Report Writing on

Chinese Toys Market in Bangladesh

SUBMITTED BY
Hasan Owais
ID: 2191801016
Musfika Jahan
ID: 2191801017

SUBMITTED TO
Professor Tsao Hai-tao

NEWHUADU BUSINESS SCHOOL, MINJIANG UNIVERSITY

Bangladesh is the 54th largest export economy in the world and the 123rd most complex economy
according to the Economic Complexity Index (ECI). In 2017, Bangladesh exported $39.2B and
imported $44B, resulting in a negative trade balance of $4.73B. In 2017 the GDP of Bangladesh was
$249B and its GDP per capita was $3.87k. Prior to 1971, Bangladesh had a very small plastic market. At
present, there are 3,000 plastic manufacturing units, 98 per cent of which belongs to the small and
medium-sized enterprises (SMEs). The domestic market size is Taka 70 billion. Per capita consumption
of plastic in Bangladesh is five kilograms per year. The plastic sector constitutes 1.0 per cent of GDP
(gross domestic product) and provides employment to half a million people directly.

A study by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in
2012 estimated that the Bangladesh plastic industry could raise its turnover to US$ 2.0 billion by 2015
and US$ 4.0 billion by 2020, if proper policies are implemented and followed. As of now, direct export is
not significant when compared with other Asian countries. In 2016-2017 fiscal year, China exported
plastic items worth US$ 70 billion, Thailand US$ 12.7 billion, Malaysia US$ 7.5 billion and Vietnam
US$ 3.0 billion, while Bangladesh exported only US$ 900 million.

Bangladesh's ranking in the list of global plastic exporters is at 89.

Demand for Bangladeshi plastic products has been increasing as the international buyers are now shifting
more to Bangladesh from China and India. Bangladesh has a huge range of diversified products in its
export basket like PVC pipes, polythene sheets, plastic wastes, shopping bags, injection molding products,
garment bags, plastic hangers, PET/PE bottles, laminated packs, cosmetics, medicine packs and
household accessories.

According to Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA), nearly
250-300 units are currently involved in the export market. The sector earned US$ 98.48 million in the FY
2017-18 while the figure was US$ 116.95 million in the FY 2016-17, according to the Export Promotion
Bureau (EPB) data. Export earnings from plastic products dropped by about 16 per cent in the last fiscal
year mainly due to high price of raw materials.

Bangladesh could emerge as a global player in the plastic industry by hiking its annual turnover to Taka
322.36 billion (US$ 4 billion) by 2020, according to a study conducted by the United Nations ESCAP.
Withdrawal of Generalised System of Preferences (GSP) by USA partially decreased the competitiveness
of Bangladeshi products that face duty from three to 15 per cent depending on the product.

In fiscal year 2017-18, the domestic market size of plastic products hit Taka 250 billion, according to
BPGMEA. The sector is growing at about 20 per cent a year on the back of spiralling demand from
domestic and export markets.

Bangladesh had a good export market of plastic waste till the Chinese government announced a ban on
imports of 24 categories of solid wastes, including certain types of plastics, papers and textiles in July
2017 which came into force from January 01, 2018. Following the ban, export of plastic PET bottle waste
declined sharply. Earnings from the plastic waste sector were US$ 13.53 million in the FY 2017-18 while
they were US$ 30.65 million in the FY 2016-17, EPB data showed. Bangladesh exported 99 per cent of
its PET waste flakes to China before the restrictions were imposed, according to sector insiders.
Bangladesh needs some more time to enter the high-tech engineering products market. The most
promising plastic product sector is toys for home and export markets. Before 2010, Bangladesh imported
toys worth US$ 600 million annually, 95 per cent of which was from China. Now imports have reduced
to US$ 360 million a year, according to traders of Bangladesh.

Bangladesh is now manufacturing toys for local and export markets, which are expanding gradually.
Export of toys, games and sports requisites from Bangladesh to Hong Kong was worth US$ 1.38 million
during 2015, according to the United Nations Comrade database on international trade.

