In this article, we’ll talk about toys’ opportunities in China throughout the story of the amazing development of Lego.
For the Danish toymaker, it’s soon going to be over 80 new stores open in China, with most of them in third and fourth-tier cities. China is like a bridge for Lego. Indeed, the multicolored bricks company has seen its revenue grow following a double-digit evolution compared to low single digits’ growth in US and European market.
To understand china’s superpower, understand its environment:
- China GDP (Purchasing Power Parity) increased from $20 trillion in 2015 to over $23 trillion in 2017
- In 2018, the purchasing power per inhabitant increase of +6.6%
- Rise of the minimum income per inhabitant
- Development of the middle class: 350-400 millions of peoples
- Largest population in the world with 1.4 billion netizens
- 236 million kids from 0 to 14 years old
- Chinese kids’ pocket money represents $58.25 billion
Lego success story in China.
- 2017: the company owned 50 stores
- 2019: the company is opening 80 new stores in 18 cities
From 2011 to 2015, the company’s revenues rose 91%, and net profit rose from €557 million to €1.23 billion. In 2017, Lego experienced its first decline in profit and revenues since 2004.
A very short experience though, as in 2018 the company enjoyed again a 4% rise in its revenue to €4.87 billion, meaning a net profit reaching €1.08 billion.
While the European and US market is getting more and more challenging for companies (bankruptcy of Toys R Us and Top Toys), China is in contrary turning out to be a real toys paradise for kids but also for businesses.
For more information about trends and opportunities on the Chinese toy market
How did Lego adapt itself to the market?
A digital world
Lego is well known to produce those multicolored bricks that kids love so much. However, the company is not famous at all for video games and other digital games. Nevertheless, they noticed the evolution of the country in both terms: economical and behavioral.
Therefore, they decided to adapt themselves and create an online community for children where anybody can upload their own designs and construction, but also comment on it. Online videos that could reach a very large public, over 1 billion views for some of them.
Moreover, the company allows kids to build settings while using apps within a smartphone to “see” additional story elements and be given tasks while having fun with these legendary colored bricks.
Education is something extremely important for Chinese people. However, the paradox is that for many of them parents should not bear the responsibility of educating kids. They consider that this is the grandparents’ or teachers’ job to do so.
However, Lego positioned himself as participating in this education. Therefore, they’re literally taking part in the kids’ experience while offering kids the opportunity to develop their creativity through construction games. In the meantime, Lego also makes up some new products more accurate to parents’ expectations, such as a construction designed teaching computer coding concepts to prekindergarten age.
They also developed toys in conjunction with East China Normal University to teach science, technology, engineering, arts and mathematics lessons to elementary school children in Shanghai.
Last but not least, the company is also cooperating with China’s Ministry of Education while training over 60,000 primary and middle school teachers.
For more information about VR in china
Lego is a company full of virtue. They even partnered with the World Wide Fund for Nature on its sustainability goals, while introducing bioplastic alternatives for all its bricks by 2030. A real game-changer considering the 75 billion plastic elements sold for its sets.
A caring company that for sure, won’t let Chinese netizens insensitive.
To resume Lego’s success in China:
- National presence
- Strong reputation
They understood the Chinese culture, but also the main values of the country. Add to this a strong brand awareness, plus national visibility, and get a successful development of a toy company.
For more information about toys market in China: A big potential for a big country.
How to develop your own empire in China?
Regardless of your company values or the different programs, you plan to set aside, there will be some requirements for your success. Whether you plan to target distributors, e-commerce platforms, or final consumers through your own stores, you’ll need the following elements to maximize your results.
In China, we go on a Chinese website
You can’t expect any sales unless you manage to give an impressive impression to your target. And if for people the first impression is about the look, for companies it’s about the website.
Chinese people are not very different from us, a good website is a good website. But their taste and features may differ from a country to another.
What to do on your website:
- Mandarin Language: they speak Chinese, don’t forget. Coming to them with an English version will be totally pointless.
- Host your website in China/Hong Kong/Singapore: the loading speed will be better and you’ll avoid all the bans caused by the Great Firewall.
- Chat tool: let them contact you in the easiest way possible.
- Links to your WeChat/Weibo official accounts (yep. Facebook, Twitter, and Instagram do not work in China)
- Use visuals and data to make it attractive. And the more info about you, the better.
- Get a perfect translation in China
Make yourself visible
Having a website is good, but letting people find you without any direct participation is better. If in occidental countries people use Google when doing research, in china they have Baidu.
Get to know that Google is also blocked in China and 95% of Chinese don’t know what is it. So, in China do like Chinese do: go Baidu! (and aim to be among the top research).
How to get a top rank on Baidu?
- Baidu advertising: Pay per click. Effective for a sustainable strategy and good enough for a couple of fast leads.
- Baike page: it’s the Chinese version of Wikipedia. They love it here. It’ll definitely contribute to your image and visibility.
- Backlinks: great to improve your visibility
- Zhihu: it can also generate backlinks to your website by mentioning you in a nice way within forums.
- Develop your reputation
Chinese people love to find information on their own. Consider that they don’t really trust corporate communication. They need someone to verify this information and to prove that you’re right. And this someone can only be a previous user or online press.
They want to make sure they’ll get good value for money, but also that your toys are safe for their kids. Therefore, they’ll try to get information and recommendation from online publications, group discussions among forums, online press articles, comments, reviews, etc.
As you may imagine, the best for you will be to give them the opportunity to find what they want… meaning your name mentioned several times online.
Develop a strong relationship with your leads and clients
Even if you attract a lot of leads or contacts, it doesn’t mean they will buy your products. Hopefully, there’s always a way to show of your influence.
To keep in touch with them while giving them the time to think about your products, you’ll need:
WeChat: Chinese Facebook messenger + whatsapp
The most popular app in China. As Facebook, it’s a messenger app allowing users to spread content on a wall, and to get access to a plurality of useful features.
What to do on WeChat:
- Open an official account
- Make up an E-brochure
- Use newsletter
- Customer support
Weibo: the Chinese Twitter+facebook wall
Very popular in China as well, it offers good opportunities to spread information and engage more people. A great tool giving you access to a large audience.
We can help you to integrate the Chinese Toys Market
Do not hesitate to contact us and introduce your project. We can offer you a 30min free call with top marketers in Shanghai (or eventually free coffee if you’re motivated enough to come in Shanghai).
We are GMA.
- Marketing Digital Expert
- Professional in the Chinese market
- We know your target
Designing the right strategy is the key to success.