Trade war boogeyman hangs over giant US toy show

[NEW YORK] The US-China trade war has dealt a glancing blow to American toys, hitting putty and arts and crafts items, while sparing superhero action figures, toy cars and most best-selling offerings.

Yet, uncertainty about the trading relationship between Beijing and Washington hangs over this weekend’s Toy Fair, dampening the festive mood amid giant balloon cartoon figures and karaoke cars as some 30,000 industry representatives survey the latest and greatest in play.

China manufactures around 85 per cent of the toys and games sold in the United States and is also home to a growing consumer market estimated to overtake the US play market in 2022.

Aaron Muderick, founder of “Crazy Aaron’s Puttyworld”, a Pennsylvania company, has seen profits hit by US tariffs on raw materials to make his colourful putty and on steel cans, which bear the “made in the USA” mark.

But Mr Muderick is most worried about losing momentum in the booming Chinese market where he has worked to establish distribution channels and build brand identity.

“We’ve invested a lot of time and dollars,” he told AFP. “If it creates a market where the product is not welcome, where there are retaliatory tariffs that make it impossible for me to reach that consumer, then I lose.”

About 40 Chinese booths are displaying with China Toy & Juvenile Products Association, including companies selling stuffed bears, trampolines, magnetic building blocks and flashing beads.

“Some members feel uncertain, but the business is so far going okay,” said the group’s president, May Liang in an interview.

Company representatives have reported no drop in interest among their US buyers, said Ms Liang, who expressed scepticism that the US would impose broad tariffs on toys.

“We believe toys are really consumer-focused especially at holiday season, so we think toys should not be on the tariff list because it will harm consumers.

“But we feel we should closely watch it,” she added.

A trip to a US toy store shows the near-ubiquity of “Made in China” on any number of gadgets, games and super hero dolls, but the country’s playworld dominance sometimes surfaces in unexpected ways.

For example, youth-oriented books on display by the Quarto Group at Toy Fair about black role models like Nelson Mandela and gay and lesbian icons such as Freddie Mercury were printed in China – another testament to the country’s competitiveness.

The toy industry dodged a bullet last September, when finished toys were left off the list of expanded US tariffs.

Toy Association chief executive Steve Pasierb said such broad tariffs look unlikely at this point US President Donald Trump has spoken more optimistically of a trade deal with Beijing.

But “this is a tweet-driven scenario we’re in here… so you could see that come back,” added Mr Pasierb, whose association, the hosts of Toy Fair, has aggressively lobbied on trade.

Toy industry consultant Richard Gottlieb considers US tariffs on finished toys “highly unlikely” and doesn’t expect the current trade conflict to fundamentally change China’s position in US toys.

“People think we make it in China to make more money,” he said. “The reason is because if we made it America, it would be five times more expensive and people wouldn’t buy it.”

But the US industry is still worried about Trump administration plans to lift tariffs from 10 per cent to 25 per cent on raw materials. That increase was scheduled to take effect March 1, but Mr Trump on Friday reiterated that he could delay the increase if a deal is close.

Companies have mostly eaten the hit from a 10 per cent hike, but a 25 per cent tariff would be much more painful.

Putty maker Muderick, for example, saw 2018 profits hit by the tariff on steel but suffered no real hit last year from tariffs on rubber silicone because he bought supply ahead in anticipation of the levy. But he expects more of a profit hit in 2019.

Some toymakers may be in long-term contracts with retailers that lock in price.

“If it goes to 25 per cent, companies will go out of business, or they will cut back jobs,” said Neil Helfand, a lawyer specialising in trade whose clients include toy companies.

The trade conflict has given impetus to major toy companies to shift more manufacturing to other markets, a trend that was already underway due to rising costs in China.

By 2020, Hasbro plans to source 60 per cent of its toys from China, compared with 69 per cent in 2018 and 86 per cent in 2012, with the company shifting more production to the US, Mexico, Vietnam and India, Hasbro executives said on Friday.

Indonesia, Malaysia and Vietnam have all enjoyed double-digit annual toy manufacturing growth between 2012 and 2017, according to data from Euromonitor International, a market research provider.

Still, those three countries plus Thailand accounted for just 9 per cent of China’s toy output as of 2017, said Euromonitor senior industry analyst Justinas Lasinskas.

Significant additional production is “unlikely” in the United States, “where production would be still more expensive even with the introduced tariffs,” Ms Lasinskas added.

