Prepared for Hong Kong Trade Development Council January 2007
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Transcript of Prepared for Hong Kong Trade Development Council January 2007
1Hong Kong Toys & Games Fair 2007
Prepared for Hong Kong Trade Development Council
January 2007
Hong Kong Toys & Games Fair 2007
2Hong Kong Toys & Games Fair 2007
Fieldwork period : January 7-9, 2007
Target group : 402 exhibitors; 706 buyers
Data collection : Face-to-face interview at the
Exhibition Venue
METHODOLOGY
3Hong Kong Toys & Games Fair 2007
EXHIBITORS’ AND BUYERS’ BACKGROUND
INFORMATION
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Respondents: 402 Exhibitors
Hong Kong60%
Overseas40%
Exporter/Re-exporter
24%
Others7%
Manufacturer63%
EuropeGermany
UKFranceItalySpainOther Europe
AmericasUSCanadaLatin America
Asia Pacific
Chinese MainlandJapanAustraliaHong Kong
Other AsiaMiddle EastAfrica
%
Company BaseCompany Base Major Export MarketMajor Export MarketNature of BusinessNature of Business
EQ A1-3, A5
41
35
21
1
1
8
8
4
4
2
15
31
3
1
7
5
3
2
4
Wholesaler6%
Composition of manufacturers’ business
OBM: 54%ODM: 20%OEM: 25%Others: 1%
EXHIBITORS’ PROFILE
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Respondents: 706 Buyers
Hong Kong42%
Chinese Mainland
22%
Others 2%
Europe7%
Asia Pacific (excl. PRC, Japan, HK)
19%
Exporter/ Re-exporter
32%
Chain Store/
DepartmentStore3%
Importer13%
Others4% Wholesaler
13%
Manufacturer28%
N. America6%
BQ A1, A3
Company BaseCompany Base Nature of BusinessNature of Business
BUYERS’ PROFILE
Japan2%
Commission Agent
3%
Independent Retailer
4%
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Baby toys & products
Battery operated & electronic toys & games
Educational toys & games
Dolls & soft toys
Outdoor & sporting items
Hobby goods & collectible toys
Paper toys (e.g. puzzle & board games, party items)
Action figures
Toys parts & accessories
Die cast toys
Candy toys
Computer toys & games
Others (each less than 1%)Respondents: 402 Exhibitors
706 Buyers
% %
EQ A6/BQ A5
17
15
13
12
10
6
4
4
4
2
2
1
ExhibitorsExhibitors BuyersBuyers
MAJOR MANUFACTURING/ TRADING & SOURCING ITEMS
16
23
12
9
6
4
3
4
7
3
2
6
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TOYS & GAMES MARKET OVERVIEW
AND FORECAST
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28
39
29
3
26
45
24
4
1
1*
*
Better than 2006
Slightly better than 2006
Same as 2006
Slightly worse than 2006
Worse than 2006
Uncertain
%
EQ/BQ B1
Respondents: 402 Exhibitors706 Buyers
Exhibitors
Buyers
OUTLOOK OF OVERALL MARKET FOR 2007
* Denotes less than 0.5%
67%
[vs. 61% in 2006]
71%[vs. 60% in 2006]
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Respondents: Those who expect a better overall market prospect in 2007
270 498
EQ/ BQ B2a,b
EXPECTED GROWTH IN OVERALL MARKET IN 2007 AS COMPARED WITH 2006
More than 20%
16% - 20%
11% - 15%
6% - 10%
1% - 5%
AVERAGE 12% 10%
% %
ExhibitorsExhibitors BuyersBuyers
17
39
15
17
12
24
43
16
8
9
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65
35
25
13
Emerging markets (incl. Chinese Mainland, Southeast Asia, India, Russia, Central & Eastern Europe)
US
Western Europe
Japan
Others (each 6% or less)
Respondents: 402 Exhibitors
%
Average Estimated Growth Rate in 2007
%
14
14
16
16
EQ B3
REGIONS WITH BIGGEST GROWTH IN TOYS & GAMES RETAIL MARKET
ExhibitorsExhibitors
[ Chinese Mainland: 29%Eastern Europe (including Russia): 22%Central Europe: 12%]
2005%
40
52
58
14
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PRODUCT AND MARKET TRENDS
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20
17
33
10
3
10
16
20
20
19
7
3
1
4
Asia Pacific Chinese (excl. Chinese
Overall N. America Europe Japan Mainland Mainland, Japan, HK)
