Toy Manufacturing In India: 5 Things You Need To Know...The Inside Scoop From India Toy Manufacturing Experts

Do you want to find certified compliant Toy manufacturing in India? We can help…we have been guiding major and smaller Toy Cos since 2014 on manufacturing options in India. Get in touch for more information/to get quotes.

We’ve been travelling to India since 2014 as India Toy manufacturing experts, visiting Toy & Game factories and bringing customers to tour round available manufacturing facilities. Our industry has seen a knee jerk clamour for alternative manufacturing sources to China in the last few months as the tariff situation hits home. The reality though is that the long-term trends are much stronger than the short-term tariff driven trends. As long ago as 2015, China’s government was telling major Toy companies that they didn’t want to make $3 or $4 Toys any more, and they unveiled the ‘Made In China 2025’ plan, under which they planned to move from a low-cost manufacturing base to a high-tech powerhouse of production driven by technology. And hats off to China, they have largely achieved this – try buying an electric car in Europe now without feeling compelled by the quality and pricing of Chinese manufactured electronic cars! The reality is that the structure of China’s economy has changed, and so the current knee jerk to find more Toy manufacturing sources outside China will not be a one-off thing while the tariff situation is fresh and new.

The major corporate companies are a decade into long term geographic diversification plans, because they need to be ahead of the game due to the sheer quantity of production capacity they need to secure. If you want to move a couple of $million of Toy manufacturing we can get a lot of that work done for you quickly, but if you want to move $1bn or $2bn, it’s going to take a decade or more.

So when we come look at India’s Toy manufacturing, please remember that the 5 factors we are listing out in this article are the reasons why the Toy business will be tied in with India for several decades from hereon in, even if the tariffs dropped back and the 20% tariffs on goods from China were removed. Please also note we write this article from the perspective of India Toy manufacturing experts.

INDIAN TOY MANUFACTURING – FACT 1 – India Has A Massive Available Work Force

India has a gigantic workforce which is currently under employed. India is the only single country in the world which could potentially rival, or even exceed, China’s scale of workforce due to China & India having very similar total populations of c. 1.4 billion. China’s population is set to shrink significantly this century, with a drop of c. 1.4billion to 800 million this century (or worse) based on current birth rates, whereas India is forecast to be on c. 1.5 billion people by the year 2100.

The other point to make here is that India’s workforce (defined as currently working or actively seeking work) is not the full available potential workforce. There are hundreds of millions of additional women who are not currently working or seeking work who could work if there were opportunities/incentives available.

Available factory workers was the original driver of China becoming the primary hub for Toy manufacturing. Typically Toy production is hard to automate, because most Toy products come and go, they normally don’t stay in the market for more than one or max 2 selling cycles. As such, the volumes and longevity don’t justify investing in robotisation and automation in the way automotive might do. The alternative to automation is to have people assembling and collating the product on a production line. So the bottom line is that to produce most Toys you need a lot of available labour, and India has that in abundance greater than any other nation on earth and will do for the next 75 years at least.

If you have already visited India, you don’t need us to elaborate on the point of there being lots of people…but if you have not, then India is a place where cities are very densely populated, there are SO many people, and as such India really does not have the same issue with labour shortage which China has suffered from for the last decade or more.

In addition, India does not have Chinese New Year, so you don’t get that problem of workers not returning just as you want to start ramp up plans for production. India does have a number of national and local festivals, occasions and holidays, but the longest one is Diwali, which may see production shut for 3 days normally.

INDIAN TOY MANUFACTURING – FACT 2 – India Production Line Labour Is Very Cheap

It wasn’t only the abundance of labour that made China such a good choice as a Toy production hub 30 years ago or more, it was also the fact that the labour was so cheap! China’s population were literally impoverished and starving before they opened up their economy and population to produce goods for overseas companies. Now however, Chinese labour is not so cheap by international standards. This by the way is a good thing for all those hard-working Chinese people who laid the foundations for the long-term success of the global Toy business. Now Chinese people can aspire to earn higher wages and to have more fulfilling work – that’s what economic development is all about, and we should be happy for China on that front, as well as respectful of the unprecedented success story of lifting literally half a billion people out of poverty.

The issue today though is that the Toy business still needs cheap labour, and you don’t find that in China today so easily. I spoke to one factory owner during the Nuremberg show this year who told me he is paying c. $1,000 USD per month to his workers (!) – that’s a massive increase versus where we were even just ten years ago.

