Transitioning-Role-of-Hong-Kong-in-the-Global-Toy-Industry | Plastics News

Emily Cheung wears two hats.

As Executive Director of 33-year-old Hong Kong manufacturer Tsuen Lee Group (Holdings) Inc., she is responsible for corporate strategy, marketing, administration, finance and compliance in one of Hong Kong’s largest toy companies (current workforce: 12,000) with factories in Guangdong and Jiangxi provinces. She is also Vice President of the Hong Kong Toy Council Trade Group.

She spoke to Plastics News at the Hong Kong Toys & Games show.

Q: What are the big challenges for Hong Kong’s toy industry right now?

Cheong: We have two different sectors. Some are manufacturers, with factories in China. Some are commercial companies. Those with factories in China face rising labor costs. There are also policy changes. Guangdong [the province neighboring Hong Kong, where many Hong Kong firms operate factories] attempts to move from labor-intensive to high-tech manufacturing. Some toymakers choose to stop.

Q: How about moving to a cheaper part of China?

Cheong: Getting around is very difficult. You need to invest in land and build a factory. You need to build relationships with the local government. Yes [a company] can’t get strong customer commitments, how can they invest in a new venue? This is a dilemma for many companies operating in China.

Q: What about moving to lower cost countries?

Cheong: [Toys] requires many different components, such as metal parts, plastic, screws, packaging, and prints. It’s not like clothes or shoes, which have relatively few components. So, for toy manufacturers, it is very difficult to move into a region or country without good supply chain support. They also need export support. A developed infrastructure for testing and shipping.

Q: What is the Hong Kong Toy Council doing to help you?

Cheong: We encourage our members to ask their customers for designs that can be optimized for automated production. It’s a way for a toy company to survive in this tough environment. What other challenges does the Hong Kong industry face? Trading and manufacturing companies face increasingly high costs for quality control.

We strive to harmonize different standards between different countries. But before achieving this, we must adapt to the regulations of each country. If you wish to ship a product to the United States, Europe, the Middle East, Brazil, and Russia, you must submit samples for each different country. This drives up the total cost of the product.

These standards vary considerably. If you want to sell your product in [a country], you must pass their standards. To do this, you better use a test lab that they recognize. Maybe some of the testing labs in the US are not recognized by Brazil.

Political issues can make this more complicated, as toy safety is always something to talk about. Over the past 10 years, for example, we have seen tighter controls on phthalates and heavy metals in paint. When the standards are changed, you cannot use your old stock in the warehouse. But countries often publish regulations a year or two before making them law. They may release changes ahead of time, but you still need time to adjust to them.

In the toy industry, we have a very obvious high season and low season. We have to manage the workforce and the production capacity. Many parameters keep changing. [A] the customer can make changes to a design.

Also, unless it’s a basic product, like a baby product, the shelf life of most products is only three to five years. And it’s very difficult for the toy industry to automate.

Q: Can’t safety and quality testing help your reputation and therefore your brand?

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