Toy Industry in Hong Kong Hong Kong Essay
- Length: 4 pages
- Sources: 2
- Subject: Business
- Type: Essay
- Paper: #39037561
Excerpt from Essay :
Toy Industry in Hong Kong
Hong Kong Toy Industry
The world toy industry in the world is growing tremendously and hence the need by many nations to invest in the sector. Among the nations, Hong Kong has been at the lime light, especially for being the leading economy in the industry. In conjunction with the Chinese mainland, the total accountability amount to 75% of the toys manufactured. The success of the operations have been credited to the ever developing market, constant customers, well-organized logistics, knowledge and a broad networking program for the marketing the end products. Famous brands developed for the industry include Playmates, May Cheong, Silverlit, Toy2R and Hot Toys.
Contextually, Silverlit is a family-oriented company but managed through the OEM, ODM and OBM bodies. It is situated in Dongguan but having no manufacturing operations in Hong Kong. Nevertheless, it has a large populous of employees and several branches in the UK, USA, Germany, France, Netherlands and Spain where the manufacturing activities take place. Managerial offices in China are found in the latter's capital Beijing, Shanghai, Guangzhou, Chengdu and Wuhan (Roger et al. 150). These nations all amount to the total universal sales made by from the company's produced goods.
Growth of the Industry
As the Silverlit companies approves, breakthrough in the business is ascribed to the innovation inspired by engineers for the first car toy to be produced. This led to the overture of enhanced technology and use of mechanisms that increased toy production. Introduction to equipment such as TurboZ with microprocessors and programs accounts for the growth of the industry in Hong Kong. Many other private, government and SMEs companies have also adopted the technology, enhancing a vast production of the products.
The growth of the greater Hong Kong industry has also been attributed to the crossover relationship between the toy and entertainment industry. Silverlit engaged in a partnership with the mainland China to facilitate the production of comic cartoon series such as the "Golden Hero." The company also purchased the French pre-school brand of Ouaps in 2009. Such ventures have greatly impacted in broadcasting the toy products increasing the sales. This methodology also emphasized on the development and utilization of innovative technology in the production of high quality toys.
According to the Silverlit's company strategy, the immense growth in the toy industry has been attributed to the management of its macro and micro external environments, mainly the competition. It has distinguished itself from the other global competitors. The methodology of managing this has been achieved through quick reception, competence, reliability and the country's compliance with their product's compliance (Solomon 136). Other entrants in the industry have not yet established concrete skills of complying with the skills required in the market. India, Vietnam, Taiwan, Korea, Indonesia, Bangladesh, Thailand, Philippines and Sri Lanka are examples nations that are encouraged to raise the levels of re-establishing themselves in the industry. Moreover, most of the named nations are prone to political turmoils, economic instability and undistributed networks of the industry in their interest. The law environment in Hong Kong supports industrial regulations, intellectual assets rights and the common codes and practices.
Just as the Silverlit Company is under the management of the OEM, OBM and ODM bodies, other companies in the region have followed the same trend in ensuring safe production and marketing. It has engaged its operations through the OEM orders that secure the ethical practices for production and, therefore, highly promoting the growth trend of the country's toy market.
Problems facing the Industry
The industry in Hong Kong has encountered inevitable challenges while venturing in the toy industry, and most importantly the Silverlit Company. Despite the fact that the Hong Kong toy industry has been able to distinguish itself from other competitors, there in an ever increasing trend of competition. The market mix modeling depicted has portrayed the increasing contest in acquiring full shares in the industry. It is becoming more savage especially in the affiliation relationship with the mainland China, especially for the Silverlit Company (Roger et al. 153). This is due to the low prices that the latter is lacing on its products, and copycatting and the less stringent rules in mainland China. The producers in the mainland have taken advantage of the industry by aiming at domestication and development of the world market so as to control the intellectual property infraction and lower the safety making it hectic for the Silverlit to enduring the venture in the industry.
The companies in Hong Kong engaging in the industry are facing financial pressures, leading to recession periods and eventually leading to the closure of some of the companies. The Silverlit has had problems as it has been suppressing to raise the prices needed to countervail production costs. It has been difficult to raise funds to assist to counterbalance the increased costs in continuing the production of the toys. The increase in the offset prices has been accredited to the widespread of consumer resistance. There later exists a less effective negotiation power from the buyers. This has caused a consolidation of the toy marketing which has led to the existence of fewer industries in the market. The few companies marginalizing the profits are Wal-Mart, Toys "R" Us, Hasbro and Mattel, putting the SMEs companies at a lower industrial relationship to the production of their goods.
Product or brand quality and importance are also an emerging challenge affecting the Hong Kong's prevalence in the toy industry. For the Silverlit Company, this issue led to an economic surge and a global downturn to all it branches (Kotabe and Helsen 389). Toys are perceived as a low value item, as they only appeal to children. The extent of companies to show-case the toys' value is highly impartial. The efforts made by the Hong Kong industries to refurbish and improve the production process and technology are also limited. This challenged the future perception of other companies in engaging in the industry.
Among other problems, increased wages' rates and input expenses have affected the toy industry making most companies such as Silverlit to incur abnormal loses. Before global economic decline experienced in 2008, toy industry had been under so much pressure with issues regarding salary increment. Since then, wages in this industry have been doubling annually (Solomon 148). Other policies introduced in the toy market have brought about problematic production and marketing issues. The implementation of labor laws has added 30% to expenditure for raw material or labor production. Raw materials such as metals and plastics have also hiked in cost forcing the toy manufacturers to struggling with change in export processing policies. Similarly, in the year 2007, the government reduced toy export VAT from 13% to 11% incurring losses to the already produced toys.
Future of the Industry
Hong Kong has managed to endure most challenges to reach the peak of the production of marketing of toys in the industry; and with the accomplishment of Silverlit Company. There is a projection that the toy industry in Hong Kong will continue growing and producing enormous and profitable incomes. Some of the strategies put in place such as joint ventures with the SLCA are expected to transform the company's prospects in being more media-oriented and brand driven. This will in turn promote benchmarking from other companies, making it hastier to enlarge the market and marginalize dominance of the greater Hong Kong to the industry.
It is also expected that the reliance to the 10 per cent of the Chinese mainland market will subside. The marker availed in Hong Kong foresees the opportunity of maturing its own entity without having high implications on the income levels and intellectual property rights. Regarding the safety and quality assurance of the products, the above enforcements, through Silverlit will be accounted for, making it easier for other contributing companies…