Toymakers face difficult patch
Updated: 2011-07-21 09:07
(Xinhua)
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Battery-operated plush dolls are seen at a retail shop of Yiwu Sunnytad Toys & Crafts in Yiwu, east China's Zhejiang province, July 20, 2011.[Photo/Xinhua]
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GUANGZHOU -- The new European directive on toy safety came into force Wednesday and has caused concern for many Chinese manufacturers over rising costs and shrinking profits.
The European Union's Council Directive 2009/48/EC on the safety of toys limits the use of 19 types of heavy metals, while only eight types were restricted by the previous regulations.
Seen by many toy makers as the "toughest regulation" so far, the new regulation also forbids the use of 55 allergenic fragrances and limits the use of 11 others for the first time.
As the biggest toy exporter, China's export value takes up 70 percent of the global trade. China's toy exports to the EU was $2.2 billion in 2010, taking up one fourth of China's exports and 87 percent of the EU's imports.
Many Chinese manufacturers believe that the implementation of the new directive will push up their costs and squeeze their profit margins.
"On toy testing alone, the new regulation includes 57 articles while previously there were only 16, so we have to spend more on new testing machines," said Wu Difei, sales manager of the Guangdong Meiye Electronic Technology Co, which has been in the export business for years.
Wu added that higher investments in toy packaging, materials and environmental protection will elevate the costs at least 15 percent.
Wen Suihong, chief editor of the monthly magazine Toy Industry, said China's toy industry will enter a difficult patch since profit margins have already been squeezed by surging costs.
Statistics from the Ministry of Commerce show that despite the 35 percent year-on-year increase in toy export volume between January and May 2011, the value rose only 13.2 percent, with each toy sold at $0.48 on average, down 16.2 percent year-on-year.
"The new regulation is like adding insult to injury, since the factories have already been plagued by problems such as power and labor shortages," Wu said.