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China Int’l Trade Fair for Children’s Wear & Goods

3 -5 November 2004 Beijing Exhibition Centre, Beijing

Market study:

A Review of the China Market for Children’s Products

China International Trade Fair for Children’s Wear and Goods 3-5 November 2004, Beijing Exhibition Centre, Beijing

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A review of the China Market for Children’s Products EXECUTIVE SUMMARY .................................................................................................................... 3

MARKET OVERVIEW............................................................................................................................. 3 CHILDREN IN CHINA ............................................................................................................................. 3 CLOTHING ............................................................................................................................................ 4 TOYS .................................................................................................................................................... 4 BABY CARE PRODUCTS/DIAPERS........................................................................................................... 5 OTHER PRODUCTS ................................................................................................................................ 5

Strollers and other accessories ....................................................................................................... 5 Children’s stationery ...................................................................................................................... 5 Education ........................................................................................................................................ 6

DISTRIBUTION ...................................................................................................................................... 6 EVENTS AND PROMOTION ..................................................................................................................... 6

INTRODUCTION .................................................................................................................................. 8 APPROACH............................................................................................................................................ 8 ABBREVIATIONS USED IN THIS REPORT................................................................................................. 8 CURRENCY ........................................................................................................................................... 8

BACKGROUND..................................................................................................................................... 9

KIDS FASHION ................................................................................................................................... 12 MARKET SIZE ..................................................................................................................................... 12 MARKET SHARE ................................................................................................................................. 13

Profiles of Key Players ................................................................................................................. 15 TOYS..................................................................................................................................................... 19

MARKET SIZE ..................................................................................................................................... 20 PROFILES OF KEY PLAYERS................................................................................................................ 22

Kader Industrial Co. Ltd............................................................................................................... 22 Silverlit Toys ................................................................................................................................. 22 Toys & Wonder ............................................................................................................................. 22 Guangdong Audley Toy Industry Ltd. ........................................................................................... 23 Shanghai Haixin Group Co. Ltd. .................................................................................................. 23 Haier ............................................................................................................................................. 24

CONSUMER TRENDS ........................................................................................................................... 24 BABY CARE PRODUCTS.................................................................................................................. 26

MARKET SIZE AND MARKET SHARE................................................................................................... 26 Profiles of Key Players ................................................................................................................. 28

CONSUMER TRENDS ........................................................................................................................... 29 BABY DIAPERS .................................................................................................................................. 30

MARKET SIZE AND MARKET SHARE................................................................................................... 30 Profiles of Key Players ................................................................................................................. 31

BABY FOOD ........................................................................................................................................ 32 MARKET SIZE AND MARKET SHARE................................................................................................... 32

Profiles of Key Players ................................................................................................................. 33 OTHER CATEGORIES ...................................................................................................................... 34

BABY STROLLERS AND ACCESSORIES ................................................................................................ 34 Profiles of Key Players ................................................................................................................. 34


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CHILDREN’S STATIONERY................................................................................................................... 35 EDUCATION ........................................................................................................................................ 35

DISTRIBUTION IN CHINA............................................................................................................... 39 GARMENTS ......................................................................................................................................... 39 TOYS .................................................................................................................................................. 39 BABY CARE PRODUCTS ....................................................................................................................... 39

EVENTS IN CHINA ............................................................................................................................ 41 HONG KONG TOYS & GAMES FAIR .................................................................................................... 41 HONG KONG STATIONERY FAIR ......................................................................................................... 42 GUANGZHOU INTERNATIONAL TOYS, CHILDREN’S COMMODITIES & GIFTS FAIR .............................. 42 CHIC – CHINA INTERNATIONAL CLOTHING & ACCESSORIES FAIR .................................................... 43 GUANGDONG (DONGGUAN) INTERNATIONAL TOYS, GIFTS AND HOUSEWARE EXHIBITION (SPRING & AUTUMN EDITIONS)............................................................................................................................ 43 HONG KONG GIFTS & PREMIUM FAIR ................................................................................................ 44 CHINA CHENGHAI INTERNATIONAL TOYS & CRAFTS FAIR................................................................. 44 CHINA KIDS FAIR / CHINA TOYS ........................................................................................................ 45 SHANGHAI INTERNATIONAL CHILDREN’S PRODUCTS EXHIBITION ..................................................... 45 CHINA WESTERN REGION TOYS, KIDS’ PRODUCTS (CHENGDU) EXHIBITION ..................................... 45 INTERNATIONAL EXHIBITION FOR CHILDREN’S EDUCATION AND TOYS CHILDREN’S TOYS............... 46 SHANGHAI TOY EXPO – INTERNATIONAL TRADE FAIR FOR TOY, HOBBIES & GIFTS FAIR ................. 46 HONG KONG INTERNATIONAL TOYS & GIFTS .................................................................................... 47 KEY PUBLICATION .............................................................................................................................. 47

FIGURE 1: EXPENDITURE ON CLOTHING AS A PORTION OF TOTAL CONSUMER EXPENDITURE, URBAN

POPULATION .................................................................................................................................. 12 FIGURE 2: COMPOSITION OF CHINA CHILDREN’S FASHION MARKET BY PRICE IN 2002 ............................ 13 FIGURE 3: TOP-RANKING CHILDREN’S FASHION BRANDS IN CHINA, 2002 ............................................... 15 FIGURE 4: TOP RANKING CHILDREN’S FASHION BRANDS IN BEIJING........................................................ 15 FIGURE 5: MAP OF CHINA SHOWING PROVINCES ..................................................................................... 19 FIGURE 6: GROWTH RATES OF BABY CARE PRODUCTS, 2001 – 2006........................................................ 27 FIGURE 7: GROWTH IN SALES OF DIAPERS IN CHINA, 1997 – 2001 .......................................................... 30 TABLE 1: MARKET SIZE BY SECTOR.......................................................................................................... 3 TABLE 2: LES ENPHANTS BRANDS........................................................................................................... 16 TABLE 3: OPERATIONS OF LES ENPHANTS GROUP .................................................................................. 17 TABLE 4: CHINA'S TOP EXPORT CATEGORIES, 2002 ................................................................................. 21 TABLE 5: TOY IMPORTS AND EXPORTS IN CHINA, 2000 - 2002 ................................................................ 21 TABLE 6: SALES OF TOYS AND GAMES IN CHINA, 1996 - 2002................................................................ 21 TABLE 7: TARIFFS ON IMPORTED TOYS, 2002 – 2005............................................................................... 22 TABLE 8: SALES OF BABY CARE PRODUCTS IN CHINA, 1997 - 2002........................................................ 26 TABLE 9: MARKET SHARE OF BABY CARE PRODUCTS BY VALUE, 2000 - 2001 ...................................... 28 TABLE 10: MARKET FORECAST OF BABY CARE PRODUCTS, 2001 - 2006................................................ 26 TABLE 11: SALES OF NAPPIES/ DIAPERS/ PANTS IN CHINA...................................................................... 30 TABLE 12: MARKET SHARE OF NAPPIES/ DIAPERS/ PANTS BY VALUE, 2000 – 2001............................... 30 TABLE 13: SALES OF BABY FOOD IN CHINA, 1996 - 2001 ....................................................................... 32 TABLE 14: MARKET SHARE OF BABY FOOD BY VALUE, 1999 - 2000........................................................ 32


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Executive Summary

Market Overview • Our research has generated the following estimates for the different

sectors of the children’s products market in China.

Table 1: Market size by sector

SECTOR DOMESTIC SALES (US$ MILLION)

Children’s clothing $3,500 – 5,000 Baby food (includes milk powder) $1,000 Children’s stationery $850 Toys $800 Baby diapers $250 Baby care products $110 Strollers & other accessories $50 TOTAL $6,500 – 8,000

Source: BSG research • In terms of the types of products most likely to be suited to promotion

through trade fairs, we believe the focus should be on children’s clothing, toys, stationery, and strollers and other accessories. For this, the market is thought to be in the region of US$5.5 – 6.5 billion. Other product categories are more typically distributed through supermarkets and the related wholesale systems and may be less suited to trade fairs.

Children in China • There are almost 290 million children in China aged 0 – 14. Some 80

million of them live in cities and are, therefore, readily accessible to international companies.

