Himfr.com Reports Frequent recalls challenge China’s rebouncing toy exports

   As the world’s largest base for toy production and export,  China’s southern Guangdong Province is the barometer of the global toy industry.

    There are signs suggesting local toy producers are recovering from the market “cold waves” at the beginning of the year,  but higher technical and safety standards demanded by export markets for products may be working as trade protection.

    Customs figures from Guangzhou, show the province exported 2.56 billion U.S. dollars worth of toy products in the first seven months this year, though down 12.1 percent year on year,  the decline rate was 2 percentage points lower than that in the first half.   And the toy exports totaled 600 million U.S. dollars in July alone,  a new high within the year after June’s 400 million U.S. dollars.  This suggests global demand for China-made Christmas toys is rapidly increasing.

     But this is no surprise as the third quarter is usually the big season for the country’s toy exports. Analysts say the government’s policy adjustment is one major stimulus for toy exports. China has increased tax rebates from 13 percent to 15 percent for toy exports since June 1 this year,  which reduced costs and spurred local toy companies to export.

     Brand-building and technological innovation  are further important reasons for the recovery of China’s toy industry.  Customs figures show products with self-owned independent brands have achieved better and accelerating growth than those without independent brands.

     Guangdong’s toy exports from self-owned brands expanded from January’s 48 million U.S. dollars to 100 million U.S. dollars in July, up 41.4 percent compared with June.  The exploration into the newly emerging markets has also helped China’s toy industry. Figures show Guangdong’s toy exports to the Association of Southeast Asian Nations (ASEAN) reached 130 million U.S. dollars in the first seven months, up 98.5 percent compared with the same period last year. While exports to the United States, the European Union, and Hong Kong markets were down 18.6 percent, 10.8 percent and 13.1 percent during the same period, respectively.

     Some toy companies are looking at the domestic market,  Because of weak demand from the U.S. and European markets, and the sensitivity to prices in the newly emerging markets like the ASEAN, also for more domestic sales.

     But China’s toy producers are facing more trade barriers.  According to a rough calculation,  in just the first week of September, toy makers had received five recall notices from countries such as the United States, Canada and Germany.

    Though recalls targeted at China-made toys by the United States and Europe have been common in the past two years, the concentration of recalls recently is shocking.

     A report by the Guangdong Entry-Exit Inspection and Quarantine Bureau shows China’s major toy export markets, the United States and the European Union, are setting stricter regulations and standards for quality and safety of toy products. In July alone, the European Union made effective a new directive (2009/48/EC) relating to the safety of toys; the United States also adopted the Toy Safety Certification Program.    This not only would raise costs for toy exporters, it is also feared this may cause chain reactions among other ASEAN countries.  Ever-rising technical standards in the international market are becoming a heavy financial burden for toy makers as testing fees rise.