However, the challenge of exporting toys is safety, compliance and patent etc. In Europe, toy safety is
governed by the Toy Safety Directive (TSD). The TSD obliges manufacturers, importers and suppliers to
ensure that their products meet the requirements in the field of toy safety, including mechanical, physical
and chemical safety. Prior to being placed in the market, each toy is submitted so that it can undergo a
conformity assessment procedure. When a toy is placed on the market, the manufacturer must draw up a
European Community Declaration of Conformity (EC DoC). By doing so, the manufacturer certifies and
assumes responsibility for the compliance of the toy with the essential requirements of the TSD.

The second-most important framework condition is the protection of intellectual property right (IPR). Toy
manufacturers face competition from counterfeit toys. In 2010-2011, Directorate-General for Taxation
and Customs Union (DG TAXUD) registered 872 infringement cases for toys with a retail value of €16
million and 2,585 infringement cases for games with a retail value of €20 million. The two main countries
of origin were China (88 per cent) and Hong Kong (10 per cent).

Bangladesh faces many other challenges as polymers are not produced in the country. The plastic industry
uses imported raw materials of polymer granules. However, industry insiders believe that this not a
disadvantage. The availability of cheap labour and the fast developing recycling industry of postconsumer
plastic wastes in Bangladesh are potential advantages to provide competitiveness in the global market
(Katalyst-2005). Given the scarcity of skilled workers and professionals, extended level of training for
workers is required. Different kinds of training particularly on use of CAD/CAM (computer aided
designing and computer aided manufacturing) and design of software need to be arranged for
improvement of product design. Bangladesh Standard Testing Institute (BSTI) should be equipped with
modern amenities and trained professionals in order to facilitate industry for standardisation and quality
improvement issues.

Bangladesh is now making non-brand toys in small numbers. The most common toys exported are
tricycles, electric or battery-operated cars, dolls, electric dolls, pedal cars and similar items. It must try to
make toys for global brands and also develop own brands in order to get higher price for products. The
design and development of toys also need huge investment in laboratory and human resources.

Introduction:

Bangladesh has an impressive track record for growth and development. It has made great progress in
reducing poverty and has grown steadily over the past decade. Based on the international poverty line of
USD1.90 per person per day, Bangladesh reduced poverty from 44.2% in 1991 to 14.8% in 2016/17.
While the income growth, human development and vulnerability reduction efforts to date have been
extraordinary, Bangladesh faces daunting challenges with about 24 million people still living below the
poverty line. Furthermore, in April 2019, the World Bank said Bangladesh requires large investments in
physical capital, human capital and reforms to better enable innovation to become an upper middle-
income country by 2031.

Major Economic Indicators:

Chinese Toys Market:

I. Market Overview

Toys in the Chinese market can be classified broadly into electronic, mechanical, plastic and wooden toys.
In addition to traditional offerings, models, licensed toys (including movie spin-offs, cartoon characters,
etc), high-tech toys and educational toys (including „STEM‟ – Science, Technology, Engineering and
Mathematics – items) have continued to come onto the market.

According to data from market research company, Euromonitor, the total retail sales of toys and games in
China soared from RMB135.6 billion in 2013 to RMB324.1 billion in 2018, an average annual growth
rate of 19.1%. In 2018, retail sales of traditional toys and games increased by 7.1% year-on-year to
RMB79.74 billion, representing 24.6% of total market turnover, while retail sales of electronic toys and
games increased by 20.9% year-on-year to RMB244.31 billion, accounting for 75.4% of total market
turnover.

As urban dwellers‟ incomes rise and quality of life improves, toy demands are beginning to change. There
is a shift away from traditional, medium- to low-end battery-operated toys, construction sets and
decorative toys, towards innovative electronic and intelligent toys. According to the mainland toy
consumer survey conducted by the Hong Kong Trade Development Council (HKTDC), both monthly
household income and children‟s ages have a positive correlation with the prices of toys purchased. As
children grow older, the average price their parents pay for a toy also gets higher, as does the average
price paid for the most expensive toy. This is possibly because, as they mature, children demand more
from their preferred playthings.

