Red Dragon China is sitting in the driving seat of the Asian Pacific Toy Market by fuelling the growth of the region at an exponential rate during the forecast period. - Actual Market Research

The Asia and Pacific markets were the biggest toy markets in the world during the historic time period. One very important pattern observed in the Asian and Pacific markets was that China's toy market had no intense competition from any other major economies operating in the toy market of the region. After China, the major share of the regional toy market is occupied by the rest of the Asia-Pacific region other than India, Japan, and Australia. So much of the emergence of the Asian Pacific toy market can be attributed to the tremendous growth of the toy market in China.

According to the report, " Asia-Pacific Toy Market Research Report, 2027" published by Actual Market Research, the market stood at USD 39 billion in 2021, which is anticipated to expand at more than 9% CAGR for 2022–2027. China dominates the toy market in the Asia-Pacific region. The growth in the Chinese toy market was driven by the country’s high economic growth and improving household disposable income. Over the last few decades, China has been a major participant in the club of the fastest growing economies, eventually becoming the world's second largest economy. With increased expenditure on toys by parents, the toy companies in China shifted their strategy from focusing on volumes to focusing on the quality of their products. Not only that, but the small and medium-sized players also focused on innovating their products to keep up with the global trend in the toy market.

The Asia-Pacific toy market was the biggest exporter of toys in the world for the last few years, but due to the demographic shift in many emerging countries, the toy market also witnessed strong domestic demand. One such crucial demographic shift was triggered when China relaxed the one-child policy in 2013 and shifted towards a two-child policy. This new policy was implemented under the 13th Five-Year Plan (2016–2020). The policy change resulted in an increase in the number of newborns in China to about 2.4 million each year, as cited by the Hong Kong Trade and Development Council. This expanded the overall consumer base for the toy market. Also, this boosted the demand for basic toy categories like plush, vehicle replicas, and infant/toddler toys in the short term, which acted as an impetus for the small and medium-sized companies and most of these companies manufacture lower-category unlicensed products.

E-commerce continues to play an important role in online toy retailing. Offline retailing by way of physical stores and supermarkets continues to play a significant role in the growth of the Chinese toy market, but the emergence and growth trajectory of e-commerce cannot be overlooked. As of 2017, China had about 750 million internet users and had a penetration rate of about 55%. However, the online space for toy retail also makes the market highly competitive between international brands and local brands struggling to maintain and expand market share.

Nevertheless, the Chinese toy market is also facing several challenges. China is one of the major destinations where top toy companies outsource their production. There have been tendencies of increased cost pressure due to rising labor costs over the last few years. Also, not all manufacturers have been able to adapt to the changing market trends, and the companies outsourcing the production have to switch between factories and supplier bases, which causes some level of value loss and uncertainty in the market. One such trend was also observed in 2017 when the currency movement was unfavorable for EU-based companies. How the players in the Chinese markets control the cost pressure and how relevant the country’s market will be in the Asian and Pacific toy markets is a scenario to be seen in the future.