• Around 20 million babies are born each year, the majority of them still into

one child families in which six adults (two sets of grandparents and two parents) dote on one “little emperor”.


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parents) dote on one “little emperor”. • The average monthly consumption by urban children is $108 suggesting

total spending in all categories in the region of $100 billion.

Clothing • The market is dominated by thousands of small, factories producing either

for the export market or non-branded, low-end product for the domestic market.

• In the market for branded products sales are roughly evenly spread

between domestic and international brands. Sales of expensive, foreign branded children’s wear is concentrated mainly in the largest and most developed cities.

• Asian children’s brands such as LawLandee and Les Enphants are among

the most successful along with brands built around internationally-recognised cartoon characters such as Mickey Mouse and Snoopy.

Toys • Guangdong province in south China is the world’s largest production base

for toys. The main focus of this industry remains, however, export to more developed countries.

• There has been limited development of branded toy products by domestic

companies for the domestic market. Although the vast majority of the volume in the market is in cheap, non-branded toys, where branded products are sold, well-known foreign brands dominate.

• There is a growing demand among wealthy urban parents (almost always

with only one child) for sophisticated educational toys. Radio controlled cars and other electronic toys rate next in popularity.

• Tariffs on imported toys are due to be reduced to zero by 2004 suggesting

that a good market could open up for high-end educational toys from over-seas. Imported toys currently represent 9% of the market by value, a figure currently increasing by around 0.5% per annum.

• Hong Kong companies with substantial manufacturing in China dominate


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the industry.

Baby care products/diapers • There is a solid and growing demand for baby care toiletries, diapers and

prepared baby food. • The market is split between the largest multi-national companies and

some large and influential domestic players – it is much less fragmented than the market for toys and apparel and may, therefore, be less well suited to trade fairs as a promotional medium.

• Distribution of these products is still mainly through department stores

but supermarket chains, European-style hypermarkets and small local grocery stores are playing an increasingly important role as more modern wholesale distribution networks are established in that sector.

• Some local firms or smaller international companies with specialist ranges

who are beginning to launch products into the top end of the baby/infant care market may find a child-orientated trade fair a useful marketing medium.

Other products

Strollers and other accessories • This market is still relatively small although it is beginning to take off in

the most sophisticated cities. • Some of the world’s leading companies in this industry are based in China

although they tend to be focused on export markets.

Children’s stationery • We believe this to be a sector worth at least $850 million a year and one

which already features heavily in trade fairs addressing children’s products. There is probably good potential for more attention to be given to this area.


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Education • A related area is the promotion of educational services which we believe

to be one of China’s fastest growing and most important markets. • There are now 60,000 private schools in China serving around 10 million

children – 4.1% of the total school population. • The English language education market is said to be worth around Rmb10

billion (US$ 1.2 billion) a year in China. • There are 1.6 million students around the world studying away from their

home country. 23% of these are from mainland China. The profile of these students has also changed: they were once mainly top-ranking postgraduates. Many are now from wealthy families and are starting their overseas education as high school students.

Distribution • Most sales of baby and child products are through department stores,

supermarkets and, increasingly, hypermarkets such as Carrefour and Wal-Mart.

• There are relatively few specialist children’s product or toy stores in China

at this stage. • Most domestic Chinese companies are supplying the bottom end of the

market with low-priced, unbranded products and do not have distribution systems to cater for the more sophisticated retail store buyers who are beginning to emerge.

Events and promotion • There are no events specialising children’s fashion although CHIC in

Beijing does have a substantial children’s wear hall with about 15% of the total number of exhibitors.

• There are a number of important toy fairs of which the most important is


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the HKTDC’s Hong Kong fair in January. Most of the toy fairs and other which incorporate children’s products are focused on the international export market rather than the Chinese domestic market.

• Children’s products also feature in major gift and stationery fairs. • Spielwarenmesse has launched a high end toy fair in Shanghai although

the first event was relatively small. • The HKTDC’s Hong Kong Toys magazine dominates the industry for those

wishing to export to major over-seas markets. On-line, the market is split between Global Sources, HKTDC and Alibaba.com (which has a stronger presence in the domestic Chinese market than the other two).


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Introduction Messe Köln Asia’s Pacific regional office has requested that Business Strategies Group assist it to develop a better understanding of the market for children’s fashion and related products in China.

Approach For this report, we have collected information from a variety of secondary sources including:

Hong Kong Trade Development Council National Bureau of Statistics, China Euromonitor Domestic Chinese press International business press US Government reports BSG’s in-house events database

Abbreviations used in this report The following abbreviations are used in this report: HKTDC Hong Kong Trade Development Council

Currency The Chinese currency is the Renminbi Yuan. It trades in a narrowly-controlled band against the US dollar. For the purposes of this report, a rate of exchange of Rmb 8.28 = US$1.00 has been used. Where we refer to the dollar, we mean the US dollar unless we specifically state otherwise.


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Background • The total population of children aged 0-14 was 287.74 million at the end of

2002, accounting for 22.4% of the entire population1. Approximately, 80 million of them live in urban areas2.

• In China, about 20 million babies are born each year. The potential market for baby products (i.e. those for infants of 0 -- 24 months) is, therefore, around 40 million children.

• China’s family planning laws limit most couples to having one child, except those couples who are both from a single-child family or when the first-born child has a non-hereditary handicap. There has been some relaxation in rural areas but the policy is expected to apply in the cities for the foreseeable future.

• With the one-child policy, the “little emperor” has a great deal of influence over family consumption with six people (i.e. two parents and four grandparents) doting on one child.

• The birth-rate in major Chinese cities has been falling in recent years. The reasons for this are3:

o Many urban residents marry and have children at a later age; o The improved pension scheme and other social welfare facilities

mean that the elderly are less reliant on their children after retirement so there is less pressure on couples to have children to support them;

o Young couples value career development more than household affairs. Some even thinks that babies are burdens that increase financial pressure.

• Every 100 women of child bearing age (i.e. 20-50 years old) in Shanghai

have on average 95 children. The birth rate in Shanghai is dropped steadily from an average of 1.5 children per women in 1990 to 1 child per women in 1996 and 0.95 child in 2002. Analysts explain that the fall is due to keen competition in women’s career. Under government regulations, women are allowed nine months’ maternity leave and many are concerned that this long maternity leave will affect their career development4.

• Analysts are recording a trends for an increasing number of “dinkies” (double income, no kids couples) in China. According to two independent research studies conducted in Shanghai, Beijing and other major Chinese

1 Source: National Bureau of Statistics, Feb 2003 2 Source: HKTDC, Nov 2002 3 Source: Xinhua News Agency, Nov 2002 4 Source: Xinhua News Agency, Feb 2003


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cities, dinkies accounted for 12.4% of Shanghai families, and 10% of Beijing families. Based on the research results, there are an estimated 600,000 couples in China’s large and medium-sized cities who have chosen not to have children5.

• In 2002, China Mainland Marketing Research Company conducted research regarding children’s consumption in Beijing, Shanghai, Guangzhou, Chengdu, Xian. It revealed that the average monthly consumption of children is US$108. Among the five cities, Guangzhou has the largest average children’s consumption (US$133), while children in Xian spent the least (US$56)6.

• China agent of German children’s wear brand, Ant-ano, has carried out market research concerning into children’s products in Beijing, Jinan, Qingdao, Yantai. Those interviewed were youngsters and the findings were as follow7:

Consumption of children’s products is focused on apparel, toys and

stationery8. Generally speaking, parents dominate purchasing decisions on children’s wear, while purchasing decisions on toys and stationery are driven by the kids themselves. Some 30-40% of sales of children’s products are driven by decision from the kid’s.

The youngster’s surveyed have on average pocket money equivalent to US$9.25 per month. Most of their pocket money is spent on snacks and stationery.

The respondents favour foreign brands of shampoo, sport shoes, apparel, walkman and cellular phones, whereas domestic brands of home electrical appliances and drinks were most popular.

The key customers for children’s products are parents aged 25-35 with considerable purchasing power.

Parents are said to be very responsive to advertising. They prefer brands which are more heavily advertised.

