According to Liang Zhongming, deputy chairman of the Hong Kong Toy Manufacturers Association, toy manufacturers are experiencing a second wave of “evacuation†in the Mainland. He said that the majority of Hong Kong enterprises in the development period of 2007 had a gross margin of 35%, and the “nothingness alone†environment caused most Hong Kong toy manufacturers to follow the beaten path. The foreign trade processing OEM model has low risk, but it weakens the bargaining power of Hong Kong businessmen. It is easy for European and American buyers to lower prices, and order winds can easily fall.
"08 The financial crisis coupled with the double blow of US product recycling tide, a large number of companies went bankrupt." Liang Zhongming, who is the managing director of Longchang International, a veteran toy company, survived the bankruptcy, and Longchang Group survived by transforming his own brand. He said: "We acquired Kid Galaxy, a well-known toy company in the United States, in 2002 and introduced its brand's "Changes" product into Hong Kong, becoming the group's first private label. The brand has more than 2,000 retail outlets in the United States. Having its own technology and brand will help reduce operational risks.†At present, Longchang’s main business is Europe and the United States, 40% to 50% are OEM business, 30% are ODM, and 25% are OBM.
Photo: Hong Kong Zhentai Chairman Huang Tiecheng (right) and CEO Huang Dazhi/Ta Kung Pao reporter Huang Baoyi
In the first round of crisis, there was still the Hong Kong-owned toy factory Zhentai Group. From the production of toy parts and components, to the production of complex, high-tech toys, as well as novelty special home appliances, Zhentai has always been singing all the way, using 40 years to invest in a small toy factory that invested more than 200,000 Hong Kong dollars, becoming an annual export value. More than 2 billion Hong Kong dollar toy giant. Chairman Huang Tiecheng said that when toys began to add electronic components in the mid-1990s, Zhentai took the lead in replacing electronic equipment and developed its own electronic production line to complete its first upgrade.
The second wave of “evacuation†stems from rising operating costs. According to Liang Zhongming, the wages of workers have doubled in the past five years. Each worker has 650 yuan a month in social security, and the company's contribution to social security has increased from 30% to 60%. Longchang replaced the machine in terms of machine substitution. By improving production processes and introducing automated production lines to replace mechanical labor, the number of workers was reduced from 8,000 to 2,000 five years ago. According to the senior manager of the Planning Department of Longchang Group, each production line can save 60% to 70% of the manpower, and the accuracy rate can be increased at the same time as 100%.
Cao Huiping, head of the workshop of Zhentai Group, said that taking Zhentai's signature dinosaur toy as an example, the splitting process at the beginning of production in 2005 required the cooperation of more than 200 people, and all processes and processes would take 3 hours to complete. With equipment upgrades, through continuous process optimization, consolidation, and increased automation, only 50 people are now involved and all processes are reduced to 20 minutes.
Focus on the Pearl River Delta in the future
Liang Zhongming admitted frankly that after two waves of shocks, the opportunities for the toy industry in the mainland market are still huge, and the focus of the future is to continue to adhere to the Pearl River Delta. Liang Zhongming spotted the “second-child economy†brought about by the change in the family planning policy in the Mainland and the “elderly market†with an aging population, and started to develop products into the “old and young†toy market. Longchang company develops wearable smart devices for the elderly, and can quickly put information on the elderly's blood pressure and heart rate. At the same time, educational robots developed at the same time have entered the education market.
Huang Dazhi, CEO of Zhentai Group, said that toys still accounted for 70% of Zhentai Group's production. In recent years, Zhentai has barely received simple product orders, and only 30% of all Zhentai products have no electronic components. The love challenge has enabled the company to cultivate outstanding R&D capabilities. Zhentai has extended its production line to small household appliances, high-tech toys and other areas, and has become a model for successful transformation of Hong Kong companies.