Chinese consumers browse toys in a Toys"R"Us store in Shanghai. Photo: Xie Jun/GT
Toys"R"Us Inc is reportedly scrambling to uphold its global business, but what is certain is that the company is thriving in the Chinese mainland market, with its 140th Chinese store recently opening in Shanghai. Similarly, other overseas toy brands like Lego and IKC are also enjoying double-digit growth numbers in the Chinese mainland at the moment. The country's economic rebound and Chinese parents paying more attention to their children's all-round development are two reasons behind the phenomenon. However, consumers argue that the high quality of foreign brands is the top explanation, though some remain worried over safety standards as most toys are still being manufactured in China.
"Which toy character do you like most?" a ceremony hostess asked a little Chinese girl in front of a brand new Toys"R"Us store inside a glistening eastern Shanghai shopping mall.
"Barbie," the girl replied gently.
"She's a Barbie girl!" the hostess cried to a crowd of people gathered at the opening ceremony of the 140th Chinese mainland store of the half-a-century-year-old US toy retailer.
While the ceremony unfolded, parents and children simultaneously swarmed the store to browse shelves packed with Western-themed toys like Transformers and Iron Man figures.
The Barbie fan is archetypical of the new generation of Chinese children who have grown up exposed to Western culture through mediums such as Hollywood movies and overseas comic books. And this new trend is permitting global toy sellers to find a growth market in China, despite losing ground in many of their traditional markets elsewhere.
China hot, world not
Andre Javes, president of Toys"R"Us Asia Pacific, told the Global Times with a confident tone that the company's "recipe in Asia is working very well", and that the Chinese market is a highlight of its Asian operation.
"We have had significant double-digit growth for at least four years in the [Chinese] mainland. It has been our best-performing market in the world for quite some time," he said on Saturday, seated in the Fastlane home site at the new Toys"R"Us store in Shanghai.
"In terms of the amount of new stores we are opening, the Chinese market is unique. In other words, we are investing disproportionately in China versus the rest of the world," Javes told the Global Times.
The Toys"R"Us stores opened in China are not just restricted to big cities, they also exist in second- and third-tier cities like Hohhot, capital of North China's Inner Mongolia Autonomous Region and Nanning, capital of South China's Guangxi Zhuang Autonomous Region. Hohhot is about 2,600 kilometers away from Nanning.
The American company's rapid success in China is in stark comparison with the fact that its global business is reportedly at risk.
According to a report by the Washington Post on September 19, Toys"R"Us filed for bankruptcy on September 18 after struggling for years to pay off a large amount of debts. But Javes stressed that the bankruptcy stories circulating in the media at the moment are "misinterpretations" as the company is in fact undergoing a "refinancing of debt" operation in the US, which will not affect the Chinese market.
"We are not closing down," he said. "Once this process [of refinancing] is closed, we will become an even stronger company."
Toys"R"Us is not the only overseas toy seller that has found that China is a promising market while at the same time facing obstacles in their global businesses.
Danish toy seller The Lego Group, headquartered in Billund, for example, saw its global revenues slump 5 percent year-on-year in the first half of 2017. The company was also reportedly going to cut 1,400 jobs, Bloomberg reported on September 5.
In China, however, Lego achieved a double-digit growth in revenues in the first six months of this year, according to Lego's half-year financial report.
High-end Dutch toy seller Instore Kids Corners (IKC) has also found growth in the Chinese mainland recently after entering into the market in 1999. The company witnessed 7.05 million yuan ($1.06 million) in sales in the first eight months of this year, up 29.08 percent year-on-year. Furthermore, in 2016 and 2015, the company experienced 15.23 percent and 3.73 percent sales growths, respectively, according to data the company sent to the Global Times.
Doris Zhang, marketing manager at IKC, said that China has now grown to be the company's second-largest market, lagging just behind Europe.
According to data that London-based business intelligence company Euromonitor International sent to the Global Times on Tuesday, retail sales of traditional toys in China reached 69.3 billion yuan in 2016, up from 64.5 billion yuan in 2015.
Meanwhile, Javes said that China's prosperous economy has been one of the reasons behind the escalating market demand for toys, but the change in mind-set regarding the core purpose of the toy is an even more important reason.
"In the past, a toy was used only as a reward for a child's good behavior when studying. But today, mothers and fathers see that toys are also essential to children's comprehensive growth, including their social development, imagination and creativity," he said.
"We see good prospects for the Chinese market. The [recent] two-child policy is a bonus, but even without it, the market's future would still be bright," he noted.
Carol Lü, senior research associate at Euromonitor International in Shanghai, told the Global Times that China's growing middle-class population and growing personal disposable income allow Chinese consumers to purchase more overseas toys with higher unit prices.
"Besides, Internet retailing allows more consumers to purchase overseas toys even if they cannot find the toys in physical stores," Lü noted.
Seeking top quality
Several Chinese consumers told the Global Times that they prefer to buy overseas toys as they believe they are of better quality.
Dong Yaqi, a mother who lives in Shanghai, said she prefers brands like Lego, whose toys' structures have "precisely made curves and angles."
While many Toys"R"Us products are manufactured in China, Javes reassured that the country has high-quality standards and that his company oversees strict tests on all the toys it sells.
But there are also consumers interviewed by the Global Times who argue that Made-in-China toys which belong to overseas brands are of a worse quality than those made overseas.
According to a report published in March by money.cnn.com, nearly 90 percent of all toys sold in the US are made in China, but some US toy sellers are still reluctant to offshore their production factories to China because they fear losing control over quality standards.
"It's understandable that overseas toy sellers would have such concerns, as it's hard to make sure that a company's overseas manufacturing standards always keep up with the requirements of the headquarters," Zhang said.
"However, an overseas company can send management staff to China to supervise manufacturing in the early stages, and gradually the Chinese factories develop a management system that helps employees understand what [standards] the brand requires during production," she said, while stressing that Chinese manufacturers now have a heightened awareness of quality in comparison to the past.
"I don't think companies need to worry too much about Made-in-China products these days," she noted.