India on the other hand has a total abundance of people willing to work for the standard wages and add ons equating to around $200 USD per month for a 6-day working week. In short, for this reason alone, the Toy business is going to need India’s cheap and willing labour force regardless of any other factors, just in order to ensure viable capacity as Toy production continues to ebb away from China over time.

Also, in India, the local employment laws are far more protective of the workers than they are in China, so from a Toy company perspective, you don’t tend to get the ongoing ethical audit infractions and failures. The workers in India live in the local communities and catch buses in to work, they don’t live in dorms, and as such they tend to work fairly standard shift patterns, with new shifts (and new workers) added at times of peak production, instead of needing to drag more hours out of the same workers.

INDIAN TOY MANUFACTURING – FACT 3 – India Has A Fairly Limited Number Of Highly Qualified Factories

India has huge potential, but in general India has much higher friction in the way of working versus China. It’s a lot harder to run a successful Toy factory in India, and for this reason there are far fewer qualified factories.

PLEASE don’t take the approach of one major (not to be named!) Toy company we worked with who ran an extended three-month costing benchmark study, getting factories to quote for more than 20 products they would never get to manufacture as it was just an academic exercise. In running this benchmarking study, the company wasted the time and interest of one of a relatively few factories they could use within India. The factory then rejected any further RFQs from the company, even though they were quite desperate for local production capacity by that stage. In a small pool, it’s best to avoid annoying or even alienating any of the fish!

One other point here – because the number of high-quality factories is limited, they tend to have a choice of customers. Or to put it more bluntly, they don’t have to try as hard to get new customers. This means that some of the more aggressive buying tactics which might work for you when working with the many qualified and compliant Chinese factories you can choose from are not as likely to work in India. Just consider the fact that at least half of the world’s biggest Toy companies are sourcing from India, and have been for as much as a decade, so they are a lot less likely to jump through hoops for you to chase a comparatively small order.

Leverage is everything in negotiating with suppliers, and if you choose to go to India, you need to be aware that you will have less leverage vs your experience in China where you have an abundance of choice and options as a buyer. On the more positive side though, all the Indian factory owners I know are ambitious and very willing to invest in increasing capacity if they can see opportunity to merit expansion.

In our capacity as India Toy manufacturing experts we have built strong relationships with key factory owners and management in India, and our clients get to take advantage of these relationships.

INDIAN TOY MANUFACTURING – FACT 4 – India Is The Only Alternative Country To China With Potential And Ambition To Develop Full Local Supply Chain

While Vietnam has been an excellent alternative assembly hub to China, it has never and probably will never be completely independent in terms of supply chain and components. We saw this during China’s aggressive Covid lockdowns. When China shut down, factories in Vietnam could not operate at full capacity mostly because they needed access to components that were still produced in China.

India is quite a different proposition in this regard. In the just over a decade since we first visited India, we have seen substantial progress made on Toy & Game industry specific supply chain in the locality. When we first went there, major Toy companies were telling Indian factories that they would be importing packaging from China…this stipulation soon disappeared, because India is a massive FMCG market, and as such it has some exceptional packaging suppliers. But it’s not just packaging, India’s local supply chain has broadened and deepened exponentially in the last decade.

India has a big ambition to become a global hub for Toy manufacturing, and as such we are seeing more and more companies become specialists in supplying parts, components and materials for Toys. Needless to say, India is still a long way behind China at this stage – as you would expect, China took c. 30 years to build, but India is improving in this area every year.

The major difference between India and the other alternative hubs to China is latent industrial base. India produces more than 28 million motor vehicles per annum. And if you have looked at the inside of a car lately, most of the materials inside are plastic – injection or blow moulded mostly, plus foams and fabrics. These are all materials used heavily in Toy production. Therefore the relevant domain expertise is large within India, even if the intimate knowledge of Toy specific regulations and specifications is less abundant, the knowledge and infrastructure for working with key materials is already there en masse.

India’s share of electronics manufacturing is also increasing. Brands including Samsung, Apple, LG, Panasonic & Huawei are all producing consumer products and telecommunications devices in India. When I first visited India, there was little possibility to source electronic components or final products in India, but now that has changed. Again, India is not yet as advanced or as efficient as China, but it is improving all the time.

INDIAN TOY MANUFACTURING – FACT 5 – India’s Toy Manufacturing Sector Has Strong Support From The Indian Government

India’s government has been a big supporter of the Toy production sector, as India is clearly well positioned to attract production and therefore a lot of new employment opportunities for India’s somewhat under employed workforce.

