China is the world's largest manufacturer and exporter of toys. Chenghai District, under the jurisdiction of Shantou, Guangdong Province, is one of the largest toy production and export distribution centers in China. After 40 years of development, Chenghai toy industry has gathered in groups and perfect supporting systems, transfusing blood for the "capillaries" of global trade.
Guangdong is bordered by the sea in the east, the Pearl River Delta in the west, a hundred-year-old commercial port, overseas Chinese all over the world, and a strong business culture. Light industry categories such as shoes, toys, ceramics, and wedding dresses are complete. Shantou has been listed as a sub-central city in Guangdong Province, which has the ability to drive regional economic development, and craft toys are one of its pillar industries.
The area of Chenghai District is 345.23 square kilometers. However, the output value of the toy industry has reached the level of 10 billion, and the market main body has exceeded 43,000 households, of which self-employed households account for nearly 75%. In 2021, there are 332 industrial enterprises in Chenghai, of which toy companies account for nearly half, with 6 listed companies, 2 toy companies listed on the New Third Board, and more than 100,000 toy industry employees.
The cost of manufacturing industry is rising year by year, the quality requirements are becoming stricter, the homogenization competition is unsustainable, and the traditional toy industry seeks new growth points to be solved. In 2020, the new crown epidemic struck, the world economy was frustrated, and globalization encountered adverse currents, testing the resilience of supply chains.
In the face of changes in the domestic and international situation, the central government has repeatedly proposed that it is necessary to accelerate the construction of a new development pattern with the domestic cycle as the main body and the domestic and international dual cycles promoting each other. On June 22 of the same year, the General Office of the State Council issued the Implementation Opinions on Supporting the Transfer of Export Products to Domestic Sales. The Chenghai Industrial Belt reflects the economic background of China's counties, is an important node of carrying forward the upper and lower levels, and is of great significance to opening up the economic double cycle.
In 2021, the haze of the new crown has not disappeared, and the chain reactions of rising raw material costs, rising prices of international shipping, and poor logistics have hit toy manufacturing another blow. The world economic situation is complex and severe, and how China breaks through as the "world factory" urgently needs to reshape the value chain in the "new rhythm" of the global industrial chain.
For a long time, the Chenghai industrial chain has been complex, there has been disorderly competition among manufacturers, intellectual property rights are difficult to supervise, and brand effect needs to be improved. Toy manufacturing is a labor-intensive industry, the demographic dividend is gradually weakening, how to move closer to the direction of technology and capital-intensive?
The Regional Coordinated Development Research Group of Southern Metropolis Daily investigated several manufacturers with different operating scales and categories in Chenghai District, exhibition halls and shipping companies in the upstream and downstream of the toy industry chain, as well as Chenghai Toy Association and university experts. The research group found that many manufacturers are exploring the domestic trade market, cross-border e-commerce boom is rising, and new trends such as "home economy" home toys are at the forefront. In order to bid farewell to extensive development, powerful factories actively invest in automation equipment, turn around to precision manufacturing, and precipitate brand value.
In recent years, Guangdong Province has guided more traditional manufacturing enterprises to jump to the highest levels of the value chain. Animation, online games, mobile games, IP, intelligent robots and other toy-related digital creative industries have emerged, and intellectual property rights, scientific and technological content are stepping stones for toy manufacturing to move towards the high-end market.
Toy Nuggets
Overseas Chinese merchants introduce orders, from workshops to enterprises to diversify the pattern of development
Compared with the Pearl River Delta, where capital is swarming and infrastructure is mature, the development of Chaoshan in eastern Guangdong is relatively uneven. The research group chose a relatively microscopic incision, the traditional agricultural county of Chenghai, with the advantage of low land and labor, how to operate a huge industrial chain, which can peek into the economic development path of Guangdong County.
