Chinese Toy Factories Under Threat

May be forced to close factories

Hundreds of Hong Kong-owned toy factories in China may be forced to close after huge global recalls hit the industry, the Hong Kong Toys Council said Jan. 4. Lawrence Chan, chairman of the council, said the wave of massive recalls in the U.S. and Europe had prompted the Chinese government and foreign buyers to impose stringent quality checks.

Costs for quality control had rocketed by at least 500% since the high-profile recalls began in June last year, he said. This, coupled with the rising cost of labor and raw materials amid surging oil prices, is expected to push total production costs in 2008 up by 15% year-on-year. Chan said hundreds of toy factories in China would find it difficult to withstand such pressures and could be forced to shut, although most of the victims would be small and medium-sized companies.

"Buyers are worried about product quality now, so they prefer to go with bigger companies rather than the smaller firms to make their toys," he said as he and industry bodies launched Hong Kong's first toys festival. The show, which opened on Jan. 30, aims to boost the tainted image of made-in-China toys. The event, which coincides with a toy and games fair in Hong Kong, the largest of its kind in Asia, will bring in hundreds of foreign buyers and will hold seminars to discuss international toy safety and quality standards.

"We hope to raise the industry's awareness on the safety issues," said CK Yeung, executive vice-president of the Toys Manufacturers' Association of Hong Kong, one of the organizers. "We Hong Kong people have been in the toy business for more than 20 years and we want people to know that we do have very strict rules on the quality of our goods," he said.

Over the past few months China has come under strong international pressure after millions of toys exported to the U.S. and Europe proved to have dangerous defects. Although the recalls have hurt the industry's reputation, the sector recorded an increase of three percent in toy sales in 2007, Yeung said. "We are confident in our businesses going forward and hope that we'll be able to cope with the difficulties we've experienced. We are cautiously optimistic that (sales) will increase this year," he added. China is the world's top toy exporter, selling 22 billion toys overseas last year, or 60% of the globe's total.

Copyright Agence France-Presse, 2008

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