw the US, European Union and Hong Kong buy $1.09bn worth of toys, or 72.5 percent of the Chinese mainland's total.
In breakdown, the mainland sold $590m worth of toys to the US, down 5.8 per cent, $380m worth to the European Union, up 14.8 per cent, and $110m to Hong Kong, down 26.8 percent.
Foreign-funded companies exported $720m worth of toys, up 7.7 percent, and state-owned enterprises exported $460m, up 3.7 percent.