Toymakers are stepping up efforts to diversify beyond China to combat rising costs and the looming possibility that the U.S., the industry’s biggest buyer, will impose punishing tariffs on toy imports.
Vicky Tong, a director at the Business Association of China in Vietnam, said the office responsible for Guangdong, where many Chinese toymakers are based, saw a near trebling of visits last year from companies looking for production facilities in the country.
Jerry Gou, who heads a toy manufacturer based in the southern Chinese city of Suzhou, is one toymaker who has realized the advantages of having factories outside China. At the annual toy fair in Hong Kong recently, he sought to attract international buyers by decking out his booth in banners promoting its factories in Vietnam and India.
With U.S. President Donald Trump threatening to impose 25% tariffs on Chinese goods, Gou believes buyers will prefer manufacturers who are able to ship toys from outside China.
“You never know what will happen in the future,” Gou said. “We need to make plans early on.”
Gou and other toymakers have reason to be nervous. China produces 80% of the world’s toys, and the U.S. is its largest customer. With the 90-day trade war truce between Washington and Beijing set to expire on March 1 — and recent talks yielding little progress — many Chinese toymakers are accelerating their overseas relocation efforts.
The most popular choice has been Vietnam, due to its proximity to China, according to industry sources.
“The U.S.-China trade war has definitely quickened Chinese manufacturers’ shift to Vietnam,” Tong said, as most visiting companies do substantial export business with the U.S. She said the office responsible for Guangdong had received visits from 27 corporate groups last year, more than double the 11 it hosted in 2017.
Toys and plastics factories are among those making the most urgent requests, she said. Tong recalled a group of Chinese manufacturers who came last August and presented a bag of cash to factory owners. “They pleaded, ‘Please rent the factories to me,'” Tong said, even though the factories are still under construction.
While production costs in China are rising, the country boasts an ecosystem of suppliers that other countries cannot yet rival.
This sudden uptick in demand has already driven up land prices in Vietnam. Rent for factories in Long An Province in the Mekong Delta region surged 20% to $2.60 per sq. meter within just a few months, she said.
Chinese toys have long enjoyed zero tariffs in the U.S. While only a very few toy categories, such as children’s bicycles, are subject to the 10% punitive tariffs Trump has imposed so far, some international buyers are calling for a shift away from production in China.
Nathan Jolly, a sales director at Australia-based NGJ Trading Co., said the company is negotiating with its Chinese toy suppliers to set up factories outside the country.
“I don’t think