As of 2017 there were around 233 million children under the age of 14 on the mainland, the year when
China began the full implementation of the two-child policy under the 13th Five-Year Plan (2016-2020).
The National Health and Family Planning Commission predicts that the number of new-borns will climb
to between 17.5 million and 21 million annually during the period. This, along with China‟s steady
economic growth, should mean that toy market prospects are rosy.

Electronic toys

High-tech electronic toys have become increasingly popular in recent years. Interactive, electronic toys
with relatively high technology content have emerged as mainstream items. Another growth area is
educational toys, inspiring children‟s imagination and creativity and enhancing their coordination. Toys
that combine learning and fun are well received by children and parents alike.

E-sports games have witnessed rapid growth in mainland China in recent years and their development has
fuelled the growth of the electronic toys market. E-sports games are played using electronic devices, such
as computers and video game consoles, with gameplay typically emphasising players trying to outwit
rivals through move and countermove. At present, the total value of China‟s e-sports market is RMB88
billion. Figures released by market research company, Newzoo, show that total revenue of the top 25
games distributors around the world was US$107.3 billion in 2018, with four such distributors mainland-
based - Tencent, NetEase, 37Games and Perfect World.

According to Euromonitor data, children under six are the primary market for traditional toys and games,
accounting for about 50.4% of retail sales. The percentage of children aged seven to 19 engaged with
traditional toys and games, meanwhile, has dropped from 39% in 2017 to 36.6% in 2018. This is possibly
because, over recent years, parents tend to buy educational toys rather than simple diversions.

Educational toys
Educational toys and toys that can help children learn are preferred by modern parents. In a survey
conducted by HKTDC, almost half of all parents saw it as important that toys should help enhance their
children‟s intelligence. The huge attention paid to educational toys in recent years has led to robust sales
of STEM items, including such new-tech as toys incorporating artificial intelligence (AI) and virtual
reality (VR) toys. Overall, mainland parents consider STEM toys likely to boost their children‟s learning
and are willing to pay a premium price for them. In view of the massive market potential for innovative
AI-led toys, the design of such items across the mainland has increasingly focused on incorporating smart
elements.

Animation and Related Spin-offs

According to market estimation, nearly 80% of the world‟s animation spin-off products are currently
made in mainland China. Of these, nearly half are manufactured in Guangdong. A research report
conducted by one mainland market research company, China Industry Research (www.cir.com), showed
that the mainland animation spin-off industry is in robust shape, accounting for more than 70% of the
whole animation industry‟s profits. According to research by mainland consulting company ASKCI, the
animation spin-off market in China was worth more than RMB 55 billion in 2018,with animation toys
accounting for the lion's share.

China’s 2018 toy imports breakdown:

2018 2017/18
HS Code Description
(US$ million) Growth (%)

9503 Tricycles, scooters, pedal cars and similar wheeled toys; carriages; 648.6 16.2
dolls; other toys: reduced-size (“scale”) models and similar
recreational models working or not; puzzles of all kinds

9504 Articles for funfair, table or parlour games, including pintables, 558.1 -20.0
billiards, special tables for casino games and automatic bowling
alley equipment

9505 Festive, carnival or other entertainment articles, including 12.7 13.0

Source: Global Trade Atlas

II. Market Competition

China is a major toy producer. An estimated 80% of all toys produced worldwide are made on the
mainland. The primary toy production and export bases are Guangdong, Jiangsu, Shanghai, Shandong,
Zhejiang and Fujian. Among these six, Guangdong is the leader, with manufacturing centred around
Shenzhen, Dongguan, Guangzhou, Shantou‟s Chenghai, and Foshan. The bulk of toy exports are
produced for foreign brands on an OEM basis.

Although China has occupied an important position in toy production for many years, market pressures
are increasing. As production costs on the mainland continue to rise many toy companies have opted to
relocate production to other Asian markets, such as India or Vietnam, where wages are lower.

Toy enterprises on the mainland still lag behind foreign toy makers in terms of branding and innovative
product design. In recent years, mainland enterprises have striven to stand out in the toy market through
product differentiation, such as tapping into the highly popular educational toy sector.