If you are looking to manufacture vinyl toys / figurines in Vietnam, let IMC Far East find the right manufacturing company to handle your product. Vietnam has increasingly becomed the toy manufacturing hub of the world due to its low labor cost and favorable investment conditions. Every toy company has its area of specialization, and we have the connections to know which company will be a perfect fit for your needs. We’ll make manufacturing in Vietnam a simple, profitable and hassle-free experience for you. Visit: www.imcfareast.com

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Opportunities for toy manufacturing in Southeast Asia

During last month’s Hong Kong Toy and Games Fair, the Southeast Asia Toy Association (SEATA) hosted its Annual Summit. The event brought together experts from key emerging manufacturing countries in the region including Vietnam, Indonesia, India, Malaysia and the Philippines.

SEATA was founded three years ago by a group of leading toy brands and retailers including Mattel and LEGO.

Asia Pacific is the world’s most rapidly developing market for toy sales, and Southeast Asia plays a crucial role in its growth. Southeast Asia’s population is over 625 million and set to grow to 717 million by 2030. In addition, their economies are growing fast, with aggregated GDP growth of 4.7% per annum.

At the event, established factories in Vietnam and Indonesia shared insights on the benefits their companies have seen after expanding in the region and diversifying their base. For Vietnamese manufacturing this including the logistical benefits of the close proximity to Mainland China and a reduced language barrier as most Vietnamese people learn Mandarin at school. Benefits of Indonesian manufacturing included a large supply of workers and lower labor costs.

Our President and CEO, Carmel Giblin also presented at the SEATA event sharing insights on some of the top 5 most common social compliance risk areas we encounter in our work to raise standards at toy factories in Southeast Asia. These include a lack of Personal Protective Equipment, insufficient emergency evacuation processes, wages & compensation not meeting legal requirements, issues around clear emergency exits, and challenges around llegally required benefits not being provided.

Southeast Asia is a region of opportunity for toy manufacturing, countries such as Indonesia and Vietnam typically have a high volume of workers with the necessary skills to support toy manufacturing. Labor costs can also be lower than other toy manufacturing regions, and benefit from our dedicated support in the region.

After China, Indonesia and Vietnam are the countries where the Ethical Toy Program has the most Certified factories and so we are increasing the level of support we are offering to toy factories based in these countries.

Last year, Ethical Toy Program opened an office in Ho Chi Minh City, Vietnam and hired a new team member in our South East Asia team dedicated to increasing our on-the-ground support to Vietnamese factories and supporting delivery of our Progress Visits which complement our audit program by providing increased capability building training and support for our factories. We are also developing more resources in Vietnamese such special guidance for our Audit Checklist which will soon be available in Vietnamese.

If you are looking to manufacture vinyl toys / figurines in Vietnam, let IMC Far East find the right manufacturing company to handle your product. Vietnam has increasingly becomed the toy manufacturing hub of the world due to its low labor cost and favorable investment conditions. Every toy company has its area of specialization, and we have the connections to know which company will be a perfect fit for your needs. We’ll make manufacturing in Vietnam a simple, profitable and hassle-free experience for you. Visit: www.imcfareast.com

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Vietnam makes pitch as an investor safe haven in trade war

HANOI (BLOOMBERG) – A red-hot economy, business-friendly policies and a Communist party led by free-traders: that’s the elevator pitch Vietnamese Prime Minister Nguyen Xuan Phuc is delivering to global investors amid the United States-China trade war.

“We are ready to grab the opportunity,” Mr Phuc said in an interview with Bloomberg TV’s Haslinda Amin, a few days before departing this week to the World Economic Forum in Davos, Switzerland.

Vietnam is quietly positioning itself as a safe haven for manufacturers wary of getting caught in the crossfire of the tariff war between the US and China. With a raft of free trade agreements, relatively cheap labour and close proximity to China, Mr Phuc has a good story to tell global executives he’ll meet in Davos.

“We are trying to increase exports in both quantity and quality of our products, especially in which we have advantages, such as seafood, commodities, footwear and electronics,” Mr Phuc said.

“We aim to become an export economy that can grow fast and provide more jobs with higher income for our people.”

Nonetheless, the South-east Asian nation has yet to see a flood of companies moving in from China, he said. And the economy has some serious challenges to overcome: inadequate infrastructure and lack of skilled workers make it difficult to attract manufacturing beyond assembly-line work such as garment stitching.

Global economic conditions are also worsening. The US-China trade war and more subdued world growth is weighing on export demand, a threat to an economy like Vietnam, where trade accounts for about twice the nation’s gross domestic product – more than any country in Asia apart from Singapore. About a quarter of Vietnam’s total trade is with China.

