Growing Chinese Toys Imports Forcing Local SMEs To Shut Shop

The branded local toy industry and those associated with the manufacturing and supply of home-made toys are in dire straits. Over 400 registered micro, small and medium enterprise (MSME) directly associated with Indian toy manufacturing industry may soon shut shop because they can’t compete with cheaper Chinese imports. 

The domestic toy industry, which is largely a combination of organized and unorganized, employs nearly 25 lakh people, a bulk of those being employed in small units spread across West Bengal, Uttar Pradesh, Maharashtra, and Andhra Pradesh among other states.

There are over 2,000 such units registered with the domestic toy market and at least 40 per cent of those have already shut shop in the past five years say people associated with the trade. “Additional 20 per cent or so are on a verge of closing down. It is difficult to compete with Chinese toys that are flooding the market regularly,” says a local toy manufacturer from Pune.

Also, merely 12 per cent of MSME Toys Manufacturers have their own full-fledged in-house design studio and team of trained designers for product conceptualization, prototype development and R&D on design with proper setup of software, say those connected with the trade.

Lack of credible data on the size of Indian toy market also poses a challenge. According to estimates, the branded toys market is worth over Rs 2,000 crore while the overall toy market is estimated in excess of Rs 9,000 crore.

Due to non-availability of affordable raw materials, many manufacturers are forced to import from China to ensure their final product is affordable. The Chinese firms focus on mass production and consumption strategy making their outputs cheaper.

Says Abhijeet Ghosh, the owner of a Kolkata based toy fir called Om Shanti Om International has a section titled “Chinese Toys and Gift Items” on its online platform. “The finished toys come by air to Kolkata from China from where it is further transported to the wholesalers and retailers across the country.” Ghosh says he serves big corporates as well, with average orders beginning from Rs 50,000 onward.

Agrees Ernst Kick, CEO, Spielwarenmesse, a Germany-based organizer of international trade fair for the toy industry. “Chinese products have a high influence over the Indian toy market. More than 80 per cent of all the toy products produced in the world from China,” he says.

Even big players like Mattel Toys have manufacturing units in China but the largely unorganized Indian toy industry is depending big time on Chinese toys for business. Says Ishmeet Singh, Country Head, Mattel India “The unorganized sector forms 70 per cent the total domestic market imports from China as China has a lot of production of unbranded toys.”

Funskool India, another large organized toy maker based in Chennai says the problem also arises as the Chinese products imitate cheaper version of the popular toys. “The influx of cheap Chinese toys which are quite often “duplicates” of best-selling brands in large quantities. They have prices which are very competitive and difficult to match by Indian manufacturers as the Chinese toy makers manufactures for the world market and play a high-volume game which obviously has an advantage on pricing. They quite often do not follow all the quality standards required for toys as well,” says John Baby, CEO, Funskool India Ltd.