Conversations With Conley: The China Syndrome

Tom Conley is the president of the Toy Industry Association (TIA), the national trade association for U.S. producers and importers of toys, games and children´s entertainment products. Recently, he took the time to talk with TDmonthly Magazine about China’s increasing foray into toy design and development.

TDmonthly: People are afraid China’s going to be Japan in the 80’s, only worse. Is China something for the toy industry to fear?

Tom Conley: Chinese-made toys represent 70 to 75 percent of all the toys sold in the States. And we’re continuing to see growth. January through June of ´05, the number that China reports for toys, in U.S. dollars is $2,000,514,122; that’s up 2.5 percent. On the other hand, I don’t have the number for imported toys into China, I know there are some, but it is probably very, very low. The Chinese market is problematic for a great many of the global marketers.

TDmonthly: Don’t American toy makers fear the loss of U.S. jobs to China?

Tom Conley: Concern about China is really old news to the toy industry, having moved its production offshore for many years now. Trying to find ways to keep the price of the product down so that the consumer doesn’t have to pay a huge amount is something the industry has understood for a long time.

There’s also a bit of inaccuracy with some of the reporting. We know that the U.S. labor movement has invested sizable amounts of money to point out repeated abuses in China for the purpose of stopping the exodus of jobs out of the United States. Maybe in some industries it makes sense; in the toy industry it makes no sense because those jobs have been gone for 20 years.

TDmonthly: Are there labor abuses in China?

Tom Conley: Quite frankly, their national labor standards are stricter than our labor standards. But recently there have been a lot of local exemptions to those labor standards. That’s why we’ve joined with 18 other national toy associations to work on the Universal Council of Toy Industries Code of Business Conduct, and we are engaged in doing audits and working with the Chinese government, working with factories throughout China, to make sure that working conditions are consistent with Chinese law.

TDmonthly: But that doesn’t stop the U.S. government from getting into it.

Tom Conley: We were very concerned when members of Congress introduced legislation that would have put a 27.5% duty on products made in China. It would have put a lot of products out of reach for the customer, and depending on what time of year that got put into place, could have had devastating effects on the holidays, which is when 60 to 70 percent of all toys are sold.

The feeling in the industry is you can’t put all your toys in one basket, and while China has been a wonderful manufacturing area, people are not naïve to the political situation that is growing and evolving with China. Malaysia, Indonesia, Thailand and Vietnam, as possible venues to make toys, are being looked into.

TDmonthly: Intellectual property rights and knock-offs?

Tom Conley: A lot of our folks are scared to death to try and go to market (in China) because they’re afraid of getting knocked-off. Hopefully, as China gets active in the World Trade Organization, they will begin to crack down on that. They need to take care of this intellectual property issue in a big way.

I think the toy industry has been driven by innovation, technology and price. And because of those three drivers, they’ve been forced to look for inexpensive labor, they’ve been forced to look for ways to save labor, they’ve been forced to be among the most innovative and creative marketers of consumer products that there is. The U.S. is the best in the world at doing that. China? I certainly welcome the competition.