Toy trading company owner and product development and marketing consultant Frank Su (蘇芳祥) has worked in Taiwan’s toy industry for 30 years—long enough to see the sector rise, fall and rise again. “About 25 years ago, Taiwan was one of the world’s top toy makers; in fact, it was often called the ‘Toy Kingdom,’” he says. “Back then, domestic manufacturers received lots of OEM [original equipment manufacturing] orders from big international brands, and sometimes they couldn’t supply enough toys to meet demand.”
After reaching a peak export value of more than US$1 billion in 1987, however, Taiwan’s toy industry began declining due to rising labor costs and labor shortages, Su says. As was the case in other traditional industries at the time, many Taiwanese toy makers relocated to mainland China and Southeast Asia in search of lower production costs.
Still, Su notes that a number of toy makers have remained rooted in Taiwan and successfully tapped overseas markets by adjusting their operating strategies, emphasizing creative product design, employing new technologies and establishing their own brands. “Those that have stayed in Taiwan have managed to figure out ways to survive,” he says. “Some have maintained R&D [research and development] and marketing departments in Taiwan while moving their production lines to the mainland. Others have sought to add greater value to their products by emphasizing quality and innovative design.”
The Taiwan Toy and Children’s Article Manufacturers Association (TCMA) works to boost quality and design by promoting R&D in forums, seminars and workshops; offering consulting services; and providing information on markets and trends through its website and monthly publications. The association also arranges for Taiwan’s toy makers to participate in domestic and overseas trade shows each year, including the China Sourcing Fair: Baby and Children’s Products, Hong Kong Toys and Games Fair, International Tokyo Toy Show and Nuremberg International Toy Fair.
An assembly line at PlayMe Toys International Corp. All of PlayMe’s operations are located in Taiwan. (Photo by Chang Su-ching)
Susan Chien (簡淑超), secretary-general of the TCMA, says Taiwanese companies are most competitive in the areas of educational toys, wheeled (ride on) toys and radio-controlled (RC) models. Part of that competitiveness stems from changing international manufacturing conditions, particularly the significant increases in the costs of labor and raw materials in mainland China since 2008. Before such costs began rising, toys made in Taiwan were 20 to 30 percent more expensive on average than those made in mainland China, but today that margin has dropped to just 10 percent, Chien says. “Over the last four years, our organization has received inquiries about Taiwan’s toy products again from international toy buyers who turned from Taiwan to mainland China for procurement many years ago,” she says.
In the secretary-general’s view, toys that are made in Taiwan have a better price-to-quality ratio than those made in mainland China. The strong R&D and production capabilities of Taiwanese toy makers allow them to handle short lead times and maintain quality while turning out small-volume runs of a large variety of goods, Chien says. “Taiwanese companies’ stable product quality, on-time delivery and credibility have enabled them to hold an edge [over their mainland Chinese competitors],” she adds.
Safe and Certified
Taiwan’s toy makers have made a major effort to test and certify their products’ compliance with domestic and international safety regulations, Chien says. At the same time, the rising rate of returns for toys made in mainland China due to defects and safety problems such as the use of hazardous materials has compelled some buyers to begin looking for manufacturing partners outside that country, she says.
One company that has built a reputation for emphasizing quality and innovation is the Thunder Tiger Group, which was established in 1979 in Taichung, central Taiwan and produces a variety of RC airplanes, boats, cars and helicopters. The company’s headquarters and most important divisions—those for R&D and brand management—remain in Taiwan, whereas manufacturing shifted to mainland China in 1995.
Students showcase their designs at NTUE’s Digital Toy Lab. (Photo by Chang Su-ching)
Thunder Tiger’s dedication to upgrading its operations was apparent that same year when the firm became the world’s first RC model maker to gain ISO 9001 certification for quality management systems. The company set up a subsidiary in Germany in 2004 to handle marketing and distribution in Europe and purchased Team Associated, a leading RC car brand in the United States, in 2005. Thunder Tiger was listed on the Taiwan Stock Exchange in 2007 and established the Sky Hobby chain of retail stores in mainland China in 2009. Today, Thunder Tiger is one of the world’s top three brands of RC models and sells products in about 50 countries under the company’s own brand and that of Team Associated.