"After the reform and opening up, overseas Chinese entered, and many Hong Kong and Singapore businessmen came here to find processing plants, starting from making accessories and then selling them to foreign firms in Hong Kong." Du Ruisheng, executive vice president and secretary general of Chenghai Toys Association, said that in 1995, the toys manufactured by Chenghai have been marketed overseas, and all kinds of merchants have heard the wind, and Chenghai has created its own brand and diversified business models. This is different from Dongguan, where foundries are lined up for large-scale production and cluster industries by providing OEM services.
Du Rui was born at the age of 65, and in the 1950s, when he grew up, the Chenghai people grew rice for a living. After the reform and opening up, the family bond tied to overseas Chinese-funded foreign enterprises, bringing the first bucket of gold to Chenghai County at that time, and new orders, technologies and equipment took root here. Truck after truck of containers flows endlessly on the dirt roads of the county seat. The young Du Ruisheng smelled the business opportunities and changed from the decoration industry to a toy factory. The two sons inherited their father's business and produced remote control cars for export to the European and American markets.
Familiality is a major feature of Chenghai's toy industry. There are family workshops all over the area, and the three- and five-storey peasants' self-built houses integrate factories, warehouses and food and housing, supporting the urban ecology of "mixed production and residence". The upstream and downstream division of labor in the industrial chain is complete, the parts manufacturing is subcontracted layer by layer, which is very flexible, and the final toy finished product is completed by multiple collaborations.
In the small micro factory in Chenghai's self-built house, local female workers are testing whether the toy sewing machine can be energized, flashing lights and singing English songs, and in 20 seconds, the goods will be sent to Russia. In addition to spare parts on the workbench, there are radios, men listen to radio news, and female workers read operas and romance novels at the table.
In the mid-1980s, when toy entrepreneurship began, urban unemployed youth, rural surplus labor, and laid-off workers in enterprises in Chenghai District competed to open small workshops and use manual plastic mechanisms to make toys. According to the survey data of Chengguan Town under the jurisdiction of Chenghai in August 1984, there are 220 plastic toy workshops in urban and rural areas, with an average of 1.5 manual plastic machines per household. In 1985, there were 406 workshops in Chenghai County Toy Factory, employing nearly 10,000 people, with a total industrial output value of 36 million yuan that year, of which cloth toys, plastic toys and other toys accounted for one-third each.
The rise of domestic and foreign consumer markets, toy manufacturing technology continues to advance. By the mid-1990s, Chenghai's toy category had an electronic trend, and remote control and electric toys were on the shelves. Since 1993, individual professional households have begun to register as private factories or limited companies in batches, and gradually become toy owners. "There are a large number of new toy manufacturers, and it takes a lot of effort to give the company a business name to avoid having the same name as other companies." Official information shows. As of 1995, toy manufacturing had become a pillar industry in Chenghai, with exports reaching $72 million, accounting for 27% of the county's total exports.
From the late 1990s to the post-millennium, the scale of Operation of Chenghai Enterprises expanded, and a number of factories with factories of more than 10,000 square meters appeared, and the number of employees exceeded 1,000. Large, medium, small and micro enterprises develop in parallel. In April 2003, the China Light Industry Federation awarded Chenghai District the title of "China Toy and Gift City".
After 2005, with the stricter quality and safety requirements at home and abroad, the labor cost is higher, the problem of recruitment difficulties is becoming increasingly prominent, the price of raw materials is rising year by year, and the internal and external pressures such as the international environment and the appreciation of the renminbi are superimposed, and the pressure on large and small toy companies in Chenghai has doubled. "The market is not transparent enough, the production is too scattered, and the explosive models will be copied at once." A toy manufacturer said.
Leading enterprises such as Aofei Entertainment and Xinghui Entertainment have been listed one after another. Mass pop culture fuels the waves, the capital market intervenes, commercial operations drive "traffic", and the value generated by IP operations is gradually sought after by the market.
Chenghai toy industry chain is flexible, and there are many categories such as cattle hair. "Showroom mode" is unique to Chenghai, similar to the front shop and back factory, merchants to Chenghai, first through the trade service provider to the exhibition hall to select products, and then sign a single with the manufacturer, the exhibition hall as a display platform does not participate in intermediate trade.