Educational toys & games
Computer toys & games
Battery operated & electronic toys & games
Baby toys & products
Dolls & soft toys
Outdoor & sporting items
Hobby goods & collectible toys
Action figures
EQ/ BQ D1
%
ExhibitorsBuyers
% % %
17
16
16
16
10
5
5
4
13
24
23
13
7
5
3
4
FASTEST GROWING TOY CATEGORIES IN 2007
# Small base; ## Very small base
%
-
15
18
16
14
12
7
4
4
17
28
23
9
6
6
2
2
19
13
13
19
11
5
5
3
8
21
22
16
7
7
3
4
11
21
14
11
4
14
7
11
16
24
24
14
6
2
5
4
-
11
16
32
11
16
5
4
33
17
13
6
4
2
6
-
-
%
Respondents: 402 Exhibitors; 706 BuyersExhibitors targeting respective markets (N. America: 138; Europe: 166; Japan: 19##; Chinese Mainland: 30#; Asia Pacific: 28##) Buyers targeting respective markets (N. America: 176; Europe: 189; Japan: 48#; Chinese Mainland : 70; Asia Pacific : 154)
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Asia Pacific Chinese (excl. Chinese
Overall N. America Europe Japan Mainland Mainland, Japan, HK)
Birth to 3 years old
Over 3 – 6 years old
Over 6 – 10 years old
Over 10 – 14 years old
Over 14 – 17 years old
Adults
Seniors
EQ/ BQ D2
%
ExhibitorsBuyers
% % %
14
25
23
14
13
10
1
11
18
32
22
11
5
CONSUMER SEGMENT WITH HIGHEST GROWTH POTENTIAL IN TOYS MARKET
%
17
26
19
17
9
11
1
13
24
29
14
14
6
1
15
23
21
15
12
12
11
21
28
20
12
8
**
3
20
27
17
13
20
11
29
17
14
14
14
18
7
18
21
21
14
11
19
30
22
8
10
- -
- - -
11
16
21
11
5
37
8
8
23
23
21
15
2
-
Respondents: 402 Exhibitors; 706 BuyersExhibitors targeting respective markets (N. America: 138; Europe: 166; Japan: 19##; Chinese Mainland: 30#; Asia Pacific: 28##) Buyers targeting respective markets (N. America: 176; Europe: 189; Japan: 48#; Chinese Mainland : 70; Asia Pacific : 154)
%
* Denotes less than 0.5%# Small base; ## Very small base
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Price
Educational value
Brand
SafetyLook and feel (e.g. colour, design, size)
Excitement
Durability
Ease of use/ setting up
TrendProducts with professionalrecognition/ certification
EQ/ BQ D3
Respondents: 402 Exhibitors706 Buyers
% %
37
28
27
30
19
13
17
8
4
6
ExhibitorsExhibitorsBuyersBuyers
PERCEIVED MAJOR SELECTION CRITERIA OF CONSUMERS IN PURCHASING TOY PRODUCTS
38
32
28
25
20
17
16
8
5
5
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EDUCATIONAL TOYS
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12.4 12.2 12.610.8
13.1 12.7
Asia PacificChinese (excl. Chinese
Overall N. America Europe Japan Mainland Mainland, Japan, HK)
% % % % % %
EQ/ BQ D4
EDUCATIONAL TOYS – EXPECTED PERCENTAGE GROWTH IN 2007
Respondents: 1,108 Exhibitors & Buyers Exhibitors & Buyers targeting respective markets (N. America: 314; Europe: 355; Japan: 67; Chinese Mainland: 100; Asia Pacific: 182)
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EQ/ BQ D5-6
MOST POPULAR TYPES AND RETAIL PRICE OF EDUCATIONAL TOYS IN 2007
Exhibitors Buyers
32
35
26
7
26
39
25
10
Most popular retail price range of education toysMost popular retail price range of education toys
ExhibitorsExhibitors BuyersBuyers
% %
49
43
31
17
16
13
10
52
47
31
14
14
14
12
Creativity related
Logic & IQ related
Language related
Personality shaping & EQ related
Music related
Numbers & Mathematics related
Science related
Others (each less than 10%)
Most popular types of educational toys in 2007Most popular types of
educational toys in 2007%
≧US$ 31
US$ 21 – 30
US$ 11 – 20
≦US$ 10
AVERAGE US$17 US$18
Respondents: 402 Exhibitors706 Buyers
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TOYS AND GAMES FOR ADULTS
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EQ/ BQ D10
Respondents: 402 Exhibitors706 Buyers
GROWTH POTENTIAL OF TOYS & GAMES MARKET FOR ADULTS IN 2007
High growth potential
Moderate growth potential
The same