Vietnam’s economy seems to be sheltered for now. Growth quickened to 7.1 per cent in 2018, among the fastest in the world. Mr Phuc said he is confident growth will reach the higher end of the government’s forecast range of 6.6 per cent to 6.8 per cent this year. He also vowed to keep the Vietnamese dong stable in 2019.

“We see growth momentum in different areas and have good foundations to achieve our goals,” he said.

Vietnam, which has completed about 16 free-trade agreements, began tethering itself to global trade after introducing market-oriented “doi moi” reforms in the 1980s. Exports surged to a record US$244 billion (S$332 billion) last year, with US customers accounting for about US$48 billion of that – more than double compared with five years ago. 

SAMSUNG BOOM

Several large manufacturers already operate in Vietnam, the biggest of which is Samsung Electronics, which accounted for about a fifth of the country’s exports last year.

Mr Phuc, concerned about anti-trade sentiments from the Trump administration, is vowing that the country will step up imports from the US, from Boeing aircraft to products from oil companies.

Vietnam faces a possible US$3 billion trade deficit in 2019 amid growing global protectionism, VnExpress news website reported on Sunday, citing Deputy Minister of Industry and Trade Hoang Quoc Vuong. Volatile trade policies in the US and European Union could hurt Vietnam’s exports this year, Mr Vuong was cited as saying.

The South-east Asian country ended 2018 with a US$6.8 billion trade surplus, according to the General Department of Vietnam Customs.

Other factors that could contribute to a trade deficit include any decline in Vietnam’s agricultural exports as other countries ratchet up domestic production to reduce external reliance, and as its growing manufacturing sector imports more materials and machinery, VnExpress reported.

“The challenges this year will include global trade tensions, climate change and insufficient infrastructure,” he said.

As a developing economy, he added, “we have to keep growing to bring more jobs to our people and eliminate poverty. We have to grow at more than 6 per cent annually to boost per capita income and to escape the middle income trap.”

Still, Mr Phuc has a good story to sell to global investors. Vietnam was ranked No. 1 among seven emerging Asian countries as manufacturing destinations by Natixis SA, which looked at demographics, wages and electricity costs, rankings in doing business and logistics, and manufacturing as a share of total foreign direct investment.

“The government has been doing a lot to help foreign investors to grow businesses long-term in Vietnam,” Mr Phuc said.

IMC FAR EAST CAN BE YOUR TRUSTED PARTNER IN VIETNAM

Choosing a Southeast Asian country like Vietnam in sourcing low cost manufacturing entails extensive market research and due diligence. It is imperative for a company to find a reliable local partner with a long history of operating in Vietnam so that they can help you directly in considering low cost manufacturing in Vietnam.

IMC Far East is a product design, development and sourcing group dedicated to assisting businesses with International Trade. We help our clients and their companies grow, compete and increase margins in today’s competitive Global Market. With over 20 years of experience, we have established an extensive portfolio of reliable and vetted factories in Vietnam. We’ll make manufacturing in Vietnam a simple, profitable, hassle-free experience for you. Visit: www.imcfareast.com

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The US-China trade war hasn’t benefited Vietnam in a ‘big way’ yet, investor says

As the ongoing U.S.-China trade war threatens to dent exports from the world’s two largest economies, analysts have projected that other countries may see Chinese and American demand diverted their way.

Vietnam — and Southeast Asia as a whole — is one of the places most expected to benefit from trade war-inspired buying. According to one investor, however, the profit so far has been slight.

“It’s a bit early for Vietnam to be benefiting in a big way from trade wars,” Bill Stoops, the chief investment officer of asset management company Dragon Capital, told CNBC on Wednesday.

The Southeast Asian nation has been touted as a possible winner in the U.S.-China trade war because of its low cost of manufacturing. Reports indicate that some companies have begun shifting production out of China to avoid tariffs imposed by America.

Vietnam will likely benefit from those adjusted supply chains for a long time, according to Rob Koepp, network director of the Economist Corporate Network.

“It is now set to be kind of a China 2.0, for various reasons, and yeah, it’s going to be benefiting and that’s going to be long term,” he told CNBC on Thursday.

While firms have likely been limited by the logistical constraints of relocating and building new facilities in Vietnam, the country has begun to see new orders “flooding” into its existing industries that have some capacity for increased production, Stoops said.

