Major U.S. Toymaker Accelerates Shift from China Amid Trade War
MGA Entertainment is rapidly moving 40% of its toy manufacturing from China to countries such as India, Vietnam, and Indonesia due to tariffs from the trade war initiated by President Trump. Despite this shift, 60% of production will remain in China. Price increases are anticipated, impacting consumers, while other toy manufacturers, such as Mattel, are also adjusting their supply chains in response to the tariffs.
MGA Entertainment, a major U.S. toy supplier to retailers such as Walmart and Target, is accelerating its manufacturing transition away from China due to the ongoing trade war initiated by President Trump’s policies. The company, known for its popular Bratz and L.O.L. Surprise! dolls, plans to increase its production outside of China from the current 10-15% to approximately 40% in countries like India, Vietnam, and Indonesia over the