Toy manufacturing shifting inland due to rising labor costs

Now that work has resumed after the Spring Festival holiday, a toy factory in Southwest China's Guizhou province is racing to complete international orders booked through the year's end, about 70 percent of which are from the United States.

In light of US President Donald Trump's new tariff policies, company head Ma Mingjiang expressed concern for export-driven businesses like his.

"Last year, our output reached 57 million yuan ($7.85 million) and our target for 2025 is 60 million. However, shifts in the international landscape could affect us," he said.

Songtao Qiaoji Toys Co Ltd, which mainly produces plush toys, serves as an OEM (original equipment manufacture) for Disney brands such as Mickey and Minnie. "Our export orders remain robust," Ma noted, adding that about 70 percent of the company's orders come from the US, with most of the remainder from European Union countries.

As a labor-intensive industry, toy manufacturing, once concentrated in southern regions like Guangdong province, is shifting inland due to rising labor costs.

"We moved because of favorable policies and abundant labor resources. Labor costs are roughly 80 percent of those in Guangdong, and most of our workers are in their twenties and thirties," Ma told local media, referring to Songtao Miao autonomous county in Guizhou.

To cut labor costs and boost local employment, the company has adopted a "headquarters plus rural micro-factory" model. "Under our current setup, the headquarters handles orders while the micro-factories manage production. This model efficiently channels orders and creates rural jobs," he said.

The firm now operates seven sites across townships, generating more than 1,000 jobs, with the headquarters coordinating orders, sales and technical support.

"Last year, Songtao's toy industry generated an output value of around 400 million yuan and employed roughly 5,000 workers. More related industries are expected to move in," said Wu Chengkai, deputy director of the enterprise service center of the Songtao Miao autonomous county economic development zone.

To attract industries relocating from coastal areas, the local government has provided substantial support in recruitment and factory land allocation.

"This year, our goal for the toy industry is an output value of 500 million yuan and export volumes exceeding 80 million yuan," Wu added.

International pressures, however, are now making their way to inland export enterprises. "Although our orders this year are stable, the US tariffs have a direct impact," Ma said.

"The outlook for toy exports remains uncertain. We need to strengthen our capabilities and gradually develop our own products to expand our market, but this shift is challenging for a company long dependent on contract manufacturing."

Liu Boqian contributed to this story.