“We are already starting to see big orders, big export orders flowing, out of nowhere, into the seafood, and the furniture and the garment industry,” Stoops told CNBC’s Street Signs. “I think this is a harbinger of things to come, as people start to divert business away from China.”

“It hasn’t happened yet, but it’s definitely in the works, and we’re starting to see straws in the wind with all these new export orders,” he added.

Investors cannot directly buy into the trade substitution theme because few exporters in the benefiting sectors are listed on Vietnam’s stock exchange, but there is still a “very strong” case for Vietnamese shares, Stoop said.

“For Dragon Capital, it’s still all about playing the domestic economy,” he said.

Vietnam’s companies have good earnings growth and are trading at a price-to-earnings ratio of around 12 times, according to Stoop, who said that’s lower than in neighboring countries.

Corporate governance is improving and the country has political stability, cheap wages and “perfect demographics,” he said.

The “turbulent state” of markets meant that the privatization of state-owned enterprises and the listing of companies came to “a bit of a halt” last year, Stoop said. Still, he projected that investors can look forward to more corporate reform in the second and third quarters of 2019.

Vietnam unseated Singapore as Southeast Asia’s top grossing market for initial public offerings in 2018.

“Remember, the government has a continuous need for money to help fund its budget deficit,” he said. “It has philosophically realized that it is good for the economy to get (state-owned enterprises) off the economy’s back.”

IMC FAR EAST CAN BE YOUR TRUSTED PARTNER IN VIETNAM

Choosing a Southeast Asian country like Vietnam in sourcing low cost manufacturing entails extensive market research and due diligence. It is imperative for a company to find a reliable local partner with a long history of operating in Vietnam so that they can help you directly in considering low cost manufacturing in Vietnam.

IMC Far East is a product design, development and sourcing group dedicated to assisting businesses with International Trade. We help our clients and their companies grow, compete and increase margins in today’s competitive Global Market. With over 20 years of experience, we have established an extensive portfolio of reliable and vetted factories in Vietnam. We’ll make manufacturing in Vietnam a simple, profitable, hassle-free experience for you. Visit: www.imcfareast.com

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Supply Chain Shifts from China to Vietnam

Supply chain shifts to Vietnam are gathering momentum, helped by China’s rising labor costs and other factors such as the ongoing US-China trade war.

Businesses with production facilities in China are looking at Vietnam when searching for an alternate manufacturing destination.

Navigating Asia’s geopolitical landscape is difficult for most foreign firms. This is more so when they have to consider moving business activity out of China.

China’s business ecosystem has been unparalleled in Asia due to its mature manufacturing ecosystem, infrastructure capabilities, and an increasingly predictable bureaucratic system.

The reason why Vietnam then features high on the radar for foreign businesses scaling up or choosing alternate sites outside China is its success in creating an adaptable production base – one that is also geared towards higher valued manufacturing.

Every country in Asia has a different set of strengths in so far as the manufacturing process goes, and many factors will be taken into account when rebuilding supply chains outside of China.

In this article, we discuss why Vietnam features prominently as firms worldwide reconsider their overreliance on a single production and sourcing base in China.

Vietnam’s appeal to multinational manufacturing firms

A study conducted by Natixis SA evaluated seven emerging Asian economies as manufacturing alternatives to China, and Vietnam was ranked number one. The study examined demographics, low wages, the World Bank’s Doing Business rankings, and logistics to determine manufacturing options.

The Vietnamese government has strategically transformed the nation into a ‘China plus one’ alternative by engaging in numerous free trade deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and EU Vietnam FTA (EVFTA), while developing its infrastructure to become a source for global export.

Vietnam has received some of China’s labor-intensive manufacturing, and this trend is most likely to continue given the government’s willingness to make progressive economic changes. Over the course of the last few decades, the implementation of market features, such as openness and trade, have become pillars for its economic restructuring. For example, Vietnam joined the World Trade Organization (WTO) in 2007 in a significant step towards merging with the global economy. Since then, several international trade arrangements to create favorable tax and investment terms have followed.

Supply chains shift to Vietnam: Textile and garment

The textile and garment sector are two of Vietnam’s major areas of export. For example, Vietnam is the second largest textile and garment supplier to South Korea after China. Industry observers also anticipate that Vietnam will soon take the top spot.

In recent years, multinational retail giants, such as Nike and Adidas, have broadened their manufacturing bases to Vietnam because of cheaper labor costs. Nike began to manufacture more of its product line in Vietnam than China starting 2009, and Adidas soon followed in 2012.

