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How the Toy Trade is Going to Evolve Affected by the Coronavirus Outbreak?

The recent novel coronavirus outbreak in China will undoubtedly generate a lot of negative impacts on China's toy foreign trade, and it will also cause different levels of damage to enterprises in various functions throughout the value chain. However, on the other hand, this is also a catalyst to accelerate the transformation of the entire traditional toy foreign trade industry at the same time. We believe that after this epidemic, the industry will undergo a major reshuffle. Whether it is for buyer, trading company or factory, whoever can adapt to the changes will survive and keep playing the game.

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No one expected that a war without gunpowder would come around the Chinese New Year. Just like SARS in 2003, the highly infectious novel coronavirus has become a constant topic day and night, and it is also a nightmare that makes us fear to go out.

The epidemic hit hard on international trade of various industries including toy trade.

In this situation, how will the toy trade develop in the near future?  Here’s some analysis of the trends.

1.   Purchasing demand remains the same but sourcing trip to China will decrease
Through communication with overseas clients, we have the following findings:

1)   Purchasing demand remains the same
For large overseas toy buyers, they have relatively fixed procurement costs every quarter, and this cost will not be reduced or adjusted due to the outbreak of virus. Therefore, their purchasing requirements will not change much every quarter, even under the current "PHEIC" proposal. (Unless WHO further restricts China's imports and exports)

2) Trip to China Cancelled
Buyers cancelled their plans to come to China. They stated that for safety reasons, they do not want to come to China directly in the short term, but will consider remote communication to work on purchasing and placing orders online. We further confirm this information by contacting a number of trading companies and they also said that many of their old customers have also cancelled the next trip to China accordingly.

3)   Online Sourcing becomes the trend
Since the purchasing demand remains the same but sourcing trip to China is not feasible for recent period of time, buyers will attach greater importance to online sourcing. In order to cater to this changing need of buyers, toy companies will have to develop new service methods, such as online recommendations, online showrooms, product videos and so on. When this service is recognized by more buyers, they will gradually realize that perhaps such online procurement is more efficient and comes with lower cost.

In other words, the situation forced acceleration of online purchasing and further boosted the Internet development of the foreign trade industry.

2.Digitalization of the toy industry will improve greatly

1)Product attributes description will become more comprehensive and detailed
Due to the gradual advancement of online purchasing, the original traditional toy product information online can no longer meet customer needs. Previously, customers cannot see the samples under online mode or touch the products or judge what the actual toy looks like.  When making purchasing decision, customers need more comprehensive and detailed information about the products and their attributes, such as product size, material, functional description and so on.

This created a higher requirement on toy factories. If a factory wants to make their products better understood by customers, it is particularly important to provide more comprehensive attributes now than in the past.

2)Product video will make the product more attractive
In the toy industry, functional characteristics are the hardest to display. Even the samples on the shelves at offline exhibition hall cannot show specific functions without people operating them.
The diversified functions are exactly the biggest feature of some toy products, such as remote-control stunt cars and drones. These functions, described by pictures and text, are more difficult to be understood.  But through video, it can be well displayed.

In addition to functions, through videos, manufacturers can better demonstrate the actual size, weight, and feel of toy products.

3) Development of Internet modes such as online showrooms will accelerate
For a long time, the traditional offline exhibition hall is the place where buyers, trading companies and factories rely on the most. Factories rely on showrooms to promote products while buyers and traders rely on showrooms to make purchasing. But under this mode, buyers need to come to China to visit the exhibitions and select products.

As we have mentioned above, once the online purchasing mode develops, the traditional offline showrooms will inevitably need to be changed, otherwise they will not be able to survive.

We can now see that some large exhibition halls in Chenghai have also started to build their own online platforms, which is also a side note of this change.

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