When people identify places to shop, publicity (brand name) and children’s preference are crucial :

o Over 95% children’s products are sold in department stores and supermarkets. These outlets are perceived to offer the best quality and variety. There are also plenty of promotion activities in these stores.

o Not many people favour children’s specialty stores. There are not many of these stores in China. Their decoration and displays

5 Source: Xinhua News Agency, Nov 2002 6 Source: China Jingyang Net, May 2002 7 Source: China Advertising Web, www.a.com.cn, available: Mar 2003 8 The latter may not be an immediately obvious sector but actually represents a very

important segment of Asian trade fair activity.


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are regarded as old-fashioned and people say they do not enjoy shopping there.

o Discounts are seen as the most effective promotional activity. 70% of respondents to the survey say they can afford children’s wear

priced from US$6 -18 and 70% of them can afford toys below US$12. Apparel contributes the largest portion on kids’ consumption but the

frequency of purchase is low. The purchasing frequency of toys and stationery are relatively high.


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Kids Fashion

Market Size • Clothing represents 10-12% of the spending by urban households in

China. Although precise figures regarding what portion of this relates to children’s clothing are not available, it would be safe to assume a figure of 30 – 40% of this for households with children.

Figure 1: Expenditure on clothing as a portion of total consumer expenditure, urban population

13.36%

13.55%

10.45%

10.01%

11.09%

0 100 200 300 400 500 600 700USD

1990

1995

1999

2000

2001

Per capita consumption on clothing(urban) Per capita consumption (urban)

Source: HKTDC, Oct 2002

• There are approximately 44,000 children apparel manufacturing companies in China. Fewer than 200 of them produce branded products9.

• The total production of children’s clothing in China is 600 million pieces a year – equivalent to only 3 pieces for each child on average10.

• The largest portion of sales of children’s apparel comes from low-mid priced products11. The average price of children’s wear ranges from US$6-1812.

9 Source: China Tongzhuang Web, www.kidsclub.com, available: 24 Mar 2003 10 Source: China Jingying Newspaper, Nov 2002 11 Source: China Jingyang Newspaper, 2002 12 Source: China Advertising Web, www.a.com.cn, available: Mar 2003


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Figure 2: Composition of China children’s fashion market by price in 2002

Above USD 24, 5.70%

USD 12-24, 29.30%

Below USD 12, 65%


• The kids fashion market is dominated by infant and young children’s wear

(age 0-6). By comparison, the choice for youth/teenagers’ (age 7-16) is more limited13.

• From January to November 2002, total sales of children’s apparel in 28 major department stores in Beijing were 2 million pieces generating a sales value of US$18.9 million14.

Market Share • Competition is keen in the children’s fashion market, with domestic and

foreign brands sharing the market evenly (although a good portion of the foreign branded products are manufactured in mainland Chinese factories and not actually imported). Among the domestic companies, only 30% have developed their own brands15.

• The low-end children’s wear (below US$12) market is mainly supplied by large domestic and township enterprises. The mid-market is dominated by joint ventures, large domestic and town ship enterprises, while the high-end market is controlled by the imported brands, joint ventures and particular national brands16.

• Though the branded products are better in term of quality and design, they tend to be relatively expensive. Outside the large cities like Beijing

13 Source: China Jingyang Newspaper, 2002 14 Source: Eastern Textile Website, www.ecf.com.cn, Jan 2003 15 Source: China Jingyang Newspaper, 2002 16 Source: China Advertising Web, www.a.com.cn, available: Mar 2003


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and Shanghai, consumers are not generally particularly focused on brands for kids fashion17.

• Imported brands such as Mickey Mouse, Toonsland, Snoopy, Les Enphants are priced higher than popular domestic brands such as YiXi, LanMao, Boshiwa, and Goodbaby. The price of imported brands may be 50% higher than or even double the domestic brands18.

• A research project focusing on the Beijing kid’s fashion market concluded that the difference between domestic and foreign brands was mainly in the design. Domestic brands were found to have dim colours, monotonous designs, and clumsy decorations. The sizing of the clothing was not felt to be sophisticated (e.g. cannot fit the target age, large gaps between sizes, etc.)19.

• None of the children’s fashion brands have more than 10% of the entire market in China. Moreover, the market share of each brand fluctuates considerably from year to year. This may be caused by the pirated products in market which remains a serious problem. The piracy problem is so serious that the low-priced pirated products appear just 2 weeks after a new product is launched20.

• The well-known Chinese beverage brand, Wahaha, has expanded into the kid’s fashion market. It had planned to launch 2,000 chain stores in China in partnership with Hong Kong High Fashion Group (HKEX Code: 0608)21. However, the expansion has not proceeded as smoothly as expected. Although Wahaha established 800 stores within 6 months, the publicity generated and sales were below expectations22. The partnership with Hong Kong High Fashion Group only lasted less than 12 months and ended in Aug 200223.

17 Source: China Jingyang Newspaper, 2002 18 Source: HKTDC, Oct 2002 19 Source: China Jingyang Newspaper, 2002 20 Source: China Fangzhi Newspaper, 2002 21 Source: Xinhua Net, May 2002 22 Source: China Jingyang Newspaper, Nov 2002 23 Source: China Fangzhi Newspaper, 2002


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Figure 3: Top-ranking children’s fashion brands in China, 2002

1 Mickey Mouse2 Xiaozhubanna3 Little Bobdog4 LawLandee5 Yaduo6 Les enphants7 Yixiu8 Shuihaier9 ABC10 Annil

Market share of kids fashion in China (2002)


Figure 4: Top ranking children’s fashion brands in Beijing

1 Shuihaier 11.48% Shuihaier 12.01%2 LawLandee 10.99% LawLandee 11.10%3 Xiaozhubanna 6.81% Yaduo 5.35%4 Wanglegao 4.31% Xiaozhubanna 5.01%5 Little Bobdog 3.66% Yulu 3.18%6 Yaduo 2.98% Haichenbeibei 2.86%7 Les Enphants 2.68% Wanglegao 2.59%8 Brums 2.04% Les Enphants 2.54%9 Haichenbeibei 2.04% Mickey Mouse 1.76%

10 Xingyunshu 1.87% Adidas 1.72%Total 48.86% Total 53.07%

Maket Share of Beijing kids fashion (as of Jan 2003)Nov-02 Jan-03

Source: China Textile Web, www.texnet.com.cn available: 25 Mar 2003

Profiles of Key Players

LawLandee Established in 1994, by American and Taiwanese investors, the owner of the LawLandee brand is PacLantic Co., Ltd. It owns a vertical operation that covers design, procurement, production, distribution, and marketing. It claims to be among the top three children’s wear companies in China. Brands The company owns two brands, LawLandee and LawLandee Footwear, and licenses the BabyMe and Coffee Beans brands. It has also licensed Garfield and Garfield Baby from Paw Inc. LawLandee is a premier children’s wear line produced for children from 3 to


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14 years old. Designed by American designers, the company says that LawLandee styles “are modern, metropolitan, and reflect the current trends in America”. BabyMe is a premier brand from C.A.N. Clothing Company in America. Products are mainly for babies from 0-3 years old and are also designed in America. The target market of LawLandee is middle income parents (family income in the upper 40% of cities’ average) aged from 26-45. See http://www.lawlandee.com/doce/aboutus.htm for more information.

Les Enphants Established in 1971 with headquarters based in Taiwan and subsidiaries in China, Indonesia, Singapore and Thailand. Listed on the Taipei Stock Exchange in 1997. Total revenue for the group in 2000 was estimated at US$120 million. The group employs an estimated 3,500 individuals and operates some 900 retail sites. It is a vertically integrated business focusing on children’s apparel and baby consumer products with designs, production, wholesale, and retail capabilities. The company both owns and licenses brands:

Table 2: Les Enphants brands

OWN BRANDS LICENSED BRANDS Apparel Les Enphants Disney Baby Les Enphants bébé Disney Winnie the Pooh Oshkosh Familiar Nike Kids (agency brand) Other products Nac Nac (skincare, detergents, & accessories)

Nuk (Feeding Bottle, Soother, Teat, Accessories) (agency brand)

Combi Japan (Stroller, Child Car Seats, Toys) (agency brand)


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Table 3: Operations of Les Enphants Group

Country # of Retail Outlets Employees Year Of Establishment

TAIWAN 215 750 1971

CHINA 426 1300 1993

INDONESIA 120 850 1991

THAILAND 100 350 1989

SINGAPORE 40 30 1999 See http://www.phland.com.tw/english/index.asp

Little Bobdog Produced by Shanghai Bobdog Children’s Articles Co. Ltd. Bobdog is a cartoon character designed by Sunward Co. Ltd. of Japan. It entered the China market in 1995 and targets children aged 0-16. The company has 219 retail locations in China with 19 in Shanghai. It provides a variety of goods, such as, children and infant wear, bags, stationery, footwear, soft toys, and daily accessories.