In the recent Indian government budget, the authorities agreed to support the establishment of key Toy manufacturing clusters, investing in skills development and Toy industry related innovation:

“Building on the national action plan for Toys, we will implement a scheme to make India a global hub for Toys.” India’s Finance Minister Nirmala Sitharaman.

Last year we attended a meeting of India’s Toy company CEOs (along with other India Toy manufacturing experts), where the Minister for Economy & Trade attended. It was clear then that the Indian government is all over the opportunity that Toy manufacturing can offer. At that stage, we used the opportunity to highlight some small issues which can constrain demand – like pushing samples through customs for quoting as quickly as happens in China. It was clear from this meeting that the authorities in India are all over the opportunity to become a global Toy manufacturing hub.

CONCLUSION – INDIA’S INEVITABLE RISE IN TOY MANUFACTURING

And by the way, it’s not just those within India who are committed to making India a global hub for Toys production. At the same India Toy Co CEO meeting we attended, Walmart was heavily present.

Major retailers are now also embracing the concept of the need for further geographic diversification. Walmart has publicly committed to tripling their spend in India from c. $3bn to $10bn by 2027: https://www.cnbctv18.com/business/companies/walmart-to-triple-exports-of-india-made-goods-to-10-billion-per-year-by-2027-7698521.htm

Walmart’s total inventory holdings can be somewhere in the rough ballpark of $50-60bn, so a $10bn spend in India is clearly very significant.

The reality is that whether you want to hear it or not, India is going to play a big part in Toy manufacturing going forward. Many of India’s internal barriers to growth in this area are being addressed or removed as the Indian government gives a big push to this sector.

India is not an easy country to work in or navigate, although it is a wondrous experience to try…as India Toy manufacturing experts we have helped many dozens of companies introductions to India for toy manufacturing – from touring clients across the country looking at factories to aiding factory selection processes and decisions, we have been helping Toy & Game companies there for more than a decade. We’re looking forward to all of you getting as well acquainted with this magnificent country as we are.

FACTORIES WE REPRESENT – INDIVIDUAL FACTORY PROFILE

Our company provides Strategic Sourcing Consultancy for India & other geographies, but we also consult for factories (we only get paid by one side of the deal so we can operate ethically). We’re going to run through profiles of our key factory partners across the next few newsletter instalments. There is no particular order, so factories, please don’t be offended if you aren’t first!

TOY FACTORY IN INDIA

India’s biggest Toy Manufacturing company: we have known the founder of the company since 2014 and have visited the factory many times. Their customer base includes many of the world’s biggest Toy companies, and there are some good reasons for that. The company has successfully ramped up production capacity from an original single unit to now having half a dozen plants, one of which is a very large facility of more than 600,000 square feet. The factory has capability in: Plastic Toys (injection & roto moulding), Dolls (inc. hair rooting), spray painting, plastic Games, Plush, in house PCBA for electronic Toys & much more.

For more info on this factory, please send a DM. (Please note this factory is set up for quite high volumes, so it’s probably not a fit for start-ups).

TOY & GAME BUSINESS CONSULTANCY

In the nearly 15 years we have been Consulting for, we have advised hundreds of companies, set up distribution into most major markets and helped to accelerate our client’s growth. For more information on how we can help, check out our services here: www.KidsBrandInsight.com/services 

GREAT PEOPLE ARE YOUR BIGGEST ADVANTAGE

Toy Recruitment Consultancy has become one our most in demand services and our primary mission is servicing the needs of Toy & Games companies. We have a social and own media platform which allows us to directly access c. 25k people in the world of Toys & Games from across the planet, aside from which after 25 years I know many people in this business.

So when a company asks for help in finding their next key hires, it’s normally easy and quick for us to get interested applicants, but then our clients also know that applicants are screened by someone who understands the business intimately, and can spot obvious B.S. – for example, on a recent screening interview we asked a candidate to talk me through how he managed a sales meeting with retailers, and having sat in those meetings myself I assessed his responses not from what sounded good, but from what we knew would work most effectively having been grilled by the same retailers ourselves.

So if you have key senior roles to fill or if you just can’t find someone qualified for a key role you need to fill, just get in touch and we’ll explain how we work/can help, or check out our Toy Recruitment website here: www.ToyRecruitment.com

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