You’d have to be living on another planet not to have noticed that toy manufacturing costs have been under increasing pressure over recent years.
China was once the holder of most of the global toy manufacturing capacity and very economical, and while it still accounts for the majority of the world’s toy production, things are changing.
For quite some time now, toy companies have been looking for an alternative or alternatives capable of offering similar capacity as China, with the economical manufacturing of yesteryear.
Vietnam and Thailand have grown in importance, especially for figurine manufacturing, making them the areas of choice for many an action figure manufacturer. Yet neither offers anything like the current or eventual potential of China’s vast capacity.
For nearly three years I have been working in India on the basis that only it can hope to replace any significant proportion of labour heavy toy production. India is the only country in the world with a similar population to China. It also has a very strong automotive manufacturing sector, with over 25 million people employed within it, making India the world's fifth biggest car exporter.
This is relevant because cars tend to be made of injection/blow moulded plastic, basic electronics, some rubber and some die cast metal – all of which are key components in toys.
There are currently a limited number of very high-end toy factories in India with ICTI and other requisite certifications. These leading factories are seeing demand significantly outstrip supply capacity, as toy companies big and small look to save around ten to 15 per cent on ex-factory costs.
It’s no wonder the industry has jumped on such cost saving opportunities.
My company is increasingly consulting with Indian factories to help get up to the required standards quickly to meet soaring demand.
And this isn’t without challenges. India in general is very culturally different to China; response times and working culture is very different and local supply chain not as experienced in manufacturing certain types of components found in toys. This can take some getting used to, as we are all so used to China’s experienced approach. Overall though, delivery and quality has been far better from India than originally anticipated, and at this stage I predict India will take billions of dollars of labour heavy toy production from China in the next few years, as China increasingly focuses on higher end or more automated production.