Tens of Billions of Blocks Market Chenghai Accounted for Half, The Capital of Toys Can Run Out of China Lego

Building blocks are becoming one of the most popular categories in the toy market, and Chenghai, which has an inherent industrial advantage, is also trying to seize this opportunity to ride the wind.

In the rumbling block production factory, a small block of particles under the large injection molding machine "ride" the conveyor belt to the plastic baskets below. The person in charge of GODES precision injection molding factory told the first financial reporter that the factory has realized fully automated production and is running almost 24 hours a day, 7 days a week.

Before arriving at the block production factory in Chenghai District, Shantou City, Guangdong Province, it was difficult to link these heavily mechanized factories with the delicate, tiny block particles in shopping malls, which is the industrial underpinning of Chenghai, the "toy capital of China".

More than 300 square kilometers of geographic area to give the largest industrial development of the Chenghai bottom. Riding on the east wind of reform and opening up, located in the special economic zone of Chenghai because of toys and rise, but also because of toys and famous, the annual output value of its toy industry from 12 million yuan in 1979 to 46 billion yuan in 2021, accounting for 78.24% of the total industrial output value of the Chenghai District in 2021, becoming the first pillar industry of the industrial economy of Chenghai.

Countless 90s, 00s childhood memories born in Chenghai, such as Pleasant Goat and Big Big Wolf, Balala little magic fairy, armored warriors, Beacon Bear, Firepower Junior King, etc.. At the same time, a number of local listed companies have grown up, such as Aofei Entertainment, Starlight Entertainment, and Shifeng Culture. This small seaside city has won many honors such as China Toy and Gift City and China Toy Manufacturing Base, and it is also the first China Toy and Gift Export Base in China.

In the upgrade iteration of the toy industry, the block category is growing rapidly and has become one of the hottest windfall. According to the "Tmall Trendy Toys White Paper", as of last year, Taobao, Tmall blocks category, has piled up a market of ten billion dollars, and blocks from the Chenghai supply chain production, has more than 50% of the ten billion market size.

A group of sharp tide in the Chenghai toy industry chain for many years, but also earlier to smell the new business opportunities in the toy industry. 2017 onwards, Chenghai blocks brand emerged, a number of blocks brand business in an interview with the first financial said, before 2017, Chenghai blocks brand is only a few, but after just five years of development, now Chenghai blocks brand has more than 100, the number of brands has increased tenfold More than.

Building blocks gradually become one of the most popular categories in the toy market, and with the natural industrial advantage of Chenghai is also trying to seize this opportunity to ride the wind.

At the end of the 1970s, some local people in Chenghai opened a family workshop, to undertake the Hong Kong toy processing business. While commissioning others to design, mold, injection molding, while assembling small toys in their own front yard, Chenghai gradually formed a family toy production network.

Since the 1990s, the Chenghai District Government set toys as a key industry, the construction of a number of industrial parks and to provide policy support. 1998, the local guide to the establishment of Chenghai Plastic City, since 1999 also held an annual Chenghai Toy Craft Fair to attract customers at home and abroad.

In 2012, Chenghai toy production and operation units only more than 5,000, to 2021 production and operation units reached 43,000, employing more than 100,000 people. At the same time, the toy output value accounted for the proportion of industrial output value of the whole Chenghai area has been rising, from about 40% a decade ago to nearly 80% now.

Nowadays, there are several toy enterprises with annual output value of more than 100 million in Chenghai, such as Aofei and Hua Wei, etc. Large enterprises drive small enterprises, and the development of Chenghai's toy industry is becoming more and more solid, and local people are getting rich by the toy industry.

In 2016, China Chenghai Bao'ao International Toy City (hereinafter referred to as Bao'ao City), positioned as the first international toy industry complex, opened with a total control scale of 2,000 mu and a total investment of over RMB 8 billion. In the toy retail outlet on the 4th floor of Baoao City, there are manufacturers such as Yongjun, Magic, Weili, Wanger, Henglong, etc., with more than 5,000 kinds of toy products, and Baoao City has become the only place in the region that is positioned as a combination of retail and wholesale toy tourism shopping for tourists to buy the special products of Chenghai - toys.

