The Toy Market in China Under Two-Child Policy

Date: July 14, 2016

The Toy Market in China Under Two-Child Policy

Understand and Capitalize on The Chinese  Toy Market Trends

Years ago, China implemented the one-child policy under which couples were only allowed to have one child. Since 2012, the country has begun to see a shrinking workforce and an aging population. It led China to relax the old law and allow couples to have two children as of 2016. Whether or not this solution will answer the economic problems is still up in the air, but the two-child policy will certainly give an advantage to certain industries, such as the toy market.

The Hong Kong Trade Development Council, which organizes the Hong Kong Toys and Games Fair, believes that with 2.4 million more babies born each year, the market will grow by $11.5 billion dollars. Nevertheless, not all players can win. Toy makers need to understand the market trends to capitalize on the growth. First of all, several specific areas of toys are rising in demand. They include:

Outdoor Toys

Children in China are facing heavy workloads from school and have high expectations forced upon them. Parents have become more aware of these burdens and are more willing to allow children to spend time outside and play. The outdoor toys give them a direction for their play time that gives them exercise for their imaginations and their bodies. 

Educational Toys

Educational toys have gained popularity among Chinese parents and children. These toys are entertaining, and can help the child develop learning skills. Educational toys are often highly innovative and unique. They feature advanced technology and often include interactive electronic items. Parents feel good about giving their children these types of toys. The children can play, but the parents understand they are playing with an educational purpose. 

Plush Toys

As children in other countries, Chinese kids love stuffed animals and with twice as many of them, the market is growing. But parents want to see something unique and different in the plush toys they buy. One type that has stood out in recent years in the Chinese toy market is those featuring TV drama characters that are popular among children. The plush toys are often integrated with electronic toys as well, so they offer songs and learning capabilities along with cute cuddle natures. 

DIY Toys

Do-it-yourself toys have gathered a large audience in the Chinese market in recent years. While they are entertaining for children, they also provide the family a good chance to spend time together. Moreover, DIY toys help with the development of children’s cognitive and communication skills, and would be favored by the Chinese parents.

The second trend is that competition between local and international brands is intensifying in the this market. Traditionally, while the international brands create high-end products, local companies dominate the medium-to-low end of the market with cheaper and less known items. However, the landscape is changing, as more and more local toy makers start to look inward into this growing domestic market and invest heavily in R&D to grab the more profitable high-end segment.

According to the China’ Toy Market Report by The Hong Kong Trade Development Council, traditional stores and shops remain the major channels where Chinese parents purchase toys: 70% of the Chinese parents bought toys from large specialty toy stores, 50% from department stores and 49% from supermarkets/hypermarkets in 2014.On the other hand, the online toy market has expanded significantly in recent years, with both local and international brands setting up the E-Commerce platform to reach their customers. This trend is sure to continue as Chinese parents would be even more occupied with one more child under the new policy, and increasingly prefer a more time-saving and convenient channel for toy shopping. Museums for children, zoos, and science park, which are frequented by families are also seeing rising demand for toy purchasing.

As the two-child policy gears up, along with the increasing purchasing power of Chinese households, the demand for quality toys will rise. However, toy makers need to understand this market to capitalize on it. Companies that can provide high-quality and innovative toys at an affordable price will see their value increase in the market. 

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