According to industry insiders, there are about 2,000-3,000 foreign trade companies in Chenghai, and about 70% of toy orders come from overseas. Du Xianyi, deputy general manager of Hongteng Toy Showroom, introduced that Hongteng Showroom has more than 5,000 booths of various types, more than 300,000 products exhibited in the exhibition, and more than 2.2 million product databases. Before the epidemic, about 8,000-9,000 batches of merchants came to select products every year, from more than 100 countries. During the Canton Fair, there are especially many, and the exhibition hall receives dozens of batches of merchants every day, and thousands of samples are handled every day, and the booth is "difficult to find".
Variables abound
The epidemic has shaken the industry, and multiple pressures have superimposed
"The epidemic has hit hard", "many small workshops can't hold up", "several problems have collided together"... The COVID-19 pandemic has lasted for two years, putting pressure on the foreign trade-led toy industry.
Around December of each year is the most critical sales season in the foreign trade toy industry, which determines the annual revenue. According to the rhythm of previous years, manufacturers should start to organize the selection of goods before the Spring Festival, orders placed in the spring of April and May, summer production in June and August, and autumn shipments in July and September, in order to be on the shelves in time. By the end of November, there were still ships adrift at sea and had not yet arrived.
In 2021, the global capacity is unbalanced, a cabinet is difficult to find, the price of shipping has soared, and the cargo ship full of toys departed from Shenzhen Yantian and Shantou Ports, but encountered port blockages, shortage of land truck drivers and other conditions, and the arrival time was delayed.
When the research group conducted a survey in November 2021, Chenghai toy manufacturers reported that the shipping time was extended from 60 days to 6 months in Europe, and from 45 days to 3 months in the United States, and the freight rate increased by 5-10 times. "In the past, the freight of a cabinet was not higher than one-third of the value of the goods, but now the freight and the value of the goods have become 1:1, and even the freight is higher than the value of the goods." The clerk of the local shipping company said.
For small and medium-sized toy companies, a shipping company once released a "special price cabinet", ranging from 7,000 US dollars to 10,000 US dollars. "Almost all of them are seconds, and the fight is hand speed." A toy practitioner said.
Cai Jinfeng, head of Shantou Zefeng Toy Factory, introduced to the research group that Christmas season orders accounted for 70% of the year. Affected by sea freight turnover and rising costs, the unit price of factory shipments was 5-10 points higher, and shipments fell by 10% year-on-year. Cai Jinfeng is a "post-90s", returned to his hometown after graduating from college for 5 years, and took care of the toy factory with his family, the main product is the orbital ball plastic building blocks, for European and American supermarkets and e-commerce supplies. The toy factory is located in a 3-storey self-built house with a plant area of more than 3,000 square meters.
The epidemic has made the supply chain dysfunctional, accelerating the change in supply and demand. Nowadays, the popularity of the toy showroom is not as good as before, and occasionally agents live-stream the selection of products for foreign businessmen in front of the shelves. Doing business across borders online has become the new normal, and home-based toys such as building blocks are more popular.
Chenghai toys such as cattle hair, manufacturing process development, the trend is also from dolls, remote control cars to building blocks, robots, etc., update iteration fast. Building blocks are considered to be the "evergreen trees" in toys, and due to the large age span and high user viscosity, they have been favored by the market in recent years.
The outbreak of the epidemic at multiple points has brought uncertainty, the step-by-step production is no longer "reliable", and the speed of order turnover has accelerated. "The manufacturing threshold of toy products is low, the production line originally made 1 product in 1 month, and now it may be changed after 5 days." A manufacturer of remote control toys in the industry for 10 years said.