In mid-September, the first financial reporter visited Bao'ao City and found that the modern mall was filled with all kinds of toy stores and a wide range of goods. Some local manufacturers said that Bao Ao City is a major initiative to build the influence of local toy brands in Chenghai, but also look forward to more local and toy-related landmarks appear, so as to attract more foreigners to Chenghai tourism.

On the other hand, in the Chenghai District, the traditional toy wholesale market - Plastic City, is still a relatively concentrated local toy wholesale market. Each toy store is almost stacked in front of the wall-high boxes, filled with all kinds of finished toys to be sent around the world. A store owner from Henan told reporters that they mainly do wholesale business, not retail for the time being, customers from all over the country, from their hands to take the goods, and then sold to the world.

Chenghai to work in the foreign population is also quite a lot. According to the results of the seventh national census, as of November 1, 2020 zero hour, Chenghai District resident population of 874,400 people, ranking 3rd among the seven districts (counties) in Shantou City; compared with the sixth national census in 2010, a total increase of 75,548 people in ten years, an increase in the number of people ranked 2nd in Shantou City.

It was also here that the first batch of building block brands in China was born.

In 1994, is the most prosperous period of development of the toy industry in Chenghai. At that time, Zhan Kehua found that the building blocks brought back from foreign visits were loved by two children. Inspired by this, in the mold industry rooted for many years, Zhan Kehua quickly made a judgment, turned into the production of blocks, the product named Enlightenment blocks, the core population of children under 12 years old.

This building block enterprise from Chenghai has experienced 28 years of development, and Zhan Kehua's two children have now become the second generation of managers.

From 2017 onwards, in the block market to crack down on piracy, the domestic block market demand increment obvious background, Chenghai toy manufacturers have begun the brand transformation. According to a number of block enterprises in Chenghai, the current Chenghai block brand has more than 100.

Alibaba Taobao Tmall industry and operations center trendy toys general manager Moza also said that this year Taobao Tmall big toy industry upgraded to a level of industry, they will re-iterate and upgrade the platform's supply and user demand, the toy from functional attributes to upgrade the emotional attributes of consumption. At the same time, the platform upgraded the block category from the original sub-category to the industry's large secondary category. In terms of performance, the new toy merchants are on fire, with year-over-year growth of more than 120%, and more than 100 new brands have been hatched in the Tmall blocks category alone.

For the rise of Chenghai blocks original brand, many industry insiders believe that, on the one hand, is optimistic about the block market, on the other hand, also has some relationship with Lego increased efforts to combat piracy.

To go long, you must do their own national brands, adhere to the original. Guangdong Yuxing Technology Industry Co., Ltd. was first founded in 2010, and after achieving early user accumulation, it achieved industrial transformation in 2018, creating the technology block brand - Yuxing Mould King (Mould King). General manager Xie Weichuan told First Financial that as an original brand enterprise, it also hates piracy, which not only damages the local brand image, but also affects the user's experience.

The awakening of brand awareness is an important reason for the rapid growth of Chenghai Block brand. Du Kehong, vice president of the Shantou Chenghai District Toy Association, told Firstrade that from the past five years, the whole industry has seen a relatively large development in terms of R&D investment and independent brand building, and the brand awareness of enterprises is being strengthened.

Building block category in the past 30 years, Lego in the Chinese market has done a very strong user cultivation and education popularization, but also for the domestic building block market reserves a very large growth potential. Coupled with the rise of the trendy toy circuit in the past three years, there is a very large influx of capital, we also see the domestic building block echelon has gradually formed on the platform. Moosa said.

Currently, the LEGO Group has more than 350 branded retail stores in China, while before 2019, the number was less than 70. After 2019, the LEGO Group's store opening rate in China is increasing day by day, and information shows that the LEGO Group has established branded retail stores in China to reach more than 140 in 2019, covering 100 cities by the end of July 2022.

