China's Toy Market Overview
1. Toys in the Chinese market can be classified broadly into electronic, mechanical, plastic and wooden toys. In addition to traditional offerings, models, licensed toys (movie spin-offs, cartoon characters, etc), dolls, high-tech toys, educational toys, internet-connected toys and toys for adults’ recreation and entertainment have continued to come onto the market.
2. According to data from market research company Euromonitor, the total retail sales of toys and games in China have soared from Rmb71.7 billion in 2010 to Rmb192.3 billion in 2015, registering an average annual growth rate of 21.8% and are expected to exceed Rmb300 billion by 2019. According to research data compiled by a mainland maternity-baby-children website (baobei360), the average amount spent per child (under the age of 16) on toys is less than US$30 in China. When compared to more than US$200 in the US and US$150-plus in some countries in Europe and the Americas, this figure shows there is definite room for development.
3. As urban dwellers’ income rises and quality of life improves, their demands for toys are beginning to change. There is a shift away from traditional, medium- to low-end battery-operated toys, construction sets and decorative toys towards innovative electronic toys, intelligent toys as well as upmarket plush toys and decorative cloth toys. Nevertheless, industry players believe that many people are underestimating the spending power of China’s low-income group. As average income is rising at a rate of 7-10% annually, the wage-earning class is having higher disposable income, so there will be more demand for inexpensive toys.
4. There are around 226 million children under the age of 14 on the Chinese mainland. China begins the full implementation of the two-child policy under the 13th Five-Year Plan in 2016. The National Health and Family Planning Commission predicts that the number of newborns will climb to between 17.5 million and 21 million annually for the next five years. Besides, in view of the steady economic growth of China, the prospect of its toy market is rosy.
5. Electronic toys: high-tech electronic toys have caught on in recent years. Interactive, electronic toys with relatively high technology content have emerged as mainstream items. Another growth area is educational toys inspiring children’s imagination and creativity and enhancing their in-hand manipulation skills. Toys for both learning and fun are well-received by children and parents alike.
6. Plush toys: the plush toys market is marked by the following features: (1) Plush toys in novel and unique designs and especially popular TV drama characters and animation characters have been sought after in the past few years. (2) Integrating electronic toys with plush toys has become the latest trend. (3) Plush toys that double as household decorative items have gained favour among many households.
7. Educational toys: educational toys like jigsaw puzzles, DIY toys and 3D construction sets are becoming the latest craze among parents and children. These toys are marked by several common characteristics: innovative in design, highly interactive and carrying high technology content.
8. Animation and related spin-offs: According to the Forward Industry Research Institute, the animation spin-off market in China is estimated to top Rmb38 billion in 2015, with animation toys accounting for the lion's share. Toy-animation crossover is gradually developing as a profit-generating business model, with Ori-Princess and World Peacekeepers as some of the more popular products. However, most enterprises still rely on animation characters of the US and Japan in their production.
9. Homemade toys and handicrafts: making one’s own handicraft works is not only easy and inexpensive, but is also a relaxing and enjoyable pastime. It has captured a wide audience on the mainland, especially given the tremendous work pressure nowadays. Working on handicrafts during leisure time can help one wind down and so has caught on as a popular home handicraft.
10. Toys for adults’ recreation and entertainment:
a. The market spells enormous potential, but supply is limited. The market remains largely untapped. According to a market survey conducted by the Social Survey Institute of China (SSIC) in 2010, companies specialised in making adult toys were already in operation in the US a long time ago, and over 40% of these companies’ toys are designed for adults. In China, on the other hand, the toy industry is still much confined to meeting children’s demands, and adult toys can hardly be found on the market. 62% of the respondents expressed that they would consider buying toys if they are of good quality and meet their needs.
b. Different adult consumer groups have different demands for adult toys. 34% of the young people interviewed indicated a preference for more complex, smart toys calling on their ability to think and explore as well as toys made for decorative and appreciation purposes; 29% of the middle-aged respondents said they have a penchant for recreational toys and toys incorporating light exercises. As opposed to adult males’ preferences, 27% of the adult females interviewed expressed the desire for decorative items for the home that double as handheld toys. 13% of elderly people interviewed indicated a preference for cuddly animal toys and dolls.
11. The China’s Toy Shoppers: A Purchasing Behaviour Survey published by the Hong Kong Trade Development Council (HKTDC) in 2014 has the following findings:
a. Among the parents surveyed, 93% point out that “I hope my child can have a pleasant and happy childhood; I will continue to buy toys to satisfy my child’s demand for toys”. To children at an older age (6-14), parents would normally give toys as a reward for the efforts they make.
b. Children starting from age 3 already know what toy they want and would ask their parents for it. As the children grow older, their influence on buying decisions would become stronger.
c. The majority of children (73%) obtain information on toy trends from their friends. The proportion of children aged 9-14 who obtain information on toys from the internet and from electronic games is considerably higher than that of children in other age groups.
d. Parents generally attach the most importance to safety (66%) and style/exterior design (55%).
e. Generally speaking, girls in different age groups all like plush toys and dolls, while boys like remote-control/electric toys.
f. The average annual frequency of toy purchase made by parents fell from 10.5 times in 2010 to 8.8 times in 2014, whereas the average annual total spending on toys climbed from Rmb799 in 2010 to Rmb1,069 in 2014.
g. Parents usually buy toys as gift during the birthday of their children (94%) and for the International Children’s Day on 1 June (88%).
h. Large specialised toy stores/toy marts are the most popular channels for parents buying toys for their children (70%), followed by department stores (50%) and supermarkets/hypermarkets (49%).
i. Online shopping has emerged as a new trend in the mainland. According to the 2010 survey, only 14% of the surveyed parents indicated that they had bought toys online in the preceding year. However, the 2014 survey finds that this proportion has risen to 46%.
j. In the past year, among parents who have bought toys online, 79% point out that the toy purchase was made on the Taobao platform. Other major platforms include Tmall (56%) and jd.com (39%). The average price of toys purchased online is Rmb112.