Since its listing on the local bourse, Thunder Tiger has received the Taiwan Excellence Award for its products from the Ministry of Economic Affairs 27 times. The award is given to products that demonstrate excellence in four categories: design, quality, R&D and marketing. “From the beginning, we’ve put a major emphasis on consumer needs and suggestions,” says Aling Lai (賴春霖), chairman of Thunder Tiger. “We also try to create value through designing innovative products and regularly launching new ones to appeal to hobbyists, especially experienced enthusiasts.” To promote its products, Thunder Tiger frequently participates in domestic and international trade shows, organizes road shows and activities, and sponsors RC model racing events and teams.
Lai says his company benefits from Taiwan’s large talent pools in the aerospace, design, electronics, machinery and mechanical engineering fields. Thunder Tiger employs a design team with 45 members, of whom about half are based in Taiwan. The company pursues quality by continually upgrading core technologies such as precision machining, control devices and electric motors, Lai says, adding that the tight integration of electronic and mechanical systems is the key to improving the power and speed of RC products.
Over the years, Thunder Tiger has targeted the high-end hobby market by offering products in the US$199–$999 price range. Since the global recession of 2008, however, RC product sales have slumped and many players have been driven out of the industry, Lai says. To survive in such a tough economic environment, Thunder Tiger is working to reduce operating costs and introduce products in the US$99–$199 price range.
While Thunder Tiger is focused on high-tech products, PlayMe Toys International Corp., founded in 2001 and also based in Taichung, specializes in making educational, musical and ride on wooden toys. The company makes and sells its own designs under the PlayMe and evercare brands, as well as supplies wooden products to Playsam i Kalmar AB, a prestigious Swedish toy design company, on an OEM basis.
Young visitors go hands-on at a toy show organized by the Taiwan Toy and Children’s Article Manufacturers Association at the Taipei World Trade Center in July 2012. (Photo Courtesy of Taiwan Toy and Children’s Article Manufacturers Association)
Like Thunder Tiger, PlayMe puts a strong emphasis on quality. All wood and coatings, for example, are imported from Europe. “We ensure safety by insisting on using superior natural materials and finishes,” says Lobo Chen (陳國棟), PlayMe’s general manager. “We consider it our responsibility to produce toys with high safety and quality standards to help children grow up happy and healthy.”
Design is an important part of PlayMe’s endeavor to turn out quality toys. “Our toys are designed to incorporate theories on children’s physical and intellectual development and promote parent-child interaction,” Chen says. “We also work to maximize the value of our products and extend their life cycles by designing for different age groups.”
Chen majored in industrial design and accumulated several years of experience in manufacturing wooden furniture and teaching aids before setting up PlayMe, so it is no surprise that he is a devotee of good structural design and fine craftsmanship. “Many toy makers simply focus on the form of their products, but we emphasize structural dynamics as well, which makes assembling and disassembling toys easier,” he says. “We also pay attention to the finer details of woodworking such as removing any sharp points and edges.” PlayMe’s emphasis on design was recognized by the inclusion of Woody Wonderland—a toy that allows children to assemble wooden pieces and silicone connectors into a variety of shapes—as one of the authorized products available for purchase at the 2011 International Design Alliance (IDA) Congress in Taipei.
Chen’s focus on quality and safety has helped PlayMe gain market share as the company’s products, which generally retail between US$20 and US$100, are now sold in Australia, Europe, Japan, New Zealand and Taiwan.
Although production costs are higher at home than in neighboring countries, Chen insists on keeping all of his company’s functions—design, manufacturing, marketing and R&D—in Taiwan. “By operating here, we can find the talented designers and woodworkers needed to create high quality products,” he says. “I believe that’s why we’ve been able to make inroads into the Japanese market, which is known for having very high quality standards.”
Wan Shian, a researcher at ITRI’s Creativity Lab, poses with one of his team’s more whimsical designs—a game called Shivering Bowling, in which the dolls scream and shudder as the ball rolls toward them. (Photo by Chang Su-ching)
One of a Kind
In light of the importance of talented employees to the sustainable development of Taiwan’s toy industry, the Master Program in Toy and Game Design at National Taipei University of Education (NTUE) began accepting students in 2003. The school’s program remains the only one of its kind in Taiwan and offers classes on design aesthetics, digital multimedia, industrial analysis, toy mechanisms and toy safety, among other topics.
