Abstract

The history of modern Chinese toy industry dates back to the early 1900s. By the early 1980s, the Chinese toy industry was developed enough to compete in the international market. By 2006, benefiting from economies of scale and cheap labor, the Chinese toy industry had come to dominate the global market for toys, accounting for around 75% of the world’s output. However, in 2006-07, the Chinese toy industry faced a series of product recalls, adversely affecting its global image. The case discusses the development of Chinese toy industry over the years. It discusses the problems facing the toy industry in China, with specific emphasis on the issue of recalls in 2007 and the reason behind the recalls. The case examines some of the other challenges that the Chinese toy industry faces such as increasing labor costs, technological inferiority of Chinese toys and the growing demand for high tech toys, and the Chinese toy manufacturers’ lack of brand power. The case ends with a discussion on the actions taken in response to the series of recalls and the possible impact of these recalls on the Chinese toy industry.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the reasons for the growth of the Chinese toy industry.
• Analyze the problems facing the Chinese toy industry.
• Evaluate the impact of recalls on the fortunes of the Chinese toy industry.
• Analyze the future of the toy industry in China.

Keywords

Chinese toy industry, Product recalls, Quality issues, Competitiveness of Nations, International trade, Country of origin effect, Trade regulations