From a cottage industry, Bangladeshi toy manufacturers have turned the table on their Chinese counterparts and are now setting their sights on the global market
There are certain objects that bring us instant joy, fill our mundane lives with delight. The sight of colorful toys puts a smile on our faces, brings out the playfulness that has taken a back seat as we wander the avenues of life. It might miss the eyes of many, but the toys that are being displayed outside the retail stores in Bangladesh have undergone a massive change. Most of them are now made in Bangladesh.
THE TORCH BEARERS
Over the years, the quality of locally manufactured toys has improved exponentially, which allowed retailers and wholesalers to put more faith in them. As the industry matures, dependence on imported toys has been declining rapidly; manufacturers are expecting the domestic toy market to become self-sufficient within the next five years. It began as a cottage industry a decade ago with a handful of manufacturers and has now evolved into a thriving sector with over a hundred high-quality manufacturers. Statistically, the size of Bangladesh’s domestic toy industry is Tk 10,000 cr; over 90% of it used to be dominated by Chinese imports; local manufactures took this challenge head-on and brought it down to a mere Tk 2000 crore.
THE MIDAS TOUCH
According to insiders, the industry flourished after the Bangladesh government allowed tax exemptions to promote local manufacturing. In 2015, authorities granted VAT exemption and customs duty reduction on the imports of parts and accessories required for toy manufacturing. It allowed manufacturers to import accessories at 5% duty; it helped to reduce the cost of production significantly. The list of materials that were granted the reduced tariff included sticker papers (non-printed), self-contained electric or non-electric motors, parts, and accessories, remote controls for electronic and electrical apparatus and gearboxes. It was the masterstroke that tilted the balance toward local manufacturers and encouraged local entrepreneurs to invest. The current growth suggests that Bangladeshi manufacturers will soon be able to compete with international toymakers in both domestic and global markets. However, Made in Bangladesh toys are already conquering markets all over the world.
Bangladeshi toys are already famous all over Europe and North America. They are exported by a handful of foreign companies who have set up factories across Bangladesh. Hashy Tiger which is located at Comilla EPZ, was set up by Japanese toymaker, Hashimoto Group; it was the first completely export-oriented toy factory in the country according to BEPZA (Bangladesh Export Processing Zone). In 2017, their export value was close to a million dollars. They primarily manufacture toys for the Japanese market and some international clients. Bangladeshi fans of diecast model cars will be pleasantly surprised that a significant number of them are produced in their own country. A Hong Kong-based company Sonic Limited established its factory at Uttara EPZ of BEPZA in 2013. Sonic Bangladesh Ltd provides model cars, motorbikes, toy tanks, and toy planes. Their primary markets are European countries, Japan, and the U.S. Similarly, The Golden Son limited manufactures toys for some of the biggest companies in the world. It is chaired by Lin Yu Chen, who is Taiwanese but now has a Bangladeshi passport. Lin aims to expand operations and train their employees so that they can manufacture all the toys for Golden Son destined for 107 countries.
The primary reason for foreign factories setting up factories in our country is the availability of low-cost labor. For a long time, this has been the biggest draw for investors looking to set-up manufacturing plants. The foreign-owned factories that we have discussed came to Bangladesh for the same reason. Toy manufacturing is labor-intensive; concurrently, production cost in China has been soring due to the rising living standards among the Chinese. Therefore, despite the infrastructural problems, Bangladesh is attracting global toy manufacturers as the most cost-effective solution. However, foreign manufacturers face some barriers, which has slowed the pace of expansion of the industry. There is a shortage of skilled local labor; most skilled workers in Bangladesh work in the RMG sector; toy manufacturing requires a special set of skills, and the training process can be very time-consuming. Factories are trying to bridge the gap by bringing trainers from China and Japan, who in turn produce local expert trainers. Currently, most factories have foreign production managers, but much like the RMG sector, skilled local employees are being developed gradually.
SMALL PRODUCERS, BIG OBSTACLES
Although the toy industry has witnessed rapid growth, the elephant in the room needs to be addressed. The majority of the exporters are either foreign-owned or local factories with massive resources. The small manufacturers are limited to producing toys for the domestic market; there is a benchmark for standard and competency that hasn’t been met by smaller entrepreneurs. There are quite a few constraints that are holding back local Bangladeshi toy manufacturers from cashing in on the enormous global demand. The majority of local manufacturers produce simple plastic toys like relax baby chair, dinky cars, and toy furniture sets. To export, they are required to provide more sophisticated toys with flawless accuracy. Most local manufacturers do not possess the infrastructure or the manpower to support the production of such magnitudes. Commonly, even simple plastic toys do not maintain export quality. As the polymer is not produced in Bangladesh, toymakers are forced to import it (polymer) from China. However, toys made from sub-standard polymers fail to pass the safety standards in Western markets, which have precluded small manufactures from producing toys for large international manufacturers and have restricted them to the local market.
The global toy market is projected to grow at a steady rate of 4% and is projected to worth more than $120 billion by 2023. As China is shifting towards more specialized manufacturing products, Bangladesh has the opportunity to become the largest toy manufacturing country in the world. It has the potential to employ millions of people and generate billions of dollars in revenues. We need to carve the avenues of our destiny carefully; Bangladesh has to devise sustainable infrastructure plans to ensure factories have hassle-free and fast logistical support. One of the significant issues faced by exporters in the delay in freight shipping in Chittagong Port, the government needs to find ways to accelerate the shipping process. As experts have suggesting relentlessly, it is time to completely overhaul our technical and vocational training institutes to produce skilled human resources; they will form the backbone of a potential billion-dollar industry. Most importantly, we should be careful not to leave behind the small entrepreneurs who have established this industry in the position it currently holds.
* Photographs: Mahmud Hossain Opu