It is difficult to establish a foothold in the Chinese toy market, even when you are already manufacturing your products in factories in China.
Just ask Tech 4 Kids Inc. The Mississauga-based company designs its toy line, which includes soft and light-up toys that it combines with a license for the popular Despicable Me servants and My little Pony characters, in Canada. But he actually makes them in China.
Originally founded in Red Deer, Alberta, the company only distributed toys until it transitioned to manufacturing them in 2006. It has approximately 50 employees in Canada and China.
Although it has shipped products around the world since then, the company was able to strike a deal to enter the Chinese toy market just six months ago.
“It’s very difficult to get in,” said Graeme Bissett, the company’s director of international sales, who blames the problems on strict testing regulations and a “decentralized” retail market in China.
To enter the Chinese market, companies selling certain products, including medical devices, audio and video equipment, and toys, must receive certification issued by China. This includes product testing by a lab in China and factory inspections by certified personnel, according to the Canadian Trade Commissioner Service website.
To prepare for all of this, Mr Bissett said the company needed to “get internal processes to the point where we could actually manage and pass all of these testing procedures”.
Tech 4 Kids also needed to find a Chinese partner to help them approach the market. Unlike Canada, where large retail chains such as Wal-Mart and Toys R Us dominate markets nationwide, in China stores are regional, with few chains.
“You need a partner who is hungry enough to go to these different regions, place products and meet customers to sell products,” he said. “We have met so many distributors in China over the years, but we weren’t able to find the right partner.”
It was one of the company’s toy industry contacts, a Canadian resident born in China, who found the partner Tech 4 Kids was looking for.
Jacqueline Vong, who had connections in China, put the company in touch with its distributor, King Bee Toys. Ms. Vong has since moved to China and works with King Bee Toys.
Despite the obstacles the company has faced in entering the Chinese market, Bissett says he is confident that the launch in China will be a success. Tech 4 Kids has already shipped just under 200,000 toys to China and expects a second shipment next month.
“We do a lot of business in Europe, in Latin America, and we were doing a lot in [the former Soviet Union] The Commonwealth of Independent States, and all of them right now … find themselves in very difficult situations from an economic and monetary point of view,” he said.
“I would say that right now China is the #1 market that has seen huge growth, outside of the United States”