Both shoe manufacturers shifted their production to Vietnam when wages in China rose to approximately US$400 per month. The current average wage a production worker earns in Vietnam is US$216 per month. However, with wages increasing at a current rate of 7.9 percent, manufacturers will most likely have to shift production again in the foreseeable future.

Maxfield Brown, Business Intelligence Manager at Dezan Shira & Associates said,
“At this current rate, and with the implementation of the CPTPP to lift tariffs on textile and garment items, the textiles industry in Vietnam has a production window of six years before it becomes commercially unviable.”

Supply chains shift to Vietnam: Electronic equipment

Vietnam’s high-tech boom in recent years has paved the way for the country to begin producing more higher-end goods. This is seen in the recent trend of electronics goods factories making the shift to Vietnam.

Most notably, China’s Goertek – the assembler for AirPods, Apple’s wireless headphones – has confirmed plans to shift production into Vietnam. Amid global tensions due to the uncertain outcome of the US-China trade war, in addition to the hefty tariffs placed on high technology, Vietnam has become a leading alternate manufacturing choice.

Major electronics firms – such as Cheng Uei, a Taiwanese firm that specializes in manufacturing equipment for iPhones and Petragon, an assembler of iPhone equipment – are also scaling their options outside of China, with Vietnam as one of the leading alternate countries.

Future supply chain shifts to Vietnam

As technology evolves, automation is most likely to replace low-cost factory production. This will create a greater demand for workers in the field of component manufacturing and assembly of electronics – like electronic components on printed circuit boards.

Vietnam’s proximity to China, its growing skilled workforce, competitive labor costs, and political stability make it an ideal manufacturing destination. Especially as component manufacturing is a complex process – one that needs to allow room for trial and error.

Why relocate to Vietnam?

The current US-China trade war truce offers temporary relief to manufacturers who were looking at a 25 percent hike on tariffs. Regardless of the outcome, business leaders will continue to assess the positives amid the trade war heat or seriously consider relocation. Companies that are over-reliant on China as a primary source of manufacturing will continuously battle unstable regulations on trade, rising labor costs, and stricter operational oversight.

Relocation is, however, a highly expensive process. It includes converting and transferring industrial plants into appropriate regions, transferring production lines, and sending qualified workers into a new country, such as Vietnam.

Multinational firms that want to shift production need to resolve new logistics in a new country, which can be expensive and take years to complete. For foreign firms that want to relocate to Vietnam, it would be advisable to partner with experienced contractors that have the right connections and local knowledge to facilitate an efficient integration.

The desirability of Vietnam as a China plus one destination is generating competition from international firms. Production costs to rent industrial land and source materials are increasing in competitive areas – this shows Vietnam’s resources are in-demand

IMC FAR EAST CAN BE YOUR TRUSTED PARTNER IN VIETNAM

Choosing a Southeast Asian country like Vietnam in sourcing low cost manufacturing entails extensive market research and due diligence. It is imperative for a company to find a reliable local partner with a long history of operating in Vietnam so that they can help you directly in considering low cost manufacturing in Vietnam.

IMC Far East is a product design, development and sourcing group dedicated to assisting businesses with International Trade. We help our clients and their companies grow, compete and increase margins in today’s competitive Global Market. With over 20 years of experience, we have established an extensive portfolio of reliable and vetted factories in Vietnam. We’ll make manufacturing in Vietnam a simple, profitable, hassle-free experience for you. Visit: www.imcfareast.com

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Vietnam is coming out on top in the US-China trade war

Vietnam’s PM is taking advantage of trade tensions to boost the nation’s profile as a manufacturing and export powerhouse.

In the race to lure companies looking for alternative sites amid the US-China trade war, Vietnam wields a slew of advantages over its rivals.

Vietnam was ranked No. 1 among seven emerging Asian countries as manufacturing destinations by Natixis SA, which looked at demographics, wages and electricity costs, rankings in doing business and logistics, and manufacturing as a share of total foreign direct investment.

“Vietnam is poised to capture some of China’s global market share in labor-intensive manufacturing,” said  Trinh Nguyen, a senior economist at Natixis in Hong Kong. “It’s the clear winner from the trade war.”

Here’s a look at what makes Vietnam attractive to foreign investors:

Cheap

Production workers in Vietnam are paid an average of $216 a month, less than half what their peers get in China. Thanks to government subsidies, electricity is also cheaper at 7 US cents per kilowatt hour compared with 10 cents for Indonesia and 19 cents for the Philippines, according to GlobalPetrolPrices.com’s June data.

