Sounds and colours of toys appeal to kids and delight them. And, seeing a child playing happily with his or her toys is but seeing a scene full of joys. Toys do play vital roles in the overall development of a child and, for this very reason, one needs to be very particular, while selecting them, about the brand and seal. Today, toy market is flooded with fake and substandard products that can hamper children’s mental and physical development. India’s toy industry has a big market, which is presently growing by leaps and bounds. Estimated currently at $ 400 million, the industry has huge potential still untapped and unexplored.
With recent recall of Mattel toys worldwide, toy industry has been brought under close watch and scrutiny. Toys are no longer looked upon as just fun or entertainment sources for kids. They are seen as valuable resources that help children immensely in their growth stage. For small kids, toys make learning joyful and interesting. Broadly, toys can be classified into electronic, wooden and plastic categories. Major players are very few in the organised sector as majority of the industry lies still in the unorganised sector that comprises cheap, substandard and duplicate toys, maximum of these being China export rejects. Domestic sector of toys in India is catching up but, till now, it has no control over the market. Domestic sector includes cottage industries and small scale industries.
Unorganised to organised sector
Until the beginning of 2000, toy industry had, by and large, old methods for manufacturing and distribution of its products. Another setback of the industry was having no control over ‘export rejects’ - cheap, substandard and low-priced toys from China. Only with global players’ realisation of Indian toy market’s potential and their entry, the industry began to undergo the much-needed transformation - from a haphazard condition to a systematic management. Commenting on the transformation and growth of toy market in India, Mr Paresh Chawla, President, Toy Association of India, says, “Till 1998, majority of toy industry market were in unorganised sector. With the coming of Chinese toys, Indian toy industry was about to vanish. Our association coming up then, 118 manufacturers were allotted land and, today, there are 18 companies, who survived the onslaught of Chinese toys, became organised and improved quality, range and prices of their products.” On the other hand, Mr Gurpreet Singh Randhawa, Principal Consultant, Technopak Advisors Pvt. Ltd, observes, “The industry is still largely unorganised with over 85 per cent of toys still sold through traditional channels. With the coming of international toy retailers in India, a fragment of the industry got organised and gained momentum. With new malls and opening up of department stores, toys are finding the much sought after shelf space and visibility. This is helping the trade in catching eyeballs and capturing sales.”
Influence of movies and television
Characters in the movies and television act as important factors driving the growth of toy market all over the world. The characters shown on television and in movies influence children to quite an extent for they relate with children’s favourite characters like Superman, Spiderman, Shaktiman. These days, children are smarter and know what to buy and where from. Toy industry is minting money by manufacturing favourite characters of children and making them available in the market. Mrs Kapoor, a housewife, says, “Children are quite influenced by movies. Whatever be the price, I buy branded and sealed toys and games for my kid’s safety. TV and movies create tremendous impact upon the target audience and, hence, we do see many licensed merchandises being introduced as soon as a new movie is released. For instance, Pirates of the Caribbean and Ratotouille characters can be seen at almost all toy shops and department stores.” Rahul, a six-year-old boy is overjoyed to get a superman as his birthday gift. He giggles, “I love my spiderman and wish to fly like him.” Any day, a Barbie is a girl’s favourite doll and Priya, a little girl, dotingly loves to dress and comb her Barbie. She plans to buy Barbie dollhouse soon.
Major players
Mattel Toys (India) Pvt. Ltd is a 100 per cent subsidiary of Mattel Incorporation, the worldwide leader in the design, manufacturing and marketing of toys and family products. The Mattel family is comprises brands like Barbie, Fisher-Price, Hot Wheels, Matchbox, Polly Pocket and Radica. They bought and acquired Leo stake in 1999. Funskool is a joint venture between Indian tyre giant MRF, and Hasbro, the world’s largest toy company. Funskool started its commercial operations in 1988.
Funskool (India) Limited is the market leader in ‘board games’, ‘play doh’ and in ‘boys collectibles’. Funskool brought to India ‘pokemon’, ‘bey blades’ and, recently, transformers, which have all had phenomenal success. The company also manufactures infant and pre-school toys, puzzles, dolls etc. and holds licenses from Disney, Warner Brothers etc. for many categories of toys. Funskool represents the Japanese toy major, Tomy, in India. Lego toys are being marketed by Marketing Services, a business unit of Mahindra Intertrade Limited. The product portfolio comprises top international brands like Walt Disney, Lego and Aqua. They started with Lego operations in 2001. In addition, Marketing Services also markets its in-house brand under the banner of ‘soft wonders’. Other players include Hanung, Creative, Frank, Satya, Peacock, Zephyr, Prasid, Centy, Tobu, Dimpy and Playgro. About competition in the market, Mr Sanjay Luthra, CEO, Mattel Toys (India) Pvt. Ltd, says, “Toy industry is so small in the organised sector that, largely, I would say that toys manufacturers in the unorganised sector would be our competitors. The organised sector is too small a market to see other brands as our competitors.”