Mickey Mouse The brand is produced by Guangzhou Zhongwei Commodity Co. Ltd. Established in 1992, it has over 900 retail locations in China. Produce and sale the agency brands: Mickey’s Corner, Mickey for Kids, Snoopy, Sesame Street, Elle Petite and Mattel (Barbie) Products include apparel, hats and footwear, stationery and accessories.

Shuihaier The Beijing Jiaman Garment & Accessory Co., Ltd. produces Shuihaier (Water-boy) brand. Established in 1994, it targets children aged 2-15.

Xiaozhubanna Produced by Dongguan Huashan Apparel Limited Ltd. Established in 1996, the company has established over 360 retail locations around China.


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Yaduo Shanghai Yaduo Apparel Limited Ltd. produces the Yaduo brand. Established in 1996, it has two product lines targeting the teenager (13-18) and children (3-12).


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Toys

• Guangdong, Jiangsu, Shanghai, Shandong, Zhejiang and Fujian are the major toys production centres in China. Guangdong and Fujian concentrate on electronics and plastics toys. Jiangsu and Shanghai specialise in soft toys while Zhejiang is famous for wooden toys24.

Figure 5: Map of China showing provinces

• Guangdong is the single most important production base for toys in the world. With over 4,500 toy manufacturing companies, Guangdong produced toys worth US$4.69 billion and exported US$3.96 billion of toys in 2002, representing 71% of China’s total toy exports25.

• Chenghai, near Shantou, in Guangdong Province is one of the major toy and handicraft export centres in China. It possesses more than 3,000 toy making

24 Source: HKTDC, Nov 2002 25 Source: HKTDC, Mar 2003


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businesses with over 100,000 employees. The toy making businesses generated US$942 million in 200226.

• Hong Kong-owned companies remain enormously important in the toy industry. At the 2003 Spielwarenmesse, 868 companies exhibited from Greater China of which 206 were from the PRC itself, 176 from Taiwan and 486 or 56% from Hong Kong.

Market Size

• According to the China Toys Association, the consumption of toys represents 5% of the annual consumption of urban residents. Some industry experts predict that the domestic sales of toys will increase 40% year-on-year and will reach US$12 billion by 201027 although Euromonitor suggests that growth has been increasing at a more sedate 6 – 7% in the past 2 – 3 years (in line with overall economic growth which seems like a more reasonable proxy for market development).

• There are more than 6,000 toy manufacturing companies in China. Among them, 85% are export enterprises. China’s major toy export destinations are the U.S.A., Europe and Japan. China’s exports represent 75% of worldwide consumption.

• Toys are one of China’s top nine exports28. If video games, footballs, basketballs and volleyballs are added, the total export value jumps to no. 8 in the rankings.

• An analysis of the following two tables shows that imported toys currently make up about 9% of the market in terms of retail value, up from 8.0% in 2000.

26 Source: Adsale, March 2003 27 Source: TDC, Nov 2002 28 Source: Business Daily, March 2002


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Table 4: China's top export categories, 2002 Major Exported Commodities in China in 2002

Rank Category Export Value(USD million)

1 Mechanical and electrical products 157,0782 Hi-tech products 67,8653 Garment & clothing accessories 41,1904 Textile yarn, fabrics and made-up articles 20,5835 Automatic data processing machines and units 20,1356 Parts of automatic data processing machines 13,1207 Footwear and parts thereof 11,0918 Plastic articles 6,0539 Toys* 5,57510 Furniture and parts 5,361… …

Toys, video games, footballs, basketball and volleyball 8,172*not including video games, footballs, basketball and volleyball

Source: China Customs, 2003

Table 5: Toy imports and exports in China, 2000 - 2002

2000 2001 2002Export of Toys 5,575 5,165 5,575Export of Video Games 591 896 2,493Export of Football, Basketball, Volleyball 70 77 104Sub-Total 6,236 6,138 8,172Imports of Toys 54 61 68

Export & Import of Toys & Related Products (USD million)

Source: Euromonitor, Jan 2003

Table 6: Sales of Toys and Games in China, 1996 - 2002

1996 1997 1998 1999 2000 2001 2002Sales of Traditional Toys 457.74 507.74 563.44 610.63 666.06 716.15 --Sales of Video Games & Hardware 5.37 6.50 6.93 7.56 8.36 9.24 --Sales of Toys & Games 463.11 514.24 570.37 618.19 674.42 725.39 760.72Per capita sales (USD) 0.38 0.42 0.46 0.49 0.53 0.57 --Total sales at constant 1996 463.12 500.20 559.53 615.09 668.37 713.89 --Consumer Expenditure on Sporting Goods, Toys, Games & Camping Equipment -- 1,672.60 1,887.07 2,153.96 2,295.94 2,674.99 2,923.59

TOYS & GAMES IN CHINA (USD million)


• The top selling imported high-end toys in China are Lego, Tomy, Barbie, Chicco, Disney and Nintendo. They are typically priced over US$12.

• Tariffs on imported toys are in the process of being reduced to zero according to the following timetable:


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Table 7: Tariffs on imported toys, 2002 – 2005

2002 2003 2004 2005 Duty rate 10.5% 7.0% 3.5% 0%

Source: HKTDC, Nov 2002

Profiles of Key Players As far as we are aware, no purely domestic players have yet emerged in China to challenge the dominance of some of the major Hong Kong firms which are profiled here.

Kader Industrial Co. Ltd. The company is plastic and toy manufacturer established in 1948. It has been listed on the Hong Kong stock exchange (code: 00180) since 1985. Its principal activities are manufacture and sale of plastic, electronic and stuffed toys and model trains, property investment, investment holding and trading. It possesses its own production base in Dongguan and employs 18,000 workers around the world. Its net asset value is US$ 59.69 million as of 31 Mar 2001 and it recorded net loss of US$3 million in the financial year of 2001. Ting Woo Shou, chairman, and Ting Hok Shou hold 57.48% of the group. The company owns two world-famous brands of model railways: Bachmann and Liliput. It is the largest manufacturer of model railways in the world (in terms of volume), producing 1.3 million train set for the US market.

Silverlit Toys The Hong Kong-based toy manufacturer was 25 years old in 2002. It produces cybertainment robopets, programmable cars, R/C Vehicles, Multimac, Kidzland & Bobby, pre-school toys, Pixels buildings blocks & mechanical toy cars. Major markets are the USA, Europe, Asia, Japan and Canada.

Toys & Wonder Hong Kong-based company established in 1993. It is operating 12 offices in China. It is authorized dealer of Bandai (TV license toys: Ultraman, Sailormoon, Power Rangers), Clementoni (jigsaw puzzle), Wow Wee (high-tech mechanical toys), Sam & Partners (jigsaw puzzle & dough product), MegaBloks (construction block), Burago (models), Yomega (yoyo) & Toy Tech (remote control Toys and peg-top).


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Company Profile Sales offices Guangzhou, Shanghai, Beijing Representatives Shenzhen, Dalian Dealers Nanjing, Hangzhou, Xian, Jinan, Changsha, Qingdao,

Shenyang, Chongqing, Chengdu, Wuhan, Shenzhen Direct Distribution Tianjin Major distribution Department stores, toy stores, hypermarkets and wholesale

markets. Guangzhou Office (Head office) Number of staff 94 Major clients Jusco, Wal-mart, Friendship Department Store,

Guangzhou Department Store, Jusco (Shenzhen),Shenzhen Friendship Store,. Jusco (Dongguan), Jusco (Zhuhai),etc.

Shanghai Office Number of staff 53 Major clients Pacific Department Stores, Carrefour, Yaohan,

Oriental Shopping Center, Isetan, etc. Beijing Office Number of staff 34 Major clients Sogo, Carrefour, Pacific Department Stores, Parkson, etc.