Pa Pai-shan (巴白山), a professor who teaches in the department, points to two major trends in the toy industry, the first of which is seeing toys take on an increasing number of functions. “Besides their core entertainment function, many toys can now also be used as rehabilitation aids, educational tools, stress relievers or for physical fitness,” he says. “And they can be used by children as well as all other age groups.”
The second big trend in the industry is the development of interactive toys that light up, speak and play music in response to user stimulus. New edutainment robots, for example, are able to respond to children’s spoken commands. The trend toward interactivity is leading to the integration of digital content and high technology in toys, which means that toy companies must now recruit designers and engineers specializing in electronics, information technology and mechanized systems. Pa therefore urges companies to offer more internship opportunities to students in those specialties, adding that student interns have the potential to help companies boost competitiveness and product value.
Shen Zhong-yuan (沈中元), an associate professor who teaches courses on the cultural and creative industry in the Graduate Institute of Performing Arts at National Taiwan Normal University, says that after decades of development, the production technologies of Taiwan’s toy industry are on par with those of leading international toy makers. To take the next step, Shen says the industry needs to focus on making more distinctive, higher-value products. The best way to do that, he says, would be to incorporate aspects of Taiwan’s culture in toys. “Taiwan’s profound history, cultural characteristics and beautiful landscapes can all be used as interesting, unique elements in toy designs,” Shen says. For example, toys could feature images of artworks collected by the National Palace Museum, local delicacies, the famous Alishan Forest Railway or the totems of Taiwan’s indigenous peoples, he says. “Our toy makers will secure a better future if they’re able to develop products that transform Taiwan’s cultural value into play value,” Shen says. “That’s something [foreign rivals] can’t imitate.”
Wan Shian (萬象) is a researcher who works in the Creativity Lab at the Industrial Technology Research Institute (ITRI), a nonprofit, government-funded R&D organization in Hsinchu, northern Taiwan. Wan agrees with Shen’s view that toys provide a good way to share aspects of Taiwanese culture with the international community. Such toys would also help to pass Taiwan’s cultural heritage down to future generations, he says.
The Creativity Lab’s KARAOKing animated entertainment system (Photo Courtesy of Industrial Technology Research Institute)
ITRI set up the Creativity Lab in 2004 to promote product innovation by bringing experts in the fields of technology and the humanities together. In essence, the lab’s mission is to come up with creative ideas for different kinds of products, including toys. The lab, which has around 50 members from diverse academic backgrounds, brainstorms about design concepts, then shares them with industry. “We want to create products that can appeal to customers and meet their needs and wants,” Wan says. “Hopefully, our ideas can inspire Taiwanese firms to think creatively.”
In 2008 and 2009, Creativity Lab’s Playful Village project sought to identify the key factors that make toys attractive and interesting, and then used those elements to generate new product ideas. Team members also worked to integrate ITRI-developed technologies for electronic control mechanisms and human-machine interaction into their designs. The result was a set of interesting prototypes that domestic companies have been invited to study for possible commercialization. The prototype Sweetie-Talkie, for example, is a machine that dispenses a variety of flavored candies, with the flavor dispensed depending on the tone of the user’s voice. Another is Shivering Bowling, a game in which players roll a ball toward the “pins,” which are actually a set of dolls that scream and shudder as the ball approaches. Memory Snapper is an electronic pet that can play with children and capture their photographs, while KARAOKing is an interactive entertainment system in which animated characters dance on a video screen in time with the singer’s voice.
PlayMe’s Chen says there has been renewed interest in traditional toys due to rising concern about the impact of video games and other electronic gadgets on children’s sight and hearing, as well as chemical use in plastic toys on children’s general health. “Nowadays parents are willing to spend more money to choose safe toys that can provide their children with hands-on and intellectual training, in addition to their normal use as playthings,” Chen says. “By addressing those customer needs, I believe toy companies will enjoy stable earnings, and that will allow them to continue operating in Taiwan.”
Write to Kelly Her at kher@mofa.gov.tw