According to Euromonitor statistics, LEGO in the global and Chinese building class toys market share of 68.8%, 42.3%, respectively, whether in the world or China, there is no doubt that the industry leader.

A number of building block industry insiders told the first financial, from the market share, domestic building blocks still lag behind the international big brand building blocks. But compared with the international brands, the user experience of domestic blocks has been comparable, and the sales price is only one tenth of the international brands.

But how can stand out and grab the missing market? Qimeng marketing center director Liu Zhaowen said to the first financial, domestic blocks are developing rapidly in recent years, but LEGO education of the market for a long time, to stand out from it, but also need domestic blocks continue to make efforts. In the premise of maintaining the cost performance, domestic blocks should also gradually increase brand investment, increase the development of mold technology research, to catch up with the gap in the foundation. At the same time through the differentiation of IP competition, the formation of a unique point to grab the market with Lego.

Differentiated development is one of the key words mentioned by several interviewees. From the product point of view, many domestic brands are exploring areas that LEGO has not ventured into, for example, Yuxing Technology focuses on functional blocks, and when the car-like blocks are put together, you can get a car toy that can be remotely controlled.

Sambo blocks from 2018 onwards in the national trend of IP continued to make efforts, has got the wandering earth, aircraft carrier Shandong ship, space culture and creativity, the Forbidden City culture and other IP, the current share of sales of the relevant co-branded series of products accounted for about 50%, the other half is the original product line series, such as the development of the female group "flower workshop series". Today's block products in addition to the categories for children, female groups and the elderly have also become important target customers.

Liu Zhaowen also said that the domestic market is undergoing profound changes in the past few years. With the growth of Generation Z, the first set of core customers of Qimeng blocks have become new white-collar workers and sophisticated mothers, and the capacity of the entire block market is becoming more and more extensive. At the same time, with the rise of tide play consumer demand, the building block industry has also captured the demand for boutique consumption. With the growth of the economic level and the popularity of Internet e-commerce, more high-quality blocks can reach a wider range through the Internet. Overall, domestic blocks branding, boutique consumption is a major trend.

Moosa that: Chenghai industry belt from the transformation of manufacturing infrastructure to the entire industry, there are more second-generation succession, more Internet growth under the helm to do the entire brand operation ideas, open up the best growth phase of this market, but also let us see the current domestic blocks ushered in their own era.

For the development of local enterprises in Chenghai, Professor of Economics Department of Lingnan College of Sun Yat-sen University and Deputy Director of Hong Kong and Macao Pearl River Delta Research Center Lin Jiang said in an interview with First Financial that the creation of brand culture is probably more important than manufacturing. Local enterprises should think beyond the original thinking of only engaging in foreign trade export and processing manufacturing, and face the domestic market more, focusing on the real needs of domestic consumers, how to deepen brand development, while maintaining quality and brand reputation is the problem these local businesses need to consider.

Domestic brands to power to seize the market bottom, from the continuous improvement of product quality, in this process, Chenghai toy industry chain of digital, intelligent transformation and upgrading play an important role in supporting.

Ltd. is one of the enterprises that produce large quantities of building block toy particles in Chenghai, with more than 25,000 types of toy particles, and can produce 40 million building block toy particles every day.

Chenghai need to make greater efforts to attract talent to support the development of creative and cultural industries, on the other hand, enterprises can also use telecommuting and other digital means to recruit design and development talent. Lin Jiang suggested that Chenghai to avoid the problem of Chenghai on Chenghai, the development and layout of the entire toy industry should be based on industrial integration and urban linkage development between cities in the Greater Bay Area and eastern Guangdong to consider, Chenghai can better take advantage of the advanced city's talent, science and technology system reform, creative industries to promote the development of local industries, such as the creative cultural industries with Shenzhen to achieve integrated development, and jointly build creative cultural gathering area, while seeking more policy support.