Decline
%
25 23
59 60
13 14
32
%
ExhibitorsExhibitors BuyersBuyers
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EQ/ BQ D11
Respondents: 1,108 Exhibitors & Buyers
MOST POPULAR TOYS & GAMES PRODUCTS FOR ADULTS IN 2007
Portable video games (e.g. PSP, NDS)
(39%)
TV/ computer/ internet games (37%)
Electronic toys (e.g. remote control helicopters) (25%)
Artificial intelligence/ robotic pets (e.g. AIBO, I-Pony) (21%)
Hobbies and Collectibles (19%)
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Department stores
Shopping malls
Internet Retailers
Toys outlets
Auction sites on internet
Superstores
Others (each 3% or less)
BQ D12
Respondents: 706 Buyers
42
36
24
21
20
17
%BuyersBuyers
PLACE WHERE CONSUMERS PURCHASE TOYS AND GAMES FOR ADULTS
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LICENSED CHARACTERS
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EQ/ BQ D8MOST POPULAR LICENSED CHARACTERS IN 2007
Respondents: 1,108 Exhibitors & Buyers
Disney characters (43%)(excluding Winnie the Pooh & Disney Princess)
Winnie the Pooh (23%)
Disney Princess (19%)
Spiderman (16%)
Hello Kitty (13%)
45
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More than 40%
21 – 40%
11 – 20%
6 – 10%
1 - 5% No premium charged
EQ/ BQ D9
Respondents: 402 Exhibitors706 Buyers
ExhibitorsExhibitorsBuyersBuyers
PREMIUM CHARGED TO RETAIL PRICE OF LICENSED CHARACTER TOYS
AVERAGE 29% 26%
11 11
21 22
25 30
2020
20 14
32
%
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2005 (%) 15 13 13 23 19 19
2224
21
26
2022
Asia PacificChinese (excl. Chinese
Overall N. America Europe Japan Mainland Mainland, Japan, HK)
% % % % % %
EQ/ BQ D7
EXPECTED SHARE OF TOYS & GAMES WITH LICENSED CHARACTERS IN MAJOR MARKETS
Respondents: 1,108 Exhibitors & Buyers Exhibitors & Buyers targeting respective markets (N. America: 314; Europe: 355; Japan: 67; Chinese Mainland: 100; Asia Pacific: 182)
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INDUSTRY TREND
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EQ C1-2
Respondents: 255 Manufacturers
ExhibitorsExhibitors
MAIN PRODUCTION MATERIALS
Others
10%Metal Alloy
8%
Plastic
76%
Paper
3%
Change of production cost due to the increase in price of main production materialChange of production cost due to the increase in price of main production material
%
Production cost increased
Production cost has not changed
95
5
Cloth
3%
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Measures taken to comply with new regulations and practicesMeasures taken to comply with new regulations and practices
%
Respondents: 313 Exhibitors who complied with new regulationsand practices
Used environmental friendly packaging
Adopted green product design
Applied green labels to the products
Changed the product design to ensure product safety
Improved factory safety condition
Replaced chemical substance to ensure product safetyBetter managed/ selected suppliers to ensure compliance with the regulations
Provided staff training and education
Highlighted the green attributes of the product in marketing
Improved labour condition
Adopted green manufacturing processes/ facilities
56
55
47
40
32
31
30
28
27
25
25
EQ C3-4
Respondents: 402 Exhibitors
%
ExhibitorsExhibitors
MEASURES TAKEN TO COMPLY WITH NEW REGULATIONS AND PRACTICES
New regulations and practices complied with
New regulations and practices complied with
78
17
5
58
50
29
16
Taken measures to comply with new regulations and practices
- RoHS
- EN71 – Part 9
- WEEE
- The CARE Process
Did not comply with new regulations and practices
Not aware of the new regulations and practices
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EQ C5-6
Respondents: 313 Exhibitors who complied with new regulations and practices