In addition, due to such factors as declining external demand, escalating production costs and changes in
the renminbi exchange rate, Chinese toy exporters are coming under tremendous pressure, with many
enterprises increasingly looking to the domestic market for business opportunities.

Industry players on the mainland also maintain that the quality and safety of Chinese toys has been
improving, with their price-performance ratio now comparable to those produced by foreign brands. In a
survey by the HKTDC, product safety was ranked as the primary consideration when buying toys, while
brand awareness appeared to be relatively less important.

While OEM production remains dominant in China‟s toy industry, changes are taking place. Some
Chinese toy makers are paying more attention to R&D, while a number of key enterprises with their own
proprietary IPR and brand names have emerged, such as Auldey, Lanmao, Goodbaby, Dove and Huawei.
In the Pearl River Delta region, toy enterprises have also embarked on transformation and are gradually
shifting operations up the value chain, increasing efforts in sales and marketing and product development.

III. Sales Channels

Sales channels for toys include specialty stores in shopping centres, mainland online shopping platforms
and supermarkets. According to a survey by the HKTDC, many parents think that physical stores provide
better after-sale services. As a result, while online shopping platforms are more convenient and offer a
large variety of product choices, physical stores are still the preferred retail channel for toys in mainland
China. Currently, specialty stores and franchise chains, such as Edutainment, Hamleys and Kidsland have
been expanding and have become a major toy-buying channel for parents.

Many toy brands have also made the move into e-commerce over recent years. Major online shopping
channels include Tmall, Taobao, JD and Yihaodian. According to industry data, the total online sale of
toys has soared by 30.9%, rising from RMB17.98 billion in 2017 to RMB23.54 billion in 2018. This
shows that the mainland‟s online toy shopping platforms are growing steadily, opening up more channels
for toy retail. Meanwhile, products from foreign brands, such as Lego, Disney and Fisher Price, are now
available via various major online platforms, highlighting their role as an effective channel for overseas
players to tap into the Chinese market.

There are two main ways for foreign brands to break into the Chinese market – by appointing agents or by
making a direct entry into the retail sector. The products offered by foreign toy makers often have high
technology content, such as electronic toys, educational toys and game consoles, posing a clear challenge
to the traditional toy market.
Selected China toy exhibitions 2019-2020:

Date Exhibition Venue

24-26 July 2019 Children, Baby, Maternity Expo (CBME) National Exhibition and Convention
Center (Shanghai)

16-18 October China International Toy Fair Shanghai New International Expo
2019 Center

3-5 November Shenzhen International Maternity Baby Children Shenzhen Convention and Exhibition
2019 Products Exhibition Center

Shenzhen World Exhibition and

11-13 May 2020 Beijing International Kindergarten Supplies China International Exhibition Center
Exhibition

IV. Import and Trade Regulations

China implements zero tariffs on toys from countries and regions enjoying the Most Favoured Nation
status.

According to Chinese regulations, all products listed in the China Compulsory Certification
(CCC) catalogue are subject to testing by designated testing and certification centres. Only products
passing CCC certification and granted the CCCmark can be imported. The following six types of toys are
subject to CCC certification: children‟s vehicles, electronic toys, plastic toys, metal toys, projectile toys,
and dolls.

Foreign companies venturing into the mainland toy market should be aware of the relevant standards in
the industry. In the Standardisation Law of the People‟s Republic of China, which took effect on 1 April
1989, four levels of standards are stipulated: national standards, industry standards, local standards and
enterprise standards, in descending order of binding force.

National standards are classified into mandatory and recommended standards, represented respectively by
standard codes GB and GB/T. For industry standards, there are likewise mandatory standards and
recommended standards, with the toy industry deemed a light industry and represented by the standard
codes QB and QB/T respectively. Local standards are mandatory within their respective administrative
regions, while enterprise standards are applicable to the respective enterprises. For details of the standards,
see www.standardcn.com and the Standardisation Administration of China (SAC) website.

