So, how much of the US retail price does the factory get? “About 20%,” says Wang.
On a $30 toy, that’s $6, which has to cover the price of the plastic and other materials, production costs including wages, and what profit the factory makes.
Chinese factories typically make a profit of between 3% and 10%, according to Jay Foreman, chief executive of US toy firm Basic Fun. So for a $30 toy that’s between 60 and 18 cents of the $6 the factory charges to make it.
Samson Ko is president of the Toys Manufacturers’ Association of Hong Kong. Many of his members moved their factories across the border into mainland China in the 1980s, attracted by cheaper land and labour.
He says the way toys are made has barely changed since then. “Automation now takes place mostly in the moulding and the packaging process. But for soft toys, or even some of the electronics nowadays, it’s still very labour intensive.”
And Chinese labour isn’t cheap anymore, he adds, after recent rises.
