Toy manufacturers are grappling with the complexities of shifting production away from China as surging costs and global disruptions reshape supply chain dynamics.<o:p></o:p>

This is based on a Reuters report.<o:p></o:p>

The Boston Consulting Group highlighted the challenging terrain faced by toy makers in a study, emphasising that such a transition is no simple task.<o:p></o:p>

Six years ago, Hasbro initiated the move towards diversification, collaborating with Indian supplier Aequs to sub-contract toy manufacturing. <o:p></o:p>

Rohit Hegde, Aequs' head of consumer verticals, revealed, "They said if you can get into toy manufacturing, now we're looking to shift millions of dollars worth of product from China to India."<o:p></o:p>

Aequs now produces a variety of toys for Hasbro and Spin Master in India. <o:p></o:p>

However, Hegde acknowledges the efficiency gap, telling Reuters, "We don't have the port facilities (in India) that China does. They have been doing this for the last 30 years; their efficiency levels are much better than ours."<o:p></o:p>

Despite the challenges, toy manufacturers recognise the risks of relying heavily on China, as evidenced during the COVID-19 pandemic when Chinese ports faced operational difficulties. <o:p></o:p>

The escalating labour costs in China have been pushing various industries towards geographical diversification. <o:p></o:p>

However, even as other sectors successfully shift production, the toy industry finds it challenging to follow suit.<o:p></o:p>

As of the first seven months of 2023, mainland China still produced 79 per cent of toys sold in the United States and Europe.<o:p></o:p>

Although this is a slight decrease from 82 per cent in 2019, the transition remains a formidable task.<o:p></o:p>

Chris Rogers from S&amp;P Global Market Intelligence points out, "Is it easy to re-shore away from mainland China? No, it isn't. That goes double for toys." <o:p></o:p>

The toy industry faces additional complexities due to its highly seasonal nature and stringent safety and sourcing requirements.<o:p></o:p>

The study reveals that despite rising wages in China pushing toy prices higher, manufacturers are compelled to consider alternative production centres to maintain cost-effectiveness. <o:p></o:p>

While China's minimum wage varies from 1,420 yuan to 2,690 yuan per month, India offers unskilled and semi-skilled workers for 9,000 to 15,000 Indian rupees a month. <o:p></o:p>

However, transitioning to other countries involves a significant time investment, ranging from 18 months to three years, depending on the manufacturing process.<o:p></o:p>

Leading toy manufacturers, including Hasbro and Mattel, have recognised the need to de-risk their dependence on China. <o:p></o:p>

Spiralling Chinese wages have contributed to an 8 per cent price increase in the UK in the first half of 2022. <o:p></o:p>

With the possibility of changes in US duties on Chinese toys, manufacturers are keen on exploring more cost-effective production centres.<o:p></o:p>

Reuters cited Nic Aldridge, the managing director at Bandai UK, who emphasised the industry's focus on de-risking China. "We are all looking at de-risking China. Raw materials costs have gone up a lot in China; we're looking for places where we could get a more reasonable cost," he said. <o:p></o:p>

Bandai is exploring additional manufacturing locations such as India and Thailand, recognising the importance of a diversified supply chain.<o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

Toy manufacturers are grappling with the complexities of shifting production away from China as surging costs and global disruptions reshape supply chain dynamics.

Toy manufacturers are grappling with the complexities of shifting production away from China as surging costs and global disruptions reshape supply chain dynamics. This is based on a Reuters report. The Boston Consulting Group highlighted the challenging terrain faced by toy makers in a study, emphasising that such a transition is no simple task. Six years ago, Hasbro initiated the move towards diversification, collaborating with Indian supplier Aequs to sub-contract toy manufacturing. Rohit Hegde, Aequs' head of consumer verticals, revealed, "They said if you can get into toy manufacturing, now we're looking to shift millions of dollars worth of product from China to India." Aequs now produces a variety of toys for Hasbro and Spin Master in India. However, Hegde acknowledges the efficiency gap, telling Reuters, "We don't have the port facilities (in India) that China does. They have been doing this for the last 30 years; their efficiency levels are much better than ours." Despite the challenges, toy manufacturers recognise the risks of relying heavily on China, as evidenced during the COVID-19 pandemic when Chinese ports faced operational difficulties. The escalating labour costs in China have been pushing various industries towards geographical diversification. However, even as other sectors successfully shift production, the toy industry finds it challenging to follow suit. As of the first seven months of 2023, mainland China still produced 79 per cent of toys sold in the United States and Europe. Although this is a slight decrease from 82 per cent in 2019, the transition remains a formidable task. Chris Rogers from S&P Global Market Intelligence points out, "Is it easy to re-shore away from mainland China? No, it isn't. That goes double for toys." The toy industry faces additional complexities due to its highly seasonal nature and stringent safety and sourcing requirements. The study reveals that despite rising wages in China pushing toy prices higher, manufacturers are compelled to consider alternative production centres to maintain cost-effectiveness. While China's minimum wage varies from 1,420 yuan to 2,690 yuan per month, India offers unskilled and semi-skilled workers for 9,000 to 15,000 Indian rupees a month. However, transitioning to other countries involves a significant time investment, ranging from 18 months to three years, depending on the manufacturing process. Leading toy manufacturers, including Hasbro and Mattel, have recognised the need to de-risk their dependence on China. Spiralling Chinese wages have contributed to an 8 per cent price increase in the UK in the first half of 2022. With the possibility of changes in US duties on Chinese toys, manufacturers are keen on exploring more cost-effective production centres. Reuters cited Nic Aldridge, the managing director at Bandai UK, who emphasised the industry's focus on de-risking China. "We are all looking at de-risking China. Raw materials costs have gone up a lot in China; we're looking for places where we could get a more reasonable cost," he said. Bandai is exploring additional manufacturing locations such as India and Thailand, recognising the importance of a diversified supply chain. (With inputs from Reuters)

Toy manufacturers navigate complex terrain amid production shift challenges: Report

diversification

Diversification, News on Diversification, stories on Diversification, articles on Diversification, Diversification stories at Wion, Diversification news, Diversification latest news