As the Chinese toy industry struggles after the global downturn, it faces competition from neighbouring countries, in particular Vietnam and Cambodia, where labour costs are lower.
Those two countries can produce toys about 15 to 20 per cent cheaper than China can, estimates Robert Hayes, the export manager for Piatnik, a board game manufacturer based in Austria. The company buys some plastics from China but makes its products in Europe. The difference could increase if China allows the yuan to continue to appreciate against the dollar. But China will retain many advantages, Mr Hayes says.
"Hubs are developing in Vietnam and Cambodia, but they don't have the infrastructure of the Chinese," he says. China's superior road network coupled with the "fantastic logistics capability" of Hong Kong will remain advantages for the Chinese, Mr Hayes says. Vietnam and Cambodia "don't have the experienced workforce, and they don't have the depth of talent that the Chinese industry can draw from", he says.
Klas Elm, a vice president of the International Council of Toy Industries and the managing director of the Swedish Toy Association, says no one country is ever likely to dominate toy manufacturing as China has. "If there is a move in manufacturing from China, it will be a scattered situation, with a mix of countries," he says.