Toymaker on track with quality control (hktdc.com)


	Toy manufacturer Ivan Ting says Hong Kong's strong safety record gives its products a competitive edge

The unmistakable sound of a steam-engine fills the air at the Kader Company showroom. The source of the sound is coming from one of Kader's new model trains. "We have added more play-value by putting a microchip in the train, so that you could listen to the sound," explained Ivan Ting, Executive Director of Kader Holdings, one of Hong Kong's established toy manufacturers. "It makes the whole experience more interactive and exciting."

Kader Holdings has been in the business for 60 years, producing the popular Cabbage Patch Kids and fine scale model railroads. Despite the current tough economic conditions and the introduction of new consumer product regulations from client countries, Mr Ting sees beefing quality control as part of moving up the value chain. "Our strategy is to produce higher quality products to achieve a higher premium. I'm of the belief, and the company is of the belief, that the most important thing is to give people peace of mind. You want to give them good quality orders, so they can sleep better at night."

The new US Consumer Product Safety Reform Act, which takes effect this month, will require suppliers to issue certifications of compliance. But Mr Ting does not foresee the tougher regulations affecting demand, though, he said, it could mean price increases of up to 20 per cent. "More than 80 per cent of the world's toys are made in the Pearl River Delta region. As long as children want toys, those factors are not going to have a big effect on the sales volume." It will, however, push manufacturers to source better materials. But the move will not hamper creativity, he added. "We just have to work around the regulations. Hong Kong manufacturers are well equipped to deal with it."

Moving up the value chain

According to a study by the Hong Kong Trade Development Council, moving towards higher value-added activities is one of the main ways Hong Kong companies have been changing the way they conduct business to stay competitive. Sixty-seven per cent of companies surveyed said they have increased quality control activities. Most of the firms polled have stepped up sales and marketing efforts, as well as bolstered product design and development. Many have also moved up the value chain by extending their business focus from OEM (original equipment manufacturing) to ODM (original design manufacturing) and OBM (original brand manufacturing).

Kader, for its part, has been acquiring international toy labels, including Bachmann Brothers in the United States and Lilliput in Germany. "Enhancing technology and producing higher value-added products is the way forward. Our technology level underwent a turning point in the 1990s through these acquisitions and our products are now collectables and sell well (overseas)," Mr Ting said in a recent interview with the South China Morning Post.

While dozens of toy manufacturers have either folded or moved out of the province, Kader plans to stay put. "You can't easily move to, say, Vietnam or India because of import-export policies and because of the supply base that's built around the Pearl River Delta area." Hong Kong, he said, will remain Kader's headquarters to serve its clients, who mostly come from Western countries. He said the companies still feel more comfortable doing business here because we "understand their language and the way they work." This, along with Hong Kong's strong track record of following stringent safety regulations, are key factors helping Hong Kong to maintain its competitive edge in the toy-manufacturing world.

New US toy safety regulation good for "quality orders"