Cai Jinfeng concluded that the overall elimination rate of new and old customers in the past two years has risen from 10%-15% to 30%. "After the epidemic, customers asked for fast shipments, and previously placed orders for 3 to 4 months to ship, and now require one and a half months to ship. Our response is to prepare raw materials in advance, organize production according to order forecasts, and make some inventory. ”
The common raw materials for toy process injection molding include polypropylene (PP), polystyrene (PS), propylene-butadiene-styrene copolymer (ABS), as well as hardware, electronic materials, packaging materials, etc., which have also encountered a "rising price tide", and the pressure is transmitted to the downstream industrial chain.
A number of toy manufacturers said that the purchase of raw materials in 2021 increased by between 10-25%, and prices were relatively stable in previous years. Cai Jinfeng said that the price of raw materials generally increases by only 3 points per year. The above-mentioned manufacturers of remote control toys said that ABS plastics in 2021 high point is 15,000-16,000 yuan / ton, 2020 low point fell to 8,000 yuan / ton. The price of IC chips has risen 3 times, and the circuit board has risen 1 times. Another manufacturer revealed that in the spring of 2021, tens of millions of "pressure chips" were taken out, and "fried chips" appeared on the market.
Previously, Guangdong also suffered from a tight power supply situation, in response to the high price of coal and natural gas, the cost of power generation enterprises increased, the official introduction of peak and valley time-of-use electricity price policy and other series of measures. In Shantou and other industrial cities, high-energy factories adjust the pace of production and use electricity at staggered peaks. Several companies investigated by the research group were worried, "The machine was originally 24 hours a day and night, three shifts of production, a daily opening and a stop during the power ration, to start the preheating, spray cleaning, a quarter of the production capacity is gone, the machine damage is larger." "At present, the power supply has returned to normal.
E-commerce next journey
Traditional foreign trade channels are blocked, and the "home economy" drives cross-border e-commerce
The epidemic has affected the operation of traditional wholesale channels, business has shifted from offline to online, and more and more manufacturers have invested in the tide of e-commerce. The younger generation of Chenghai "toy people" told the research group that cross-border e-commerce has grown rapidly and has great potential.
The "home economy" stimulated by the epidemic has stimulated cross-border e-commerce, especially beneficial educational home toys. Xie Weichun, general manager of Guangdong Yuxing Technology Industrial Co., Ltd. (hereinafter referred to as Yuxing Technology), entered the industry in 2000, formed a "husband and wife file" with her husband, started from the production of toy yo-yos, four-wheel drive cars, dolls, etc., and began to do building blocks since 2016, after two years of research and development, the first intelligent building block product was launched in September 2018.
In March 2020, Yuxing Technology entered AliExpress, Alibaba's cross-border e-commerce platform. At present, the company's sales through e-commerce channels account for 50%.
"The epidemic has also made foreign consumers start to frequently try to shop on retail e-commerce platforms." Xie Weichun said that through the cross-border e-commerce platform, building blocks products are sold to more than 100 countries around the world, and a New South American market will be added in 2021. Building blocks are the "evergreen trees" in toys, with a large age span, and strong community, pay attention to user experience, and "enthusiasts" gather online. More and more B-end manufacturers collect feedback from C-end users through e-commerce data, and adjust product research and development, production and other links.
The production of building blocks involves a large number of spare parts and accessories, which is a labor-intensive industry, and Chenghai is home to a large number of foreign workers. More and more manufacturers are thinking about how to "machine substitution".
Cai Jinfeng introduced that before 2020, the proportion of cross-border e-commerce and traditional wholesale channels of its company's products is 2:8, and the proportion change in 2021 is 4:6.
The traditional "showroom model" has also been moved online. There are nearly 10 professional toy e-commerce platforms in the whole district, such as Yicai Network and Xiao bird cloud. Taking The Bird Cloud as an example, it has gathered more than 40,000 toy factories and more than 2 million toy products in the national industrial chain to select toys online and search for source factories.
According to official data from Chenghai District, there are 10,194 toy market entities whose business scope includes online sales. The industry estimates that about 60% of the toy companies and self-employed households registered in the zone sell through the Internet.
