While the chip crisis is expected to disrupt the business in electronics, which are the most gifted at Christmas, before this holiday period, when gifts are given to children in every family, toymakers are also experiencing supply problems due to the division’s dependence on China. Although increasing freight costs have caused the branch to consider new production options, approximately 80 percent of the 95 billion dollar toy export is made by China. This makes it difficult for toys to enter gift baskets, causing delays in shipments and price increases due to freight and raw material bottlenecks.
From Barbie dolls to Hornby toy trains, all toy giants produced in China sought the director’s way of problems in the supply chain. Even though Barbie’s manufacturer, Mattel, has closed factories in Asia, Canada, and Mexico in recent years, a manufacturer that still has facilities in China and its scale has allowed it to manage bottlenecks. However, smaller competitors such as Hornby, which have been producing entirely in China since 1995, are still struggling to bring middle-of-the-shelf works to markets such as the UK, even though the demand for some works has increased by 35 percent this year. However, Jerry Healy, marketing manager of another British toy manufacturer Character Options, says the problem cannot be resolved quickly, and that low-profit toys priced under £20 are not attractive to produce locally.
Rise in toy prices
All executives in the branch, which will continue in 2022, also state that the continued dependence on China will reflect on the consumer. Frédérique Tutt, the global toy sector analyst of the research company NPD Group, states that especially the crisis in the maritime sector and the increasing freight have triggered localization efforts, that production is no longer as cheap as before in China and prices will increase by 12 percent in 2022.
Toy giants try to reduce Chinese production
The world’s largest toy manufacturer, Lego, was able to overcome the supply chain, which suffered the first blows with the pandemic quarantines, thanks to the geographical spread of its production, and announced a profit in the first half of 2021. The company’s production facilities in Europe and Mexico enabled it to overcome the bottleneck caused by the pandemic. However, the Denmark-based cluster announced last week that it will invest $1 billion in Vietnam to facilitate its access to Asian markets.
It will increase local production to 20 percent
Alain Joly, founder of France’s largest toy manufacturer Doudou et Compaigne, told the Financial Times that “the troubles caused by the pandemic have given the department a financial reason to reduce its dependence on China,” adding: “About 80 percent of global toy exports It’s in China’s hands. We had planned to have 10 percent of our production in France. But we’ve now increased that goal to 20 to 25 percent, and we hope to have achieved that goal by mid-2023. The “Made in France” movement gained momentum in the toy department of France. Alain Ingberg, the head of the French toy manufacturers sectoral association, states that the share of local production, which was 8 percent in 2014, has increased to 15 percent as of today. Ingberg states that the aim of the department is to make 20 percent of toy production in France within five years.
Cannot find some game consoles and smartphones
In the electronics sector, which was most affected by the chip crisis, the production of many companies, from Apple to Samsung, was negatively affected. Due to the ongoing crisis, availability problems are also experienced in the most well-known electronic treats of the New Year. Chip division analyst Alan Priestley from research firm Gartner warns that the chip bottleneck will have an impact on Christmas and New Year’s shopping. Speaking to CNBC, Priestley states that consumers who are accustomed to the convenience of e-commerce sites that deliver within 24 hours, such as Amazon Prime, will have to wait an estimated two to three weeks in this period.
Glenn O’Donnel, vice-president of the analysis company Forrester, points out that the most popular Christmas treats are chip-rich computers, smartphones and game consoles, especially in developed economies. Noting that Sony’s PS5, Microsoft’s Xbox Series S and Google’s Pixel 6 Pro smartphone have already become very difficult to find, O’Donnel says, “If you want to buy it, you have to pay a nice premium.”