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China toys market: Solid value growth witnessed during 2012
Toys and Games in China - a new market research report on 2014-03-25 04:31:01
The slowing down economy in China as well as the 12-year-long hardware regulation of video games has put much pressure on toys and games, resulting in relatively slower but solid current value growth in 2012. However, the benefit from the fourth baby boom, which is expected to last to 2015, still supports demand for toys and games products in China. Actually, the one-child policy bringing with it resource concentration from the family for the only child has also contributed to the double-digit growth, especially along with the growing disposable income in China. Furthermore, it also helps to stimulate video games to grow when the young generation of players have made up the largest part customer base and saw continuous increases during 2012.

Affected by the early years´ availability of countless pirated products, most video games players are not used to buying online games but to downloading them for free or buying the pirated products instead. However, lots of players are more willing to spend on the virtual products offered in the games, which also results in profits for the online games in China. To cater to the special consumption habit, instead of focusing on charging subscription fees, most of the online game companies have turned to a new charging model. Such models provide free-download consumer-end software and also have no time limit, but the trading costs of virtual products purchased during the games are what generate the lion´s share of revenue for those companies.

Although more and more international brands are entering China, local brands such as Tencent in video games and Guangdong Alpha in toys still played the leading role in toys and games in 2012. Higher barriers in foreign markets such as the stricter quality inspection force more local companies to turn to the domestic market for higher sales. Particularly, thanks to the popularity of TV as well as computers in the low-tier areas, most of the local companies also shore up their shares in the market with rural and small cities penetration when competition in large cities has seen saturation over the review period.

With the young parents who are more habituated to online purchasing due to price considerations as well as the convenience brought by the more developed logistics in China, internet retailing again recorded double-digit growth in value sales of toys and games in 2012. As more and more toys companies establish online flagship stores with improved after-sale service to go along with the sales growth the internet retailing channel will experience stronger growth. Online video games generate the most sales through the internet retailing channel, and continued to contribute to the channel´s increased growth in 2012.

The growing disposable income driven by the promising economy in China is expected to play a crucial role in development of the toys and games market, especially in the rural areas which have historically displayed much lower spending on toys but have a higher proportion of children compared to the demographic seen in large cities. Continuous urbanisation during the forecast period could also help companies reach those consumers as they are merging into powerful consumption groups. Video games are also expected to see further growth, benefiting from the growing popularity of PCs, tablets and smartphones over the forecast period, which shows great potential according to public sources.

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