At the same time, Chenghai Toys has opened up the domestic market through e-commerce, live streaming and other channels, and the toy trade format has shown diversified development.
Since the trial operation of Shantou Toy Douyin E-commerce Live Broadcast Base in March 2021, it has settled 236 enterprise merchants, with a current broadcast rate of more than 50%, a maximum of more than 50,000 people in the live broadcast of merchants, and a single-day sales of more than 1 million.
"Douyin live broadcast with goods, manufacturers demand emerged." The best sellers of live broadcasting are drones, hand-made, blind boxes, etc. Wu Jilin, head of Shantou Toy Douyin e-commerce live broadcast base, said.
The research group found that it is not easy for foreign trade enterprises to adjust their business and develop the domestic demand market, and they must make changes in design style, production lines, sales channels, etc., and they are not familiar with market access and different payment collection cycles. "The overall low pursuit of quality by domestic e-commerce has led to a serious price war and a lack of quality control standards." Chenghai toy industry insiders said that due to cost and risk considerations, many manufacturers "dare not try".
Become China's "Lego"
Industry changes and intelligent manufacturing accelerates
The research team found that the Chenghai toy category is constantly innovating. In the past, for B-end foreign trade sales, large and small enterprises won by volume, and the "price war" was endless. E-commerce will directly push manufacturers to C-end customers, "explosive models", "traffic", "surprising victory" and "IP brand" have more potential to carry goods.
Huada Toys Co., Ltd. (hereinafter referred to as Huada Toys) is a leading local building block manufacturing enterprise, starting from the production of baby carriages and remote control vehicles, and turned to the building block industry in 2015, from design, production and sales are grasped by their own families, covering the entire industrial chain, which is relatively rare in the local area.
Chen Wei, deputy general manager of the company, introduced that it takes 2 or 3 months for new products to be launched from project establishment to listing, and the company has set up 3 research and development departments. "If you don't go fast enough, you'll be left behind very quickly." Huada toys account for about 6:4 domestic and foreign trade, and there are signed IP (Intellectual Property) licensed building block products, such as Ultraman, Godzilla, Kumamoto Kuma bricks, etc.
"Toy innovation is more about styling, but products need to be iterated continuously, starting with details such as splicing and burrs reduction, and following customer needs." Cai Jinfeng and other "post-90s" bosses have a stronger sense of "network", are keen on the trend direction, love to visit shopping mall toy windows, and teach themselves industrial design software.
Molds are tools used to manufacture molded items, and their quality determines the quality of the product. Taking plastic building block products as an example, the mold price ranges from 10,000 yuan to millions, and abS plastic is put into the mold, melted at a high temperature of 210 degrees, and injection molded.
Xie Weichun said that the development of new products investment is large, at present, Yuxing Technology has more than 4,000 sets of molds, a set of building block engineering vehicles need thousands of sets of molds, different colors. "Different building block molds are quite different, and our products should control the accuracy of building blocks at an error of about 1 c." A hair like a man is about 10 c's. ”
In the Huada toys mold opening workshop, the masters have more than ten years of experience. Precision is the core competitiveness of building blocks, and the requirements for quality control are high. Industry insiders stressed that with the international leading brand lego of building blocks to narrow the gap, domestic manufacturers should be more sophisticated in precision.
Experienced masters compare the molded building blocks with the particulate mold one by one, with a scale as thin as 2.5 mm.
Chen Wei said that some precision machines rely on imports and cost a lot. The Huada Toys Dust-free Processing Center places several imported wire cutting machines and invests 20 million yuan for the imported machines.
"It is not difficult to produce building blocks, but the company is positioned towards high quality and high standards, investing more, growing slowly, not only needing good equipment, but also needing a strong team." To do the whole industry chain is to grasp the core competitiveness of the production link in the hands, no longer rely on the foundry. Chen Wei said, "Doing 'Chinese Lego' is the dream of the building block industry." ”
For a long time, rising costs, difficulty in recruiting workers every year, and aging workers have been thorny problems in front of manufacturers. Toy manufacturers say that at the beginning of 2021, labor prices rose by 10% year-on-year. Production line workers are generally older. At Zefeng Toy Factory, workers aged 40-50 are assembling "over-the-top" plastic toys, skillfully moving, plastic fittings stacked on the workbench, and Teochew operas playing on the radio in the corner.
