Not much fun for China's toy exporters as costs rise
Source: Xinhua |
February 5, 2013, Tuesday
|
Print Edition
Print Edition
TOY exporters in China's southern coastal areas are feeling the pinch due to rising costs, appreciation of the yuan and tougher regulations from western importers.
China is the world's largest producer and exporter of toys, with Guangdong Province alone contributing more than 70 percent of its output.
Zhongshan is the province's leading export hub with 118 companies and its exports account for more than 10 percent of the province's total.
However, the boom has cooled.
Zhongshan has seen two consecutive years of a fall in toy exports worth US$642 million, down 6.6 percent year on year. Volume has shrunk by 2.7 percent to 48,514 batches, said Xie Lin, an official with the Zhongshan Entry-Exit Inspection and Quarantine Bureau.
The minimum wage in Zhongshan climbed to 1,100 yuan in 2011 from 920 yuan the year before and the increase has led to rising production costs of at least 10 percent for most companies, industry insider Chen Mei said.
Extra costs cannot simply be passed to customers as clients from the United States and Europe expect cheap prices when buying from China, Chen said.
Manufacturers say they have to keep accepting orders even when there is barely any profit because they cannot afford to lose customers.
Large quality recalls by international toy giants have also hurt the industry after western customers raised standards to ensure the safety of imported toys.
Exports to Europe and the United States take up the lion's share for Zhongshan. The worth of exports to the US reached US$206.35 million in 2012, or a third of its overall export trade.
However, revised import standards in both places threaten the sector, casting a gloomy outlook on the industry, said Zheng Xiaoming, professor with Guangdong University of Technology.
In Europe, a new regulation forbidding the use of 55 allergenic fragrances and limiting the use of 11 others may push up Chinese manufacturers' costs by at least 20 percent, according to a survey.
Wu Chunjing, chief of the Zhongshan Entry-Exit Quarantine and Inspection Bureau, is urging companies to raise quality standards in accordance with international regulations as one solution to the problem.
He also suggested manufacturers develop innovative products with high-added value, so they can make a profit despite rising costs. The domestic market is another option.
Each Chinese child spends about 40 yuan (US$6.28) a year on toys but the figures in Asia generally and the world is US$13 and US$34 respectively.
"Exploring the domestic market with e-commerce channels and more business settled in yuan can provide a shield during this winter," said Wu Shuo, a Zhongshan quarantine and inspection bureau spokesman.
Zhongshan is a mature toy production base that can cope with changing fortunes, Wu said. "The industry, which withstood the Asian financial crisis and massive recalls, can survive the hard situation this year."
China is the world's largest producer and exporter of toys, with Guangdong Province alone contributing more than 70 percent of its output.
Zhongshan is the province's leading export hub with 118 companies and its exports account for more than 10 percent of the province's total.
However, the boom has cooled.
Zhongshan has seen two consecutive years of a fall in toy exports worth US$642 million, down 6.6 percent year on year. Volume has shrunk by 2.7 percent to 48,514 batches, said Xie Lin, an official with the Zhongshan Entry-Exit Inspection and Quarantine Bureau.
The minimum wage in Zhongshan climbed to 1,100 yuan in 2011 from 920 yuan the year before and the increase has led to rising production costs of at least 10 percent for most companies, industry insider Chen Mei said.
Extra costs cannot simply be passed to customers as clients from the United States and Europe expect cheap prices when buying from China, Chen said.
Manufacturers say they have to keep accepting orders even when there is barely any profit because they cannot afford to lose customers.
Large quality recalls by international toy giants have also hurt the industry after western customers raised standards to ensure the safety of imported toys.
Exports to Europe and the United States take up the lion's share for Zhongshan. The worth of exports to the US reached US$206.35 million in 2012, or a third of its overall export trade.
However, revised import standards in both places threaten the sector, casting a gloomy outlook on the industry, said Zheng Xiaoming, professor with Guangdong University of Technology.
In Europe, a new regulation forbidding the use of 55 allergenic fragrances and limiting the use of 11 others may push up Chinese manufacturers' costs by at least 20 percent, according to a survey.
Wu Chunjing, chief of the Zhongshan Entry-Exit Quarantine and Inspection Bureau, is urging companies to raise quality standards in accordance with international regulations as one solution to the problem.
He also suggested manufacturers develop innovative products with high-added value, so they can make a profit despite rising costs. The domestic market is another option.
Each Chinese child spends about 40 yuan (US$6.28) a year on toys but the figures in Asia generally and the world is US$13 and US$34 respectively.
"Exploring the domestic market with e-commerce channels and more business settled in yuan can provide a shield during this winter," said Wu Shuo, a Zhongshan quarantine and inspection bureau spokesman.
Zhongshan is a mature toy production base that can cope with changing fortunes, Wu said. "The industry, which withstood the Asian financial crisis and massive recalls, can survive the hard situation this year."
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