Vietnam also has one of the largest labor forces in Southeast Asia, at 57.5 million. That compared with 15.4 million for Malaysia and 44.6 million for the Philippines, according to the World Bank.

Deals, investment

Vietnam’s communist leaders have pursued free trade deals with South Korea and Europe and joined 10 other nations in March in signing a Trans-Pacific trade pact.

Officials completed a trade deal with the EU in June that will eliminate almost all tariffs. In Southeast Asia, only Singapore has a similar agreement with the EU.

The government is also making it easier for foreign investors to do business with a proposed securities law that would allow 100% foreign ownership of public companies, except those in restricted sectors like banking and telecommunication.

Foreign direct investment is surging, with the government expecting disbursed FDI to rise to a record $18 billion this year.

Geography

Vietnam’s proximity to China also adds to its appeal. The two share a land border, compared with countries like Indonesia, Philippines and Malaysia which are all much farther away.

Chinese companies that need raw materials or product components from the US will find it easier to source these goods via Vietnam. Vietnam is China’s largest trading partner in Southeast Asia as the two nations become more central in each other’s production chains.

Stability

Vietnam boasts one of the world’s fastest-growing economies, forecast to expand at about 7% this year. The dong has been relatively stable in 2018, compared with other currencies in Asia like the rupee and rupiah which suffered large declines.

“Strong economic growth and political stability are very important to investors,” said Tony Foster, the Hanoi-based managing partner in Vietnam for law firm Freshfields Bruckhaus Deringer.

The dong will remain fairly stable in the near-term, Fitch Solutions Macro Research, a unit of Fitch Group, said in October, citing support from strong FDI inflows and manufacturing.

IMC FAR EAST CAN BE YOUR TRUSTED PARTNER IN VIETNAM

Choosing a Southeast Asian country like Vietnam in sourcing low cost manufacturing entails extensive market research and due diligence. It is imperative for a company to find a reliable local partner with a long history of operating in Vietnam so that they can help you directly in considering low cost manufacturing in Vietnam.

IMC Far East is a product design, development and sourcing group dedicated to assisting businesses with International Trade. We help our clients and their companies grow, compete and increase margins in today’s competitive Global Market. With over 20 years of experience, we have established an extensive portfolio of reliable and vetted factories in Vietnam. We’ll make manufacturing in Vietnam a simple, profitable, hassle-free experience for you. Visit: www.imcfareast.com

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Trump’s trade war on Chinese goods could hit the toy industry hard

This holiday season, parents may want to throw a few extra toys in their carts.

The U.S. government’s recently announced tariffs on Chinese goods spell trouble for the toy business — and shoppers. The industry might be prepared for this coming winter, because products are mostly finished and prices are set, but next year could be more expensive for manufacturers, retailers and consumers, toy industry experts told MarketWatch.

Individual toys are not on the list of products affected by the tariffs President Trump announced Monday, but some raw materials and chemicals are — including lithium batteries and the chemicals that make Silly Putty. As a result, toy prices next holiday season will be higher, said Jackie Breyer, editor-in-chief of the Toy Insider, a toy review site.

“The good news for this holiday season is manufacturers have the parts they need to finalize any products — 2019 is a whole other story,” she said.

On Sept. 24, $200 billion in Chinese imports will face a 10% tariff, and on Jan. 1, 2019, the rate will jump to 25%. President Donald Trump said he will issue a third round of tariffs, which would affect $267 billion of additional imports, if China takes “retaliatory action against our farmers or other industries,” according to a White House statement. The threats are the latest move in an escalating trade war between the U.S. and China.

Another round of tariffs would probably include finished toys, said Richard Gottlieb, chief executive officer of Global Toy Experts, a consultancy for the toy industry.

Other items sold in children’s stores, including furniture and bicycles, are already on the list, said Rebecca Mond, vice president of federal government affairs at the Toy Association. “Overall, these actions have been very harmful for the toy industry,” she said. And even though prices are set for this holiday season, higher costs could get passed onto consumers, Mond added. “It will depend on the company and how they can absorb these costs,” she said. “We are playing the wait and see game.”

High chairs, booster seats, bouncers, infant walkers, cradles and play yards were on an earlier list of items affected by tariffs, but most of those items were exempted from tariffs after manufacturers lobbied the U.S. Trade Representative. “With China supplying the vast majority of these juvenile products and with no alternative manufacturing capacity readily available elsewhere, tariffs on these juvenile products will result in higher prices and fewer choices for U.S. consumers,” wrote Corinne Murat, director of government affairs at toy manufacturer Mattel MAT, -0.07% in a public letter to the Office of the United States Trade Representative (USTR) in late August.

