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The domestic toy industry was so competitive that it ranked third in the world for export in 1990. However, from the end of the 1980s, they were unable to withstand the sharply rising wage burden, and toy manufacturers closed their business and moved overseas. The number of toy manufacturers, which had reached more than 700 during the boom, has recently dropped to less than a tenth. Large toy companies, such as Young Industries and Son Goku, have their production bases overseas and are focusing on developing children’s characters and creating added value through’One Source Multi Use (OSMU)’.
30 years of traditional toy manufacturing downhill
The toy industry, which makes stuffed toys and plastic toys, is considered a representative labor-intensive industry. It is an industry with a comparative advantage in emerging industrial countries where the wage level of workers is relatively low. It is also a feature of this industry that has a high connection effect with the cultural contents industry such as TV animation, movies, and characters.
In the 1960s, the domestic toy industry grew rapidly based on cheap labor. The growth of the toy industry was also supported by the growth of the domestic demand as the population grew rapidly, with the total fertility rate reaching 4.54 in 1971. Domestic toy exports steadily increased, reaching the highest point in 1987 at 1.07 billion dollars.
Since then, the domestic toy industry has been on a downhill road. This is because in the late 1980s, domestic wages rose sharply, and toy companies closed their business or moved to overseas production bases. According to the National Statistical Office, the number of domestic toy manufacturers decreased from 732 in 1987 to 266 in 1992. Exports also declined at an annual average of 20%, plunging to $2761.1 million in 1993.
The toy product trade balance turned to a deficit in 2000. Since then, the deficit has widened every year, recording the largest trade deficit in 2018 ($72.2 million). As of 2019, the number of domestic toy manufacturers was 60, and the domestic doll and toy manufacturing industry shipments decreased from 4287 billion won in 2000 to 2959 billion won.
The toy industry focuses on developing its own character
The size of the domestic toy market is 1.5 trillion won, of which about 60% are imported toy products. Major domestic toy companies have their production bases in China and Southeast Asia and are creating added value through their own character development. Young Industries, the number one toy company in Korea, led the increase in sales of toys with the popularity of Kong Soon-i, which was introduced in collaboration with Studio Mokoji in 1999, and the transforming robot animation Tobot, which was released with animation production company Retrobot in 2014. In 2014, Son Goku joined hands with Choirak Contents Factory, and the Turning Mecard series, which was launched by combining a robot and a minicar, once suffered a’out of stock crisis’ and made a huge hit.
Aurora World, which started as a plush toy company in 1981, settled in the European and Asian markets with Yoohoo and friends characters, first introduced as a toy product in 2007. The company earns about 80% of its sales from overseas markets. Smart Study Baby Shark Pinkfong, CJ E&M Mystery Apartment, and other toy products in collaboration with content companies are continuously being introduced.
According to the Korea Creative Content Agency, the size of the domestic character industry market as of 2018 was 12.2 trillion won, which has been steadily growing at an annual average of 7.8% since 2014.
An official from the toy industry said, “In the 2000s, as the cultural contents industry grew rapidly, the toy industry was reorganized mainly with companies with their own characters.” “The’one source multi-use’ strategy that applies to toys, animation, fashion, etc. by utilizing one successful character has become a trend.”
Last year’s Corona 19’Zipcock’ increased sales
According to the Electronic Disclosure System of the Financial Supervisory Service on the 2nd, Son Goku’s sales last year reached 85.2 billion won, up 16% from the previous year (73.4 billion won). Sales rebounded in 4 years after 2016 (129.3 billion won). Operating profit also fell to -1.2 billion won, a 40% decrease from the previous year (-2 billion won). An official from Son Goku said, “It is analyzed that the demand for toy products that help social development has increased as role-playing is possible due to the increase in life in the home.”
Some companies have diversified their business. Aurora World established Smile Bio, a mask specialized sales company in the second half of last year, and entered the mask market for the first time in the toy industry. It is planning to increase added value by applying Yoohoo and friends characters to the mask design, while actively utilizing the existing global distribution networks such as North America, Europe, and Hong Kong to pioneer mask sales channels.
Young Industries, which was sold to a Hong Kong-based private equity fund eight years ago, was acquired in August last year by Mirae N, a domestic educational publishing company. The industry is expecting to create synergy by combining Mirae N’s educational know-how and Young Industries’ character toy business capabilities.
Reporter Min Kyung-jin [email protected]