Nearly 80% of the toy export enterprises are eliminated in Guangdong province, which is the epitome of the depression of the foreign trade industry.

China’s toy export has been hit because of many reasons. The growth rate in the year of 2008 has dropped greatly. And the toy export of Guangdong province, which takes 70% of the whole country’s, has suffered greater drop in the growth rate.

Under the influence of the recall event in August, 2007, the sub-prime mortgage crisis in the US, the appreciation of Renminbi, decrease of export tax rebate ratio and the increase of production cost, China’s toy export amount from Jan. to Jul. of this year was 4.18 billion USD. The growth rate was only 2.1%, 22.4 percentages lower than the last year. And in Guangdong, the export amount was 29.91 billion USD in the same period, increasing by 4.8%, which was 39 percentages lower.

According to the latest statistics from Guangzhou Customs, from this Jan. to Jul., there are only 1404 toy enterprises in Guangdong with the record of toy export, of which 374 enterprises are new ones. Compared with the last year, 3618 enterprises have retreated from the toy export market, taking 77.8% of the total number of the export enterprises in the same period of last year. Most of them are private enterprises, and the number is 2882.

In that situation, the large-scaled enterprises obvious get more order forms. The statistics shows that there were 45 enterprises with more than 10 million USD of export amount in the first seven months of this year, six more in number than last year. Their total export amount was 1.63 billion USD, taking 55.9% of Guangdong’s total amount of toy export of the first seven months. The number of enterprises with more than 100 million USD of export amount was 4, while the number in the last year was 3. The total export amount of these 4 enterprises was 710 million USD, 24.4% of the total amount. The total export amount of the enterprises having retreated from the market was only 220 million USD from this Jan. to Jul., taking 1.8% of the total amount.

A director of a large-scaled state-owned toy enterprise in Guangdong said that some big purchasing agents would like to pay more attention to product quality under the influence of the recall event. It has made the number of the order forms of this enterprise even larger. However, due to the appreciation of Renminbi and the large increase in the cost of labor and raw materials, the profit become smaller and smaller. It is quite easy to suffer deficit. So this enterprise is trying to heighten the price by improving the product design, and it also tries to receive the order forms with higher added value. In addition, parts of its orders are processed in the toy factories in Hunan, Jiangxi and some other provinces.

According to the director, by now there is no phenomenon that the purchasing agents transfer their order forms on a large scale. But due to the increase of the cost in the Pearl River Delta Areas (an economic zone in Guangdong province, South China), some overseas purchasing agents may transfer some low-price orders to the other Asian countries and regions. Some small and medium-sized enterprises (SMEs), which attend the competition mainly with the low price, may face great stress. On the one hand the number of order forms decreases greatly; on the other hand they can not deal with the increasing cost because of their poor price negotiation ability. Many toy enterprises have been closed for those reasons. Comparably speaking, large-scaled enterprises own stronger abilities of self-adaptation and risk-resistance.

Mr. Samuel T. Mok, former Vice Minister of the US Department of Labor, said in the 2008 High-end Forum of the Internationalization of China’s Enterprises on Aug. 15th that the level of Made in China kept making progress and the product quality kept improving. The gradual increase of the labor cost in China is a good matter, which can force the enterprises not to generate cheap and low-class products. At present it is necessary for China to go through the procedure of structure adjustment. This is also up to the trend of the international industrial transfer. However, it is a must to lay emphasis on smooth transition so that the training and allocation for the workers can be enhanced.

Mr. Pieter Schats, CEO of Toysrus (Asia) Co. Ltd (a giant in toy retail) said in the Hong Kong International Licensing Show that the event of America recalling Chinese toys reminded the worldwide toy purchasing agents to pay more attention to the product quality. But it does not influence the purchasing in China. Nearly 80% of Toysrus toy products are purchased from China, especially from the Pearl River Delta Areas, while the other 20% comes from Europe and Southeast Asia. In this year it is very obvious that the increase of the purchasing cost in the Pearl River Delta Areas. Along with that the retail price will go up too.

Mr. Pieter Schats said: “Usually we choose our toy supplier with the respect of product quality, safety standard, product originality and the like. In addition, we also care a lot about the distance between purchasing place and retail place. Asian market is one of our markets that grow fastest. In 2007, the sales amount exceeded our expectation by 250%. We also got excellent development in China.”