Regulations and safety norms
Government rules are observed only in the organised sector while unorganised sector hardly follow them. Speaking about norms, Mr Luthra, says, “Government has done a good job because, at the macro level, there are couples of things happening like reduction of duties on toys: 2002 duty used to be 52 per cent on toys. Over five years, the government has reduced the duty continuously from 36 to 12.5 per cent.” Complementing the point, Mr Chawla says, “To support Indian toys exports, the SSI ministry has set up a lab in Delhi and Mumbai where toy manufacturers can get their toys tested as per norms set by BIS (norms are same as EN71 needed for European countries). To promote growth, charges for testing are discounted for small-scale industries. Three years ago, Indian toy exports were worth Rs 200 crore and, today, these are over Rs 400 crore worth. The turnaround of toy industry in India since 2000 is because of efforts by SSI ministry, UNIDO and entrepreneurs of our industry. We acknowledge the full support of our government in our success.” Regarding the safety norms in India, Mr Luthra says, “The safety norm in India is ISI 9873, comparable to the best in the industry globally. Europe has EN 71 norms.” However, Mr R Jeswant, General Manager (Marketing and sales), Funskool India Ltd, says, “We, at Funskool, follow EN71 standards. We insist that our suppliers should also comply with these standards. The materials are tested in toy testing labs abroad to ensure quality standards.”
Recalls
Things can possibly go wrong in any industry. It is very important to see whether a company admits its mistakes, takes a stand and does the needful. Recently, Mattel has recalled approximately 1.5 million toys worldwide manufactured at their China production unit. Commenting on the third and recent recall, Mr Luthra said, “In all, around 7,500 pieces of the specific parts of two Barbie® accessories sold since January 2007 would be affected by this announcement and no Barbie® dolls are included within the recalls. Earlier, we have done two recalls, one related to lead paint, where we found one of the consignments faulty for a brief period. The other related to magnets; it was not related to safety norms. We found that if magnet in the toy gets separated and is tiny, then, children can consume it. If, by chance, the kid consumes, it can damage the intestine due to magnetic field. Seeing this possible danger, we realised that we need to further strengthen our process and ensure that magnets in toys are not visible and they do not get separated. We have already adopted these norms. Prior to January 2007, we have recalled toys.” As regards the types of recall, Mr Luthra says, “There are two types of recall: voluntary and forced recalls. We did voluntary recall and, I think, this way, the image of the organisation gets enhanced as consumers’ percieve that the organisation is extremely conscious of its products and is ready to do a recall even at a loss. If it’s a forced recall, then, it definitely impacts the brand equity.” Supporting this point, Mr Chawla says, “Recalling means that some harmful toys have been removed from market so that children could be safe. It was done because company cared for children and also for its name.”
China imports
In India, the majority of toys in unorganised sector comprise export rejects imported easily from China. Talking on China toy industry, Mr Chawla says, “ Chinese industry is under pressure due to rise in labour wages and also due to increasing competition from India and Sri Lanka. To downplay competition and maintain low cost image, they have started cost cutting by using cheap raw materials like toxic paints. Toys made in China have been found hazardous and harmful. We have every reason to believe that most of the Chinese toys sold in India without the name of manufacturer or importer are hazardous to the health of children.” Authenticating the harmful effects of Chinese toys, Mr Luthra says, “The toy industry accounts for 1000 crore and 25 percent of it is in the organised sector. Toys worth 750 crore could be potentially harmful as the industry is dominated by unorganised sector.”
Toxic elements in toys
With major part of toy industry market being in the unorganised sector, presence of toxic elements in majority of toys cannot be ruled out. One year ago, Dr Abhay Kumar, Senior Program Officer, Chemicals and Health, Toxics Link, studied and checked samples of toys from Delhi, Chennai and Mumbai. Dr Abhay, informs, “The study was undertaken primarily with the aim of ascertaining levels of total lead and cadmium in PVC and non-PVC toys.” Toxic elements hence present in toys are the bright colours used in painting the toys that are organo-metallic in nature. Brighter the toy, more harmful it is. Another element is PVC (polyvinyl chloride). Lead and cadmium are added to PVC as stabilisers. When children chew or suck these toys, they leak and children are exposed to high levels of lead and cadmium.
‘Made in India’ tag to be popular soon
To set a benchmark in global arena, Indian toy industry has to start working in a systematic and meticulous way. Time is come when ‘made in India’ is recognised worldwide for its quality and standard. Mr Randhawa sees a bright future of toy industry in the coming years. He says, “The toy industry will see a lot of actions in future with many international players setting their vision on capturing a ripe market. Recently, international player Hamley’s announced its plans to set up shops in India, while ‘Toys R Us’ has been delving on the market situation for sometime now. We will see specialty stores dealing in toys of all kinds in India.” Toy industry is getting the attention of manufacturers, distributors, government and retailers. The industry has a huge potential and it can only be tapped when the government tightens its hold on the unorganised segment and encourages development of the toy into an industry, which has no import of substandard toys and export of Indian toys. “The toy industry in India is on the verge of taking off and should be able to sustain an average annual growth of over 15 per cent over the next five years”, says Mr Jeswant. One solution to the problem of toxic elements in toys can be stringent laws and regulations for testing of toys. The government should introduce and impose such norms besides heavy duty and a thorough checking of imported toys. Commenting on the future of toy industry, Mr Luthra says, “Future is very bright. Import duties have gone down. Kids’ channels are growing and these include Pogo, Disney, Cartoon Network, Hungama, Nicklodeon. And, lastly, consumers’ income is growing and they are conscious of what they are buying. These four parameters - reduction in duties, growth of organised retail, kids channel and consumer income growth - are propelling the growth of toy industry. The toy industry is growing at eight per cent but the organised sector is growing at 18 percent.”
Copyright © 2009 - 2024 Franchise India Holdings Ltd