On 1 December 2010, revisions were made to the CCC scheme implementation regulations on six types
of toys, namely children‟s vehicles, battery-operated toys, projectile toys, dolls, plastic toys and metal
toys. The revisions further clarify the relevant technical requirements for these types of toys and shorten
the time limit for certification. The CCC toy standards govern toys‟ raw materials, as well as structural
and circuit design in a bid to protect children‟s safety. The above products which have not been certified
or do not carry a certification mark are not allowed to leave the factory, be sold in, imported to, or used in
other business activities in China.

The Measures for the Administration of Inspection and Supervision of Toy Imports and Exports
(Revised) introduced on 23 November 2015 sets out provisions for supervision and management of the
recall of defective import and export toys that may cause injuries to children. Export toys making a
declaration for inspection for the first time must submit a test report issued by the test laboratory for
import and export toys, as well as other documents, as required.

The National Technical Requirements for Toy Safety (GB 6675-2003), in force since 1 January 2016,
contains four newly added mandatory national standards. Compared with the old standards, the four new
requirements have the following three features: (1) the scope of application has been expanded to cover
toys and materials designed for play by children aged under 14, as well as products not specifically
designed as a toy but possessing features which can be played with by children aged under 14; (2) the
requirements for safety indicators, including sound, mechanical parts and combustibility, have been
tightened; (3) six plasticisers, including dibutyl phthalate (DBP), have been listed as restricted substances,
with restrictions on the maximum quantities in line with those in EU standards.

To ensure the safety and quality of children‟s toys and to protect children‟s health and safety,
the SAC has revised GB 6675-2003: National Technical Requirements for Toy Safety which was
subsequently superseded and replaced by Parts 1 to 4 and 11 to 14 of GB 6675-2014: National Standard
for Toy Safety. The requirements are mandatory and have been in force since 1 January 2016.

Determination of Total Lead Content in Materials of Toys and Children‟s Products (GB/T 22788-
2016) has been implemented since 1 July 2017 to replace the Determination of Total Lead Content in
Surface Coating on Toys (GB/T 22788-2008). The new national standards revise the scope of
applicability and include metallic and non-metallic materials in the determination of total lead content.

Under the Measures for the Administration of Inspection and Supervision of Toy Imports and Exports, in
force from 6 March 2018, toy imports which have passed inspection are not required to affix the
inspection and quarantine mark.

For the purpose of the Measures for the Administration of Inspection and Supervision of Toy Imports and
Exports, as of 21 November 2018, the General Administration of Customs (GAC) has required
original CCC certificates for the import of all toys listed in the Catalogue of Products Subject to
Compulsory Product Certification. Previously, only a copy of the certificate was required.

In May 2019, the GAC announced a third revision to the Measures for the Administration of Inspection
and Supervision of Toy Imports and Exports. This latest version designates the GAC as the governing
body for the inspection and supervision of imported and exported toys. The GAC will now assume
responsibility for the inspection and supervision of all imported and exported toys listed in the Catalogue
of Import and Export Commodities Subject to Inspection, as well as those required to be inspected
pursuant to the relevant laws and administrative regulations. Toy exports / imports not listed in
the Catalogue, meanwhile, will remain subject to spot-checks in accordance with the
prevailing GAC regulation

Toys Industry in Bangladesh:

The local market for toys is seeing a steady decline in its reliance on imported toys. As per Bangladesh
Toy Merchants Manufacturers and Importers Association (BTMMIA), local toy manufacturers have taken
over 60% of the market. Prior to 2010, this market was fully dependent on Chinese exporters who
exported toys made from cheap plastics. Today, local manufacturers have increased their ranks and are
producing and supplying quality products that have greatly helped overcome Bangladesh‟s dependency
on imports. As per Shahjahan Mozumdar, founder and president of BTMMIA, toy accessories worth
Tk5,500 crore were being imported before 2010 whereas today this number has been reduced to Tk3,000
crore. 2016 alone saw an increase of Tk500 crore than the year before, in the production of toy
accessories. Mohammaod Rayhan is a shopkeeper in Kamal Store based in Chandni Chlak. He said two
customers had come in last week and bought a doll for Tk110. He said sales of locally made dolls like the
one he sold to those customers were “made in Bangladesh” and sales of such local toys were going well.
He said: “Earlier China toys were sold mostly but now Bangladeshi products are doing better because the
prices are lower than Chinese toys.” Omar Faruque, another shopkeeper from Alauddin store in Chandni
Chowk said: “Chinese products are mostly sold in major cities like Dhaka, Sylhet and Chittagong.
However, in rural areas, locally manufactured toys are dominating the market. The quality is as good as
toys imported from China and since locally made toys are cheaper, our sales have gone up too.”
At present, there are over 100 toy manufacturers in Bangladesh. Among them, there are approximately 12
large companies such as Hakkani Hark group, Kabir Garden Industries, Aman Plastic Industries, Sabbir
Plastic Industries and Sumon Plastic Industries who are based in Kamrangir Char, Lalbag, Islambag,
Chalk Bazar and Gazipur. As per Shahjahan, the worth of the toy market is currently estimated at Tk7,000
crore, of which Tk4,000 crore accounts for local manufacturers, leaving only Tk3,000 crore worth of toys
that are imported.

Chinese Toy market in Bangladesh:

Toymakers are looking to widen their market share at home and abroad through enhancing their
capacity with the help of foreign technologies, especially from China, industry-insiders said.

They also have a plan to double their investment to Tk 20 billion by 2020 to boost the toy sector. In
2010, the import of toys totalled Tk 50 billion, which has now come down to Tk 20 billion, as the local
manufacturers enhanced their skills and developed a professional depth of know-how of the industry
over the time, according to the Bangladesh Toy Merchants, Manufacturers and Importers Association.
This sector is contributing to economy through creating job opportunities among the youths in rural
areas where scope of employment is very limited. Buoyed by the success of local manufacturers, global
toymakers are now coming to Bangladesh to team up with them to set up a toy manufacturing hub, the
local manufacturer said, adding that such a move would help Bangladesh become a major toy exporting
country in near future. China has been exporting toys worth billions of dollars from its toy city. We also
need such a toy manufacturing hub where all manufacturers can work together to boost this sector. The
local entrepreneurs are now seeking to team up with Chinese toymakers as their country is considering
shutting down the toy industry terming it less profitable and small industry. Presently, some 100
toymakers are producing 800 to 1000 toy items in the country. Of them, Hakkani Hark Group, Kabir
Garden Industries, Aman Plastic Industries, Sabbir Plastic Industries, Sumon Plastic Industries and
Everest Toys hold the major market share in the toy market. Besides, 5000 to 7000 items of toys are
imported from China. The reliance on imported toy, toy parts and mould is declining day by day, as the
local industries continue to flourish greatly due to its innovative, creative, technical initiatives, said
industry insiders. The imports totaled Tk 50 billion in 2011, Tk 40 billion in 2012, 35 billion in 2013, 30
billion in 2014, 20 billion in 2015, 25 billion in 2016, and Tk 20 billion in 2017. As many as 20,000 workers
are currently employed in the industry and 7000 wholesale shops are dealing with toys across the
country. The livelihood of about two million people is linked to the industry.
Conclusion:

Toy industry imports a few hundred components mostly from China and faces problems of Harmonized
(HS) Code and customs duty as these are imported in mixed consignment. Customs office also has no
experience of price and determination of taxes for these components. National Board of Revenue (NBR)
can identify the components and determine single HS Code for such components and spare parts to
resolve the confusions.

The entrepreneurs in the plastic sector have developed the plastic industry through their own initiatives
and finances. Now, the government should come forward to support the sector so that it can enter global
market with high value products like toys and also increase capacity to comply with IPR and safety issues.

References:

1. https://www.marketingtochina.com/toys-market-in-china-trends-and-opportunities/
2. https://www.researchgate.net
3. https://www.dhakatribune.com
4. https://thefinancialexpress.com.bd
5. https://www.scmp.com
6. http://china-trade-research.hktdc.com
7. https://www.thedailystar.net/
8. https://oec.world/en/profile/country/bgd/
9. https://wits.worldbank.org/CountryProfile/en/BGD
10. http://www.epb.gov.bd