"The stability of post-90s and post-00s workers is not as good as that of the previous generation, and they seem to pay less attention to wages." The bosses said bitterly.
Large factories are adding machine substitutions, applying more automation equipment, improving efficiency, and adapting to the precision manufacturing requirements of high-quality toys. Shantou Gaodesi Precision Technology Co., Ltd. was founded in 2017 and works for several local enterprises.
The automated production line of the Goldex factory, supported by a central feeding system and intelligent warehouse, greatly improves the efficiency.
The Cordex factory has a double-storey intelligent warehouse with a total area of more than 10,000 square meters, a warehouse capacity of 120,000 boxes of building blocks, each box is equipped with a bar code, the robot sorts at a speed of three meters per second, and 36 robots replace 240 workers. Yuxing Technology's building blocks are also produced here.
"Sorting building block accessories is like taking Traditional Chinese medicine, one pack after another, 2 grams, 3 grams, 7 grams, 8 grams of small pieces, a bag adds up to dozens of small pieces." Xie Weichun described that the production of building blocks is trivial and complicated, the machine can save manpower, and the production accuracy has also been greatly improved.
Huada Toys has also invested 15 automated production lines in recent years, with an investment of more than 1 million yuan per line and a 24-hour start-up, eliminating the need for three-shift assembly line workers. In the sorting workshop, building blocks of different shapes and colors are fished on the conveyor belt, distributed to the corresponding boxes, and then automatically packaged. At the end of each production line, there are two quality inspectors, one is responsible for measuring the weight of each package, the error can not exceed 0.1 grams, and if it does not meet the requirements, it is handed over to the other "repair package".
After extensive development and various changes in the internal and external environment, chenghai toy industry is becoming more and more aware of the importance of increasing the added value of the industry. "We have a sense of crisis, rising costs, pushing products to higher added value." Customers who pay attention to quality will not easily change factories. Cai Jinfeng said.
At the end of the Huada toy automation workshop, a semi-manual semi-automatic sorting line was retained, and on the assembly line were 12 skilled female workers, responsible for the sorting of large building blocks, and each person's monthly salary was 4,000 yuan-6,000 yuan. In front of the workstation, the female worker planted a small building block flower.
Yang Yusheng, assistant to the general manager of Aofei Entertainment, told the research group that Aofei Entertainment transformed from a traditional toy manufacturer, and its trademark awareness began to emerge from the 90s, and then introduced animation such as four-wheel drive kid, using animation IP authorization to drive the development of the toy industry. Relying on the R&D centers in Shenzhen and Guangzhou, Aofei Entertainment and other companies have established "industry-university-research" cooperative relations with universities to explore the transformation of "animation IP + mobile games + network + pan-entertainment" path.
According to official information, China Shantou (Toys) Intellectual Property Rapid Protection Center has settled in Chenghai, relying on the center, toy design patent rapid examination and issuance of authorization certificate, from application to authorization takes only 3 to 10 working days. At present, there are 30,169 valid registered trademarks in toys.
"The low-cost, labor-powered way of making money in the past has gradually left us." Fan Wei, director of the Department of Electronic Information Engineering of the School of Engineering of Shantou University, said that Chenghai toys have a fast manufacturing and development speed and a high cost performance ratio, but many enterprises lack long-term planning and have a long way to go in increasing the added value of products such as industrial design, attention to research and development, and intellectual property protection.
Coordinator: Nandu reporter Huang Shulun
Written by: Nandu reporter Huang Shulun Wang Meisu Liu Jialin Intern Chen Manyu
Photo: Nandu reporter Liu Jialin