Guangdong Audley Toy Industry Ltd. Changhai-based domestic toy manufacturing company established in 1993. The company put over 600 types of toys into the market and has registered 128 national patents. It is now operating 6 offices in Beijing, Liaoning, Guangzhou, Shanghai, Chengdu and Wuhan. Other than its own branded remote control cars, 4-wheels drives and robots, it has licensed the Pocket Monster (Pokemon) and Gameboy brands from Japan.

Shanghai Haixin Group Co. Ltd. A domestic textile company established in 1985, it is listed on the Shanghai Stock Exchange (B share, code: 900917). There are 24 factories and about 8000 employees. Shanghai Haili Toys Co., Ltd. Shanghai Haiyan Toys Co., Ltd., and Shanghai Haifa Toys Co., Ltd. are branches specialising in toy. Their combined annual trade volume has reached almost US$40 million. It is claimed to be the largest plush-toy maker in China. Its main products are stuffed toys with various cloth, plush and other synthetic fabrics as outer materials. Haixin's toys have various international quality certifications, including ASTM for the United States and EN-71 for Europe. Haixin's toys are exported to Europe, North & South America, Australia, East Asia and Southeast Asia. Haixin supplies many major retailers including Wal-Mart Stores, Kmart,


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Dayton, Walgreen, CVS, Fred Meyer, Rite Aid, Target Stores, Tesco, ASDA Group, Toys 'R'Us and Woolworths.

Haier Haier, China’s best-known manufacturer of consumer electronics and home appliances is aiming to become “China No. 1 Toy Brand” in three years. Haier is positioning itself at high/middle priced end of the market and is cooperating with Korean and Japanese companies to design and develop new products. The development will focus on 3 different kinds of robots providing entertainment, education and family caring service29.

Consumer Trends

• Urban children spend an average of US$12-36 on toys annually, with some spending as much as US$9630.

• The average price of regular toys is US$3.6 per piece while the price of the highest-end toys can reach US$120. In order to cater to children’s needs for high-end toys, about 30 toy rental shops have been established in Shenzhen. In addition to a US$24 annual membership fee, children have to pay one-tenth of each toy’s market price for a one week rental31.

• Competition in China’s toys market is keen. No individual toy brands have substantial market share32. Brand awareness of toys is weak and there are no really famous domestic brands like Barbie in the China market.

• Most of the “Made-in-China” toys use foreign designs and the industry adds very little value to the end product. The major reason for this is that China lacks toy designers. Recently, only one higher education institution, Tianjin University of Science & Technology, has provided a programme specialised in toy design33.

• China’s first toy library, Green Children’s Toy Library opened in Beijing in Jan 2003. It provides 170 types of toys, including dolls, bricks, blocks, paper-cutting, and jigsaws. Children are allowed to borrow and play with the toys in the library. The function of toys library is not merely to offer toys for children but also to educate parents how to select safe & suitable toys for their children. On top of this, the library hopes to become a useful research base for Chinese toy designers so as to promote design innovations34.

29 Source: www.tz-net.com, Jan 2003 30 Source: HKTDC, Mar 2003 31 Source: TDC, Mar 2003 32 Source: China Advertising Web, www.a.com.cn, available: Mar 2003 33 Source: HKTDC, Feb 2003 34 Source: www.china.org.cn, Jan 2003


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• Guangzhou is investing US$48 million to build China’s first Toy Centre, a 32.13 hectares theme park. The park provides a transaction centre for manufacturers, plus seminars, exhibitions, and games. It is hoped that the park will develop into a dual business and sightseeing destination. The project is supported by Guangdong Economic and Trade Commission and Guangzhou Commerce Commission. The first phase of the construction covers 160,000 m2 and started in Nov 2002.

• After joining the World Trade Organization in 2001, China pledged itself to uphold international patent laws. Denmark’s Lego has recently won a lawsuit against a domestic Chinese manufacturer which imitated the company’s snap-together plastic building blocks35.

• Parents in urban areas are looking for toys containing educational properties whereas traditional toys still dominate in the rural areas. Research conducted by the China Social Survey Corporation (translated name) shows that 46% of urban parents will choose ‘educational’ toys for their children, followed by electronic toys (34%) and soft toys (20%)36.

• Products currently popular in China are:

o Assembly models such as tanks and toy cars are attracting both children and adults. The sales of assembly models are good. They can be as high as US$85-97 while the average price is US$ 8-10.

o Remote control toys, like remote control cars (cost about US$15-18), boats (US$18-48) and airplanes (US$410-1,933), phonate, luminous toys electronics toys.

• The sales of toys are no longer seasonal. In the old days, parents only tended

to buy toys at festival times but will now buy toys any time.

35 Source: Adsale, Jan 2003 36 Source: TDC, Nov 2002


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Baby Care Products

Market Size and Market Share • Sales of baby care products in 2001 in China were valued at US$102 million,

showing 8.2% growth over 2000. The growth came from a combination of increased awareness of baby care products and rising incomes37.

Table 8: Sales of Baby Care Products in China, 1997 - 2002

1997 1998 1999 2000 2001 2002Baby toiletries 21.01 23.39 25.82 28.43 31.10 --Baby hair care 10.52 11.04 11.59 12.26 13.09 --Baby skin care 42.22 45.71 49.54 53.45 57.64 --Sub-total Baby Care Product 73.75 80.14 86.96 94.14 101.83 110.51Per capita sales (USD) 0.06 0.06 0.07 0.07 0.08 --Total Sales at constant 1997 prices 73.75 80.82 88.95 96.04 102.66 --

SALES OF BABY CARE (USD million)


Table 9: Market Forecast of Baby Care Products, 2001 - 2006

2001 2002 2003 2004 2005 2006Baby toiletries 31.10 33.78 36.87 40.40 44.40 49.00Baby hair care 13.09 13.84 14.67 15.62 16.62 17.73Baby skin care 57.64 61.59 65.97 71.04 76.85 83.30

Forcast Retail Sales (Value) of Baby Care by Subsector (USD million)

Source: Euromonitor, October 2002

If this forecast is correct, it will generate growth rates as follows in this sector:

37 Source: Euromonitor, Oct 2002


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Figure 6: Growth rates of baby care products, 2001 – 2006

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2001 2002 2003 2004 2005 2006

Baby toiletriesBaby hair care Baby skin careTotal

• Baby skin care products outsell other baby care sub-sectors. In addition, there is a substantial degree of usage by adults as many young women perceived that baby care products are more skin-friendly and health to their skin. Adult women, for example, account for around 30% of Johnson’s sales of baby skin care products in China.

• Baby hair care is the smallest sub-sector of baby care products. Most people in China use adult hair care products for babies.


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Table 10: Market Share of Baby Care Products by Value, 2000 - 2001

Brand Company Name 2000 2001(Global Brand Owner) (National Brand Owner)Johnson's Johnson & Johnson China Ltd. 27.57 28.93Hai Er Mian Henkel China Ltd. 10.39 10.95Yumeijing Tianjin Yumeijing Group Co. Ltd. 5.98 6.54Xiao Ding Dang Shanghai Chaozhong Cosmetics Co. Ltd. 2.99 3.70Les Enphants Les Enphants Co. Ltd. (Mainland China) 0.85 1.70Liushen Shanghai Jahwa Co. Ltd. 1.51 1.68Safeguard Procter & Gamble (Guangzhou) Ltd. 1.36 1.47Cussons Cusson (Qingdao) Toiletries Co. Ltd. 1.70 1.13Pigeon Pigeon Corp. 0.57 1.13Kemeng Henkel China Ltd. 0.30 0.46Others 46.78 42.31Total 100.00 100.00

Brand Shares for Baby Care (% value)



Johnson & Johnson U.S.-based J&J was the first company to venture into children’s products in China. It has established a factory in Shanghai and is a substantial spender on promotional activities and advertising on many television channels. The company dominate the market in China especially in urban areas and the eastern part of the country.