Horizon Group, a company that makes the children’s craft kits “It’s So Me” and “Braid-tastic!” said the tariffs would affect their products as well. “These items, e.g. sand and wooden sticks, represent some of the most basic and essential everyday craft-related items, they are an absolutely non-critical area with regard to manufacturing and intellectual property and relevance to national security concerns, and respectfully they have absolutely no place on the list of proposed tariffs,” Horizon Group’s lawyers wrote in a public letter to the USTR.

Most toys are made in China, and if they aren’t, their parts are, Breyer said. China offers cheap labor and low production costs, and safety isn’t as much of a concern as it is in other countries, like Vietnam, Thailand or India, she said, which makes it cheaper to do business there. Imposing tariffs won’t give U.S. manufacturers an incentive to make more toys in the U.S., because of the increase in production costs and materials prices, Mond added. “The cost of production here in the U.S. is still higher than the costs in China with these tariffs,” she said.

If you are looking to manufacture vinyl toys / figurines in Vietnam, let IMC Far East find the right manufacturing company to handle your product. Vietnam has increasingly becomed the toy manufacturing hub of the world due to its low labor cost and favorable investment conditions. Every toy company has its area of specialization, and we have the connections to know which company will be a perfect fit for your needs. We’ll make manufacturing in Vietnam a simple, profitable and hassle-free experience for you. Visit: www.imcfareast.com

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Forecast for manufacturing overseas: China vs. Vietnam

Is Vietnam the new China in the manufacturing sector?  The short answer is not yet. But it does have potential to get there in the future.

China’s economy is changing. It has been for a while. While that may shuffle the cards in the country’s manufacturing sector a bit, it also opens up opportunities for countries like Vietnam to move into a position of being a low-cost manufacturing hub.

Capabilities and confidence in Vietnam’s manufacturing sector are growing and many companies are already starting or moving their manufacturing operations to the country. Recent events surrounding new tariffs and the potential of a trade war between the U.S. and China could of course shake things up even more and give more reason to drive manufacturing, at least for certain types of goods, out of China and into Vietnam.

However, manufacturing as a workhorse in Vietnam is still young and while there are many positives to Vietnam’s manufacturing sector that will likely continue to grow, for now China still holds a significant competitive advantage.

For a country to be competitive in low-cost manufacturing, there are a few economic areas that are generally needed: low labor costs, young populations, a supportive policy environment, quality infrastructure, minimum level of education for all workers, availability of engineers, economic growth, and a large internal consumer market.

In many of these areas, we feel Vietnam happens to fit the bill well. While the country’s infrastructure is not yet as strong as China’s, we feel it is still more stable than some other low-cost manufacturing leader candidates like Indonesia or India. Vietnam also has a more stable political environment. Because of this, some Chinese companies are moving manufacturing to Vietnam.

Licensing and operating have become much simpler than in China due to the Vietnamese government welcoming most sectors and market entry. However, a downfall that Vietnam has in its pursuit to transform into a low-cost manufacturing leader is the size of the country. A smaller population represents a smaller potential consumer market, which doesn’t help industry growth in becoming sustainable.

Yes, there are some situations where it makes sense to manufacture in Vietnam over China at this moment, but Vietnam is still years behind China. The country has a lot of potential for the future, but it is not for everyone, just yet.

Currently, Vietnam is better suited for larger companies who have more capability to overcome challenges the country still holds and capitalize on lower labor costs. The manufacturing industry here is fragmented, making it more difficult to navigate and find suitable suppliers and workers with the necessary skill sets. The trail has been blazed in China over the years making the path much clearer there. China’s strong infrastructure, that includes well-paved roads and some of the world’s busiest shipping ports, make it easy to find a handful of options for just about anything you need and not too far away from where you need them.

During China’s rapid economic growth a handful of decades ago, the country experienced a job boom. Even though there is a lot of potential for growth in other areas in Vietnam, it may not experience the same increase in jobs due to the rise of robots and automation. Times are different, but that won’t necessarily make it a less viable option for manufacturing though.

As China’s economy slows and it begins to shift more of its focus to medium and high-tech manufacturing, Vietnam is overall in a great position to secure its already proven capability in low-cost, labor intensive commodity type products like apparel, toys, textiles, shoes, and basic consumer electronics.

For businesses, that means they will eventually have even more options and opportunities to keep our products thriving.