ExhibitorsExhibitors
EFFECT OF THE NEW REGULATIONS AND PRACTICES ON PRODUCTION COST
Change of production cost due to the new regulations and practicesChange of production cost due to the new regulations and practices
%
Production cost increased
Production cost has not changed
90
10
Average increase in production cost: 14%
Strategies to offset the effects of increased production costStrategies to offset the effects of increased production cost
%
47
41
26
12
8
6
9
Discuss with buyers the possibility of sharing the increased cost
Modify the design of existing product lines to lower production cost
Develop new product lines with lower production cost
Sell more products with lower production cost to offset the loss from the high cost items
Discontinue partnerships with buyers who are not willing to absorb some of the cost
Discontinue product lines with negative margin
Others (each 5% or less)
No strategies currently undertaken
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BQ E1-2
Respondents: 706 Buyers
REACTION OF BUYERS ON THE NEW REGULATIONS AND PRACTICES
Strategies to deal with the increased prices of productsStrategies to deal with the increased prices of products
%
32
29
24
21
18
11
12
7
Share part of the cost with manufacturers for better quality products
Transfer the cost to consumers
Source new product lines with lower sourcing prices
Source from different suppliers who can offer lower sourcing prices
Source more products with lower sourcing prices to offset loss from the high cost items
Target higher-end markets with higher purchasing power
Others (each less than 1%)
Company has not been affected/ Not aware of the new regulations and practices
No specific actions currently taken
% willing to pay more for products complying with new regulations & practices
% willing to pay more for products complying with new regulations & practices
%
BuyersBuyers
More than 10%
6-10%
1-5%
Not willing to pay a premium
49
27
14
10
Average % willing to pay: 8.7%
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EQ C7
Respondents: 381 Exhibitors who are aware of the new regulations and practices
ExhibitorsExhibitors
COMPLYING WITH NEW REGULATIONS & PRACTICES WOULD ENHANCE COMPETITIVENESS
Yes
79%
No
21%
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SOURCING PRACTICES
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49
26
48
64
81076
%
Number of QuantityOrder of Each Order Unit Price Lead Time
Respondents: 706 Buyers
[Mean: 18%] [Mean: 15%] [Mean: 14%] [Mean: 11%]
BQ C2a-d
INCREASED
DECREASED
SOURCING PATTERN (2006 VS. 2005)
BuyersBuyers
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BQ C1a
BuyersBuyers
Respondents: 706 Buyers
ODM
28%
OBM
34%
OEM
33%
DISTRIBUTION OF BUYERS’ PROCUREMENT FROM RESPECTIVE MANUFACTURERS
Others
5%
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EQ A4/ BQ C1bPREMIUM FOR BRANDED TOYS
More than 30%
21-30%
11-20%
6-10%
1-5%
Not willing to pay a premium
Average: 28% 31%
Respondents: 402 Exhibitors706 Buyers
ExhibitorsExhibitorsBuyersBuyers
12 7
2420
2829
1618
19 23
21
%
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Southern China & Hong Kong
Shanghai and its neighboring provinces
Rest of the Chinese Mainland
Southeast Asia
Taiwan
Japan and South Korea
US and Canada
Western Europe
Russia, Central & Eastern Europe
Latin America
Others (each less than 2%)
65
36
22
10
10
10
9
8
4
2
%
EQ E3/ BQ C3
Respondents: 706 Buyers
PREFERRED REGIONS/ COUNTRIES FOR NEW SUPPLIERS
BuyersBuyers
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EXECUTIVE SUMMARY
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SUMMARY - I
MARKET OUTLOOK
Both exhibitors and buyers are very optimistic about the market prospect.