Henkel China Ltd. Germany’s Henkel operates six major businesses: hair colorants, hair styling and care, toiletries, skin care, oral hygiene and fragrances. All six businesses are active in China. It established its first office in Beijing in 1995 and set up a Shanghai office in 1997. It is now operating 18 joint ventures in China. Shanghai Henkel Cosmetics Co. Ltd. is the branch which produces baby care products under the Hai Er Mian and Kemeng brands. Hai Er Mian launched a series of new baby care products in 2001

Tianjin Yumeijing Based in Tianjin, this company concentrates on baby skin care products which are mainly distributed through local distributors targeting lower-end consumers.


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Shanghai Chaozhong Cosmetics Co. Ltd. Established in 1998, the company is based in Shanghai, China and focuses on children’s and baby skin care products

Les Enphants Co. Ltd. Based in Taiwan, the company established its first China office in Shanghai in 1993. It now has 426 retail locations in China. It is primarily considered to be an apparel firm, but now also handles other baby care products with its own and agency brands.

Consumer Trends

• China’s baby care product manufacturers are developing new product with natural ingredients. Aloe, green tea, flowers and milk are popular ingredients38.

• Key players are trying to consolidate market share through deeper market segmentation. Johnson & Johnson, for example, launched its baby toiletries line in 2001 while Henkel launched a series of new products in 2001 and now has a full range of baby care products.

• In order to cater for the Chinese custom of sending gift to new-born babies (with a celebration one month after birth), many manufacturers provide baby care gift packs containing a selection of products.

38 Source: Euromonitor, Oct 2002


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Baby Diapers

Market Size and Market Share The Chinese market for diapers has been growing very rapidly in the past five years with sales increasing 25 – 35% a year.

Figure 7: Growth in sales of diapers in China, 1997 – 2001

0

50

100

150

200

250

300

1997 1998 1999 2000 2001

US$

mill

ions

0%

5%

10%

15%

20%

25%

30%

35%

40%

%ge

gro

wth

SalesGrowth

Source: Euromonitor, Oct 2002

Table 11: Sales of Nappies/ Diapers/ Pants in China

1997 1998 1999 2000 2001Sales 91.95 113.53 153.99 188.43 242.41Per capita sales (USD) 0.07 0.09 0.12 0.15 0.19

SALES OF NAPPIES/ DIAPERS /PANTS (USD million)

Source: Euromonitor, January 2003

• The growth potential is still huge with only 0.2% of Chinese babies using

disposable diapers, compared with 80% in the U.S.39 • 1.2 billion baby diapers were produced in China in 2001. Guangdong

represents 60% of China’s production40.

Table 12: Market Share of Nappies/ Diapers/ Pants by Value, 2000 – 2001 39 Source: Fortune, March 2002 40 Source: GD-HK Information Daily, December, 2002


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Company Name (National Brand Owner) 2000 2001Zhongshan Disposable Soft Pte. Ltd. 17.00 18.00Everbeauty Industry Shanghai Co. Ltd. 17.00 17.50Hengan Fujian Holding Co. Ltd. 13.00 14.00Dongguan Chung Nam Paper Co. 8.50 8.50Procter & Gamble (Guangzhou) Ltd. 7.00 8.00Goodbaby Paragon Hygienic Products Co. Ltd. 6.50 5.50Guangdong Archie Sanitary Products Co. Ltd. 5.00 4.00Shantou Ealeaine Treatment Co. Ltd. 4.00 4.00Kimberly-Clark (China) Investment Co. Ltd. 5.00 3.50Dongguan Aall & Zyleman Baby Products Co. Ltd. 4.00 3.50Nanhai Ruiqi Babycare Product Co. Ltd. 1.00 1.00Foshan Chaoshuang Paper Product Co. Ltd. 1.00 1.00Others 11.00 11.50Total 100.00 100.00

Manufacturer Shares for Nappies/ Diapers/ Pants (% value)



Zhongshan Disposable Soft Pte. Co. Ltd. Headquartered in Hong Kong, this company manufactures and distributes disposable baby diapers, adult incontinence pads, and feminine hygiene products. Brand names: Fitti, Pet Pet, Lovebaby

Everbeauty Industry Shanghai Co. Ltd. Based in Taiwan, the company has a China office located in Shanghai. It produces adult diapers and disposable baby diapers. Brand name: Sealer & Prokids

Hengan Fujian Holding Co. Ltd. Listed on the Hong Kong Stock Exchange, this company has 20 subsidiaries in 14 provinces in China. It produces sanitary napkins, adult diapers and disposable baby diapers. Brand name: Anerle


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Baby Food

Market Size and Market Share Sales of prepared baby food have been growing steadily in China over the past 5 – 10 years.

Table 13: Sales of Baby Food in China, 1996 - 2001

1996 1997 1998 1999 2000 2001Sales 616.77 691.68 762.48 828.94 907.68 997.00Per capita sales (USD) 0.51 0.57 0.62 0.67 0.73 0.79Total sales at constant 1996 616.77 672.78 747.93 824.74 900.75 979.68Total sales (Tonnes) 80,012.70 88,747.94 96,984.96 104,925.23 114,436.30 125,228.21Per capita sales (Grams) 65.97 72.70 78.67 84.47 91.46 99.41

SALES OF BABY FOOD (USD million)


• The Chinese government officially encourages breast-feeding. Milk powder

manufacturers have to post a message on their website stating that breast-feeding is the best way to feed a baby. Moreover, companies are not allowed to exhibit milk powder for babies aged from 0-6 months.

Table 14: Market share of baby food by value, 1999 - 2000

Company Name (National Brand Owner) 1999 2000Nestle (China) Ltd. 21.25 23.32Mead Johnson (Guangzhou) Ltd. 11.36 13.16Friesland Coberco Dairy Foods Holding NV 7.86 10.46Wyeth Nutritionals 7.69 9.59International Nutrition Co. Ltd. A/S 6.99 8.72Heinz-UFE Ltd. 6.45 7.00Shijiazhuang San Lu Group 4.80 5.06Hailongjiang Wei Chuan Milk Products Co. 4.37 4.79Shanghai Milk Co. 1.83 2.18New Zealand Dairy Board Beijing 2.10 1.74Huangzhou Beinmate Foods Co. Ltd. 1.64 1.54Beijing Huiliduo Co. Ltd. 0.25 0.28Others 23.40 12.16Total 100.00 100.00

Manufacturer Shares for Baby Food (% value)



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Nestle (China) Ltd. Based in Switzerland, the company’s China head office is in Shanghai. Products include: Nuhen Junior, Lactogen, Neslac, Nespray, Nestle Nan & Nestle Infant Rice Cereal.

Mead Johnson (Guangzhou) Ltd. Based in the U.S.A., the company established its China office in Guangzhou in 1993. Products include: EnfaMama (for pregnant and lactating mothers), Enfapro, Alacta, Enfagrow, Enfakid, Junior Sustagen & Enfolac (aged from 0 month to 6 years old).

International Nutrition Co. Ltd. A/S Based in Singapore, the company’s China office is in Shanghai. Brand of product: Dumex 1 Plus Growing Milk & Dumex 3 Plus Growing Milk

Friesland Coberco Dairy Foods Based in the Netherlands, the company’s China office is in Tianjin. Brand of products: Dutch Lady, Frisolac, Frisomel and Frisogrow.

Wyeth Nutritionals Based in U.S.A., the company’s China office is in Beijing. Focus on milk powder, product includes: S26 Mama, Materna (multi-vitamin and minerals pills), S26, S26 Gold, Promil, Promil Gold, Progress, Progress Gold, Promise Gold & Nursoy (aged from 0 month to 7 years old).


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Other categories

Baby Strollers and Accessories Many Chinese families still cannot afford a baby stroller and babies are often carried in parents’ arms or traditional fabric slings. However, the demand for baby strollers is growing steadily in affluent cities like Shanghai, Beijing and Guangzhou41. So this remains a small market but one which is likely to grow steadily.