IMC FAR EAST CAN BE YOUR TRUSTED PARTNER IN VIETNAM

Choosing a Southeast Asian country like Vietnam in sourcing low cost manufacturing entails extensive market research and due diligence. It is imperative for a company to find a reliable local partner with a long history of operating in Vietnam so that they can help you directly in considering low cost manufacturing in Vietnam.

IMC Far East is a product design, development and sourcing group dedicated to assisting businesses with International Trade. We help our clients and their companies grow, compete and increase margins in today’s competitive Global Market. With over 20 years of experience, we have established an extensive portfolio of reliable and vetted factories in Vietnam. We’ll make manufacturing in Vietnam a simple, profitable, hassle-free experience for you. Visit: www.imcfareast.com

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Vinyl Toys Are Safe

As a parent or a consumer, you may have read or heard reports casting doubt on the safety of soft plastic toys made of polyvinyl chloride (PVC), or vinyl. Claims have been made that when children suck and chew on soft vinyl toys, such as teethers or pacifiers, they are being exposed to “hazardous materials.” International Council of Toy Industries (ICTI), the worldwide association of the toy industry, along with many other organizations and scientific groups, would like to set the record straight.

The toy industry has an absolute commitment to ensure that its products are safe. Along with voluntary standards established by the industry, we conform to stringent government standards for the safety and health of all individuals, especially children. The safety of toys is, without question, the industry’s top priority, and it supports any scientific investigation which can help improve or reinforce the safety of its products.

We have prepared this brochure to explain some of the issues that relate to vinyl toys and assure you – as parents and consumers – that vinyl toys are safe.

Polyvinyl chloride, often referred to as PVC or vinyl, has been around for more thanfifty years, and is one of the world’s most widely used and researched plastics. It is found in every home in a variety of consumer products ranging from water pipes to shower curtains. Its approved use in food packaging as well as its wide spread applications in the health care field demonstrate the safety of PVC. Vinyl is used for the storage of national blood supplies throughout the world as well as in numerous surgical applications.

Recently, some groups have raised concerns about phthalates, an ingredient that makes vinyl soft and pliable. Critics have taken a potpourri of scientific half-truths and developed a campaign alleging that vinyl products containing phthalates (pronounced th-al-ates) pose a danger, especially when used to make products such as children’s toys. They claim that harmful chemicals migrate from the soft plastic and accumulate in the human body causing serious health threats. These allegations are simply not true and do not stand up to scientific scrutiny.

The toy industry is concerned that parents and consumers are being unfairly targeted and frightened by extremist environmental groups. We would like to take this opportunity to clarify misinformation about vinyl and any potential threats to the health and well-being of children. None of the claims made by critics have been supported by reliable scientific evidence. If there were any truth to these claims, we would be the first to eliminate any hazardous ingredients. We would never compromise children’s safety. After all, we have children too.

  • Vinyl is one of the world’s most widely used and most researched plastics with a safety record of more than 50 years. 
  • Vinyl is a material used in many toys, and, despite sensationalized and irresponsible claims made recently by some groups, toy manufacturers are confident that it is safe. This confidence in vinyl is based on the findings and opinions of national regulatory agencies and some of the most respected scientists in the world. 
  • Soft vinyl contains a substance called phthalates. Research into the effects of phthalates does not show that phthalates themselves are in any way hazardous to children’s health. In fact, there is no scientific evidence that these chemicals put people of any age at risk. 
  • While vinyl is the principal component in a wide range of products for consumers, the healthcare industry, and other highly regulated industries, some organizations have targeted products for children due to the high visibility of toys and the opportunities they offer for media coverage. Their research methods are at best questionable and their claims unfounded. The allegations against the safety of vinyl toys cannot be substantiated by scientific fact. They simply are not true. 
  • Vinyl and phthalates have been used in the manufacture of toys and baby products for 40 years. Generations of children have played with, and sucked on, toys made from pliable vinyl, and there is no evidence of any adverse effects. Indeed, the widespread use of phthalates in a number of non-toy products has led to extensive research verifying its safety.

If you are looking to manufacture vinyl toys / figurines in Vietnam, let IMC Far East find the right manufacturing company to handle your product. Vietnam has increasingly becomed the toy manufacturing hub of the world due to its low labor cost and favorable investment conditions. Every toy company has its area of specialization, and we have the connections to know which company will be a perfect fit for your needs. We’ll make manufacturing in Vietnam a simple, profitable and hassle-free experience for you. Visit: www.imcfareast.com

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