Toy business is not a game

A trusted destination

This decades-long development has also endowed the country with expertise, making it a "trusted manufacturing destination", Baulch said. "You can rely on the quality, the pricing, the turnaround time, everything that you need to rely on. You can also rely on the fact that if an issue arises, China has the knowledge to sort it out."

Peter Handstein, founder and CEO of Hape Toys, a German toy company, echoed this sentiment, saying that the supply chain in China is "unbeatable".

"This did not happen overnight. I am not only a witness. I am a part of it," he said.

Hape Toys has manufactured the majority of its toys in China for the past three decades, since its production facility in Zhejiang's Ningbo opened in 1995. Its office in China, which employs more than 1,000 people, now oversees all core operations, from toy design and material sourcing to manufacturing, product inspection, and distribution.

Artificial intelligence and robotics are further powering factories, Handstein said, enabling tasks such as quality checking.

Some have been hyping up the idea that soaring labor costs in China are eroding its competitiveness, while Handstein described the increase as an "achievement", because paying labor 10 times more means the wealth of a worker in China has increased 10 times. "Is it an incredible achievement?" he said.

"The quality of the people, the efficiency, and the outcomes are also greater," Handstein said, suggesting that the pay rise also reflects the progress of a skilled workforce for manufacturing, since the same number of people his company hires now as 10 years ago produce 3 to 3.5 times the output.

Low cost was the catalyst for the rise of the manufacturing giant, but what has kept China in the game is its reliability and quality, Baulch said.

"People forget that, in the last 20 years, China has made tremendous strides at improving the quality … When you send your toys there, the vast majority of the time, you are going to get exactly what you ordered and paid for."

Producing in high-quality plants in China is indeed not cheap, but the sector is capable of suiting some very specific needs, said Juan Martinez, founder of Art Fabula, a Swedish toy brand whose toy prototypes are made in China. He makes a type of sofubi toy, a style of vinyl collectible toy, and the product must also comply with all European Union legal standards.

The one-man company had tried to move part of the manufacturing elsewhere away from China, but the attempt only proved to be a costly "disaster" that nearly destroyed the small business.

"Everything was wrong… I lost all hope when I received broken toys in the mail, along with the metal molds! Why on earth would they send the molds to me?" Martinez said. "If it hadn't been for my wife, who helped me accept the loss and encouraged me to keep working hard, Art Fabula would have disappeared a long time ago."