Profiles of Key Players A number of the world’s largest producers of strollers and related products are based in China. Top among these is Goodbaby:

Goodbaby Child Products China based Goodbaby Child Products is the bestsellers in both China and the US. Goodbaby sold 1 million strollers representing approximately 80% of the entire China market in 2001. Goodbaby has also produced a series of multi-purpose products such as a stroller which can be converted into a rocking chair and a highchair which can be transformed into a walker and rocker. According to the CEO of Goodbaby Child Products, Chinese families do not have much money for the more expensive items and thus look for multi-function products. Goodbaby’s strollers are sold under the Geoby, Cosco, Safety 1st, Huffy and Schwinn brand names. Goodbaby also produce disposable diapers and children’s and infants’ clothes, children’s bicycles, car seats, playpens, bassinets and other kids’ products. The apparel is branded “Geoby” (for infants and toddlers) and “Goodbaby” (for children over 4 years old). The annual sales of Goodbaby is US$125 million with the China market accounting for 35% of its revenue (US$43.75 million).

Lerado Group Based in Taiwan, the company claims to be the second largest baby stroller manufacturer in China. Products include baby strollers, walkers, high chairs, 41 Source: Fortune, March 2003


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bicycles, infant wear, baby bed, bed linen, milk bottle, etc. Brand names: Angel, Hello Kitty, Disney, Doctor Jr., Evenflo, IGC-Bertini.

Children’s stationery The sale of children’s stationery products is an important part of this sector. Almost 50% of the exhibitors at the HKTDC/Messe Frankfurt Hong Kong Stationery Fair which is held alongside the HKTDC Toy and Games Fair are showing children’s products. The total Chinese market for personal (as opposed to office) stationery in 2001 was US$4,02742. There is no firm figure for children’s stationery but assuming this figure was proportional to the population, that would mean sales of around $850 million.

Education Chinese culture has always placed a great deal of emphasis on education. In the new, more meritocratic environment of today’s China, this is even more pronounced. The following highlight some of the key trends emerging in education in the past 12 months; language education (particularly English), overseas education (at both university and secondary level) and private schooling within China. According to a survey conducted by the National Bureau of Statistics, Chinese citizens spend an average of 10% of their savings on education. This is 3% higher than their average housing budget43. The number of people aged 18-22 receiving higher education was 7.2% in 1995 and it rose to 13.3% in 200144.

Private schools

• According to official statistics, over 60,000 private schools are operating in China (including 44,000 kindergartens, 4,300 primary schools, 7,316 ordinary high schools, 999 vocational high schools). Over 10m students are

42 Source: Euromonitor, 2002 43 Source: China Daily, December 2002 44 Source: XinHuaNet, July 2002


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enrolled45. This number represents only 4.1% of the public school system in China.

• One of private school, Nanyang, in China is paying its new Principal Rmb 1m a year46.

• The state government is drafting the laws to protect the private schools by stating that the private school and its members possess the same legal right as the public system.

Language

• English education in China generate over Rmb10bn annually, in areas including the following47:

o English examinations (e.g. TOFEL, IETLS, GRE, GMAT, CELPIP, Vocational English Examination) Charge: TOFEL cost Rmb750,CELPIP cost Rmb1,200

o Learning-aid equipment (e.g. electronic dictionary, English learning software)

Charge: over Rmb100 per piece o English training programmes (e.g. New Oriental Education Group,

Wall Street Institute(WSI)) Charge: highly dependant on the content of the course,

normally around Rmb10-20 per hour

• According to an unofficial survey over 3,000 language education organisations operate in China48.

• The main reasons for studying English are the desire to study abroad and, more importantly, to find a good job. Foreign firms are perceived to offer openings with attractive salaries (for employees speaking English, pay is 20%-40% higher than normal). Thus, the result of English tests have become critical factors for job hunter49.

• It is hard for the mainland students to request application for the public English exams (TOFEL and GRE) by themselves under the current system.

45 Source: China Daily, December 2002; China Daily, June 2002 46 Source: YengchangWanBao, May 2002 47 Source: Zhongguojinyingbao, May 2002; Century 21 Economic Report, November 2002

and December 2002. 48 Source: Zhongguojinyingbao, May 2002 49 Source: Zhongguojinyingbao, May 2002; China Daily, September 2002


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This has created a market niche for private English education (especially from international educationalists)50.

"China has become the largest market for English teaching in the world," Robert Diyanni, an official with the College Board of the United States51

• In Shanghai, a trend is emerging for taking courses in specific areas using

English as medium of instruction. These include financial accounting, marketing and public relations52.

Overseas study

• According to United Nations statistic in 2000, the entire population of students studying abroad is 1,600,000. Among them 380,000 are mainland students, amounting to 23% of the total population53. Other reports suggest that the number could be as high as 460,000 mainland students in 103 different countries and regions54.

• The age of students studying abroad has been falling in recent years. Among the mainland students in Australia and New Zealand, 10% of them are studying at high school. With rapid economic growth in China, the income of many families has risen substantially. Many families have become wealthy enough to send their children to study abroad55. This means that the nature of Chinese students studying is changing. In the 1980s and first half of the 1990s, mainland Chinese studying overseas were typically the academic elite, usually graduate students. The new generation of overseas students has had a much more privileged upbringing. They are wealthy and, in many cases, more interested in fashion and leisure activities than schooling56.

• The destination of overseas study for mainland students has also become more diversified. Other than the long-standing popular destinations, such as the United States, Australia, Japan and Canada, student are becoming interested to study in less developed countries including Ireland, Greece, Ukraine, Russia and South Africa57.

50 Source: China Daily, September 2002 51 Source: China Daily, September 2002 52 Source: Zhoungguomouyibao, December 2002 53 Source: qingxinsuchu-H01, August 2002 54 Source: XiaoFeiReBao, September 2002 55 Source: qingxinsuchu-H01, August 2002; International Commerce Newspaper, July 2002 56 Source: BBC News, “China raps 'reprobate' students“, 3 January, 2003 57 Source: International Commerce Newspaper, July 2002


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• As well as those travelling overseas to study privately, the government

continues to send thousands of students abroad for study every year. There are 3,025 vacancies in 2003. The Government has amended the regulations recently, giving priority to students in following options: communication and information technology, advanced agricultural technology, life sciences and health, material sciences and new materials, energy and the environment, engineering science, applied social science, and subjects related to WTO58.

58 Source: Shenzhen Commerce Newspaper, January 2003


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Distribution in China

Garments • The majority of children’s garments are bought from small independent

retailers and market traders. The higher end products and legal imports are mainly purchased from department stores.

• Hypermarkets such as Carrefour and Wal-Mart and beginning to play a

small role in this segment. • In Shanghai, there are 3 department stores targeting children aged from 0-

16, operated by Shanghai Huaihai Qingshaonian Yongpin Youxian Company. It was established in July 1997, focusing on infants and kids fashion, footwear, nursery products, toys, stationery and sport equipments.

Toys • The most popular distribution channel for toys is department stores and

hypermarkets. The number of small, independent toy shops is relatively limited although very basic toys are widely sold in markets and small, local, general stores (often located near to schools and playgrounds).

• US-based Toymart opened China’s first toy chain store in Beijing sized

600m2. Hasbro, Barbie, Lego, Play-Doh, MB Games, Jurassic Park, Disney’s Princess, Harry Potter, Toy Story 2 are the key brands sold in the store59.

Baby care products, diapers, etc. • The main distribution channel in both rural and urban areas for baby care

products is department stores. Mothers are said to favour buying baby care products from department stores as they have knowledgeable sales people60.

• Grocery stores are, however, becoming a more significant distribution

channel for baby care products. Shoppers value their convenient locations and good prices.

59 Source: Toymart website, www.brmtoys.com , available: 31 Mar 2003 60 Source: Euromonitor, Oct 2002


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• Pharmacies are an emerging distribution channel for baby care products

although relatively few customers are using them at this stage.

Wholesale As in most areas of China business, there is no real national distribution system for products in this category. However, the recent (7th April, 2003) announcement of a mega merger between the parent companies of Lianhua Supermarket Holdings Co., Hualian Supermarket Co., Shanghai No.1 Department Store Co., and Shanghai Material Trading Centre Co., may be a sign that this is likely to change. The merger is seen as a clear reaction to the successful emergence of international hypermarket competitors such as Wal-Mart and Carrefour in China who are likely to import as far as they can the national distribution systems which have given them such power elsewhere. Lianhua already has more than 1,700 stores across China while and Hualian, has a further 1,200 stores. Both have announced aggressive expansion plans in recent month. For the time being, however, the majority of department store and speciality store buyers have very limited resources available to them for sourcing new product and we continue to believe that domestically-orientated trade fairs in China have tremendous potential to serve this market.


