Top Hong Kong toymaker abandons China

China now too expensive for toy making.

Lung Cheong International Holdings, Ltd. said that building another factory in Indonesia and pulling manufacturing away from increasingly expensive Chinese factories can help it boost profitability in a weak global market.

The company sold its China factories in 2011 and moved production to Serang, Indonesia. It said the new Indonesian factory, which will demand an investment of US$9.7 million, will double its production capacity. Plant construction is to be finished next year.

Lung Cheong said its production base in Indonesia with its plentiful labor supply currently enjoys favorable advantages over China. It remains confident in its ability to seize this opportunity to consolidate its market position amid the exit of weaker players.

It said its export-dependent toy business has been hurt by weakness in major markets in North America and Europe that accounts for over 80% of revenues. It noted that most of its sales in the year ending March 31 were for less complex, lower-priced toys.

The company makes toy race cars, electronic and plastic toys and consumer electronics, and generates more than half its sales from its own-branded products, including toys under the “Kid Galaxy” name.
It said it has a marketing and toy design office in the USA.