About 70% of them expect a better market outlook in 2007 (vs. around 60% in 2006).
Among those who anticipate a positive market growth in 2007, majority expect an increase of 6% or above.
Exhibitors anticipate that the highest growth would be in emerging markets (65%), particularly the Chinese Mainland (29%) and Eastern Europe (22%). Growth in mature markets like US (35%) and Western Europe (25%) is less prominent.
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PRODUCT & MARKET TRENDS
“Computer Toys & Games”, “Battery Operated & Electronic Toys & Games” and “Educational Toys & Games” are regarded as the three categories with the fastest growth in 2007.
Consumers aged 6 to 10 are the key segment driving the growth across different markets. The adult segment would also contribute to the growth in Japan, the Chinese Mainland and other Asia Pacific countries.
Besides price, educational value, brand and safety are the other major selection criteria for purchasing toy products.
Educational Toys
Positive growth potential is expected for educational toys, as traders are anticipating a growth rate of over 10% across different markets.
Creativity, logic & IQ and language related educational toys are seen as more popular.
SUMMARY - II
40Hong Kong Toys & Games Fair 2007
PRODUCT & MARKET TRENDS
Toys and Games for Adults
Over 70% of the traders anticipate a moderate to high growth potential in the adult toys and games market.Portable video games and TV/computer/internet games are the most popular for adults.Consumers usually purchase toys and games for adults from department stores and shopping malls.
Licensed Characters
Characters from the Disney family are still the most popular, followed by Spiderman and Hello Kitty.Both exhibitors and buyers think that around 25% premium can be charged to the retail price of licensed character toys. Traders expect that licensed characters would represent over 20% of their export/import in major markets.
SUMMARY - III
41Hong Kong Toys & Games Fair 2007
INDUSTRY TREND
95% of the manufacturers experienced an increase in production cost due to the increase in price of the main production material used.
Most exhibitors (78%) are complying with new regulations & practices (e.g. RoHS, EN71-Part 9) in their production process. They think that this would enhance their competitiveness. Measures commonly taken include using environmental friendly packaging, green product design and labeling.
Exhibitors who complied with these regulations generally agree that production cost would increase as a result. Besides modifying the design of current product lines to lower the cost, they would also discuss with buyers the possibility of sharing the increased cost.
Majority (90%) of the buyers are willing to pay more for products complying with these regulations & practices. Buyers would take various actions to deal with the increased prices, including sharing the cost with manufacturers, transferring the cost to consumers, and sourcing new product lines with lower sourcing prices.
SUMMARY - IV
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SUMMARY - V
SOURCING PRACTICES
It is encouraging to learn from buyers that the number of orders and quantity per order are substantially higher in 2006 as compared with 2005, yet allowing an increase in sourcing price and lead time.
Almost all traders believe that a premium can be charged to branded toys. Most think that a premium of at least 11% can be imposed.
Buyers prefer sourcing products from Hong Kong/ Southern China, followed by other regions in the Chinese Mainland.
43Hong Kong Toys & Games Fair 2007