Christmas bitter for Chinese toy manufacturers as yuan appreciates, squeezes profits

As the world gets ready to celebrate the West's biggest festival, Christmas, next month, Chinese toymakers are not so cheery, as the appreciation of the yuan crimps their already paper-thin profits.

Around 80 percent of the world's Christmas toys, trees and decorations are churned out of factories in southern China staffed by workers who scarcely have any idea of the meaning of Christmas.

Despite the huge market share, Chinese manufacturers are still struggling to break even as the yuan appreciates and the cost of labor and materials rise.

INCREASE IN ORDERS, DECREASE IN PROFIT

"Orders increased about 15 percent in the first nine months as the European and American markets gradually picked up, after the global financial crisis dragged down sales in the previous two years," said Liang Liping, a manager at the Jiangxi-based Yusheng Trade Company, at her stall at the Canton fair, China's biggest trade fair, in Guangzhou City, capital of south China's Guangdong Province.

Official statistics confirms Liang's anecdote.

The Chinese toy industry exported 5.99 billion U.S. dollars of products in the first eight months of 2010, up 31.6 percent from a year earlier, according to customs data.

Liang's stall displays colorful ornaments which she said are samples for Christmas 2011, as the company has shipped its last batch of orders for this year's Christmas earlier this month.


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