Standoff with China hits India’s toy-making plans

By: admin

BENGALURU: India’s aspiration to indigenise toy manufacturing may not be easy to realise if the political tensions with China persist. It will prevent partnerships with Chinese toymakers, partnerships that are seen as essential to not only build India’s competitiveness, but also to imbibe much needed skills. The Chinese dominate the global market, said Aravind Melligeri, chairman and CEO of Aequs, a company which is trying to develop the largest toy cluster in the country. “The biggest challenge is the restriction in movement of people which will hinder knowledge transfer,” he said. “We as a country are able to do higher engineering products, but the challenge comes in aesthetics and qualitative knowledge. For example, the brightness of the eyes, you cannot engineer that, you have to have a feeling for it, which we lack. We can build the knowledge, capacity and skills only through partnerships,” he said. Aequs, which has a large aerospace SEZ in north Karnataka where global companies make aircraft components, has acquired over 400 acres in Koppal for the toy cluster. An initial investment of $100 million is planned. The first unit may start towards the end of next year. The global toy industry is worth $100 billion out of which 60% comes from China. While the pandemic and the trade war between the US and China have made US toymakers look at other countries, India is still not the alternative due to multiple reasons including lack of qualitative knowledge, ability to scale up, absence of proper supply chain, and unavailability of raw materials. Mike Burrows, vice president of contract manufacturing at toy maker Mattel Asia Pacific, said the supply chain in India is not as competitive as in other countries and raw materials are more expensive. “These products are highly seasonal, require highly competitive manufacturing costs and require quick turn-around times. For that, skill development and technical competency are critical,” he said. “A toy is not child’s play when it comes to manufacturing,” said Sanjiv Khullar, MD of India and south Asia for toy maker Hasbro. Melligeri said the US-China standoff has made all OEMs (original equipment manufacturers) go to Vietnam and most of the factories there are run by Chinese. India’s tensions with China have already slowed down talks between Aequs and the companies it was looking to tie up with, Melligeri said. The Indian toy market is about $1.5 billion, out of which $600 million comes from domestic manufacturers and the rest from imports. While companies like Hasbro and Spin Master are present in the country, they only export products worth $75 million, an industry executive said.

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