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Events in China In order to identify potential competition for the event under consideration by Messe Köln it is necessary to look beyond fairs targeted purely at children’s products. Eleven events are identified in the report although, none of them is focused primarily on children’s fashions. The China International Clothing & Accessories Fair (CHIC) has one section for kids’ fashions and organises a kids’ fashion show during the exhibition. Many shows put the word “Toys” in fair names, but actually include a wide variety of children’s products. Conversely, some 904 of the 2,898 (31.2%) of the exhibitors at the HKTDC’s annual Hong Kong Gifts and Premiums Fair are exhibiting toys, baby products or educational items. The following events are listed in date order. We have included the HKTDC Hong Kong Toy and Games Fair and Kenfair’s Toy and Gifts Fair (a part of its October “Mega Fair”) for comparison with other events in China as we believe it to be one of the most important in the region and a fair which increasingly drawers Chinese participation.

Hong Kong Toys & Games Fair Organiser Hong Kong Trade Development Council Venue Hong Kong Convention & Exhibition Centre Scope of exhibits

• Educational Toys & Games • Battery Operated & Electronic Toys • Baby Toys & Products • Die Cast/Mechanical Toys and Action Figures • Hobby Goods • Party Items, Toy Parts & Accessories • Multiple Products / General Merchandise • Outdoor & Sporting Items • Soft Toys & Dolls

Date 6- 9 January 2004 2003 event No. of Exhibitors: 1,702

No. of Buyers: 28,433 Gross Exhibition Space: 49,102 m2


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Hong Kong Stationery Fair Organiser Hong Kong Trade Development Council

Messe Frankfurt (HK) Venue Hong Kong Convention & Exhibition Centre Scope of exhibits

Writing Equipment Paper & Paper Products Office supplies Artists' equipment Educational systems (15 exhibitors) Children's Stationery and School Supplies (84 exhibitors) Publications & Trade Services

Date 6-9 January, 2004 2003 event No. of exhibitor: 210

No. of buyers: 11,492 Gross area: 6,000sqm

Note Almost half (47%) of exhibitors at this fair which runs concurrently with the toy fair are exhibiting children’s stationery and related products.

Guangzhou International Toys, Children’s Commodities & Gifts Fair Organiser Guangdong Toys Association Venue Chinese Export Commodities Fairground, Guangzhou Scope of exhibits

Toys, children accessories, baby & children products, toys parts, machinery equipment, arts & crafts

Date 2-4 April 2003 1st event: 1989

No. of exhibitors: 292 No. of visitors: 7,500

Notes Hong Kong Trade Development Council organises a HK Pavilion at the fair


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CHIC – China International Clothing & Accessories Fair Organiser China Garment Association

China World Trade Centre Co. Ltd CCPIT, Textile Industry

Venue China International Exhibition Centre, Beijing Scope of exhibits

Men’s wear, women’s wear, children’s wear, bags, accessories, shoes & hats

Date 27-30 March 2003 No. of exhibitors: 850 (127 exhibitors in children’s wear

section) No. of visitors: 50,000

Notes This fair has a separate children’s wear section representing around 15% of the total exhibitors.

Guangdong (Dongguan) International Toys, Gifts and Houseware Exhibition (Spring & Autumn editions) Organiser Adsale Exhibition Services Ltd.

Messe Frankfurt (HK) Ltd. China Council for the Promotion of International Trade (CCPIT), Dongguan

Venue Dongguan International Conference & Exhibition Centre, Dongguan

Scope of exhibits

Educational toys & games, battery operated & electronic toys, baby & pre-school toys & products, children’s stationery & school supplies, houseware, electronics

Date Spring session: 23-26 April 2003 [cancelled] Autumn session: 23-26 October 2003

1st event: 2002 No. of exhibitors: 314 No. of buyers: 20,682

Note: The spring session of the fair has been cancelled due to SARS and all exhibitors will be moved to the October edition of the fair.


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Hong Kong Gifts & Premium Fair Organiser Hong Kong Trade Development Council Venue Hong Kong Convention & Exhibition Centre Scope of exhibits

Advertising gifts & premiums Consumer electronics Fashion jewellery & accessories Party & X’mas decorations Toys (803 exhibitors) Baby products: (78 exhibitors) Educational system: (23 exhibitors) Travel goods Trade services & publications Watches & clocks

Date 28 April – 1 May 2003 23 – 26 July 2003 (Due to SARS, there will be another session in July)

2002 event No. of exhibitors: 2,898 No. of buyers: 56,853 Gross area: 56,600sqm

China Chenghai International Toys & Crafts Fair Organiser China Council for the Promotion of International Trade

Chenghai Toys Association Chenghai Arts & Crafts Association

Venue Chenghai Exhibition Centre, Guangdong Scope of exhibits

Toys, Children accessories, Arts & Crafts, Christmas Gifts, machinery, parts & materials

Date 29 April – 2 May 2003 No. of booths: 256

No. of visitors: 10,000


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China Kids Fair / China Toys Organiser China World Trade Centre, Beijing Nanbei Exhibition Co.

Ltd. Venue China World Trade Centre, Beijing Scope of exhibits

The hall is divided into 3 areas: Toys, models and baby & kids’ necessities

Date 14-16 May 2003 1st event: 1999


Shanghai International Children’s Products Exhibition Organiser Shanghai Pudong International Exhibition Company

Shanghai Brand Exhibition Services Co. Ltd Venue Intex Shanghai Scope of exhibits

Toys, educational tools/equipment, children food, kids wear, kids insurance, kids necessities

Date 25-27 July 2003 Note: The organiser has told us that the exhibition is not yet

confirmed.

China Western Region Toys, Kids’ Products (Chengdu) Exhibition Organiser Sichuan Industry & Commerce Association

Chengdu Hua Exhibition Company Venue Sichuan Provincial International Exhibition Centre Scope of exhibits

Toys for children and adults Kids products: educational equipment, furniture, necessities

Date 7-10 August 2003 1st event: 2002



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International Exhibition for Children’s Education and Toys Children’s Toys Organiser Beijing Zhongmaolian International Exhibition Co. Ltd Venue Beijing International Exhibition Centre, Beijing Scope of exhibits

Toys

Date 1 – 4 October 2003 The organiser tells us that this event may be cancelled. A

final decision will be made nearer the scheduled date.

Shanghai Toy Expo – International Trade Fair for Toy, Hobbies & Gifts Fair Organiser Spielwarenmesse eG

China Toy Association China National Arts and Crafts Group Corporation

Venue Shanghai Mart, Shanghai Scope of exhibits

Toys, Games, Arts & Crafts

Date 8 – 11 October 2003 1st event: 2002

No. of exhibitors: 130 No. of visitors: 9,000 Visitors breakdown by business nature at 2002event

22%

18%

15%14%

10%

9%

6%6%

Mail-order houseDepartment store & chain storeExporterOthersWholesale tradeManufacturerCommerical representativeRetail


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Hong Kong International Toys & Gifts Organiser Kenfair International Limited Venue Hong Kong Convention & Exhibition Centre Scope of exhibits

Toys: Battery-operated, die-cast/metal, electronic toys & games, inflatable, pre-schools, stuffed toys & dolls, educational toys & games, friction 7 & wind-up toys, radio-control toys, parts & accessories

Date 21-24 October 2003 1st event: 1991

The Gifts & Household Products show is held together with the Toys show. According to the organiser, they do not designate specific halls for each product. However, toy companies are mainly in hall 5 with about 600 booth. No. of exhibitors for the two shows: 3,028 (Hong Kong: 1,532, China: 345) No. of companies exhibiting toys in the shows: 370 (12.2%) No. of buyers: 58,405

Key publication The HKTDC is an absolutely key player in this market. It’s publication Hong Kong Toys and accompanying web site (www.tdcenterprise.com) are among the largest of their kind. The magazine was first launched in 1969 and is published twice a year. The January and July editions average 1,800 and 600 pages respectively. The products covers all kinds of toys in this publication, for example, remote-controlled toys, battery-operated toys, dolls, educational toys & games, models, plastics toys, puzzles, sporting toys, inflatables, wind-up toys, etc.

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