Facts and Tips to Know Before Outsourcing Toy Manufacturing in China
August 19, 2018
One of my friends wants to invest his idea in a toy and decides to outsource the manufacturing in China. I called a former chief executive of one of China’s largest toy exporting companies and discussed how to make this investment successful. He showed me facts in the toy industry in China and gave me some advice. I think some of the points here also apply to other industries in China:
Intellectual property: the biggest problem is intellectual property. As you may note, in many cases, the idea of a toy is easy to copy. Some companies may even send spies to their competitors to get the prototype of their toys. Keeping your idea a secret is priority # 1.
Company varies: It is true that many companies in China have the ability to produce toys with great quality and low price. But keep in mind that not every company has the same competence. You may need to review its size, history, and reputation to select a trusted partner.
Rules on International Trade: Due to Mattel’s recent problem of “poisoned toys,” both America and China have restricted their rules on toy imports / exports. People working on toy exchanges between countries have to study the rules better and pay more for toy safety certification.
Money matters: some of my American friends have the stereotypical idea that everything done in China is cheap; so they think that part of their salary can make a huge international business. But in the toy industry, considering all costs related to design, manufacturing and export, a $ 100,000 order is still very small. You may have to ensure sufficient capitalization before investing.
Find a right person
Since we are in the United States and we can not manage all kinds of problems in China. Entrepreneurs in the US need to find a manufacturer in China, how they can handle the whole process, from building the prototype to the time toys are received by their American partner. This person should be a veteran in the Chinese toy industry and be familiar with the details of designing, manufacturing and exporting. Good personality is also an important issue. You can contact some major exporting companies in China for this type of person.