Between 300 and 400 small to medium companies setting up on the mainland could be forced out of business due to the rising cost of wages, raw materials and oil.
This is despite an expected three per cent growth in global revenue.
Lawrence Chan, chairman of the Hong Kong Toy Council said operating costs have risen by 15 per cent, putting pressure on about 10 per cent of Hong Kong’s 4,000 companies.
"Many toy companies are looking to raise prices. So despite the sales volume, in particular in the United States, which is expected to remain constant [amid the expected economic downturn], we are cautiously optimistic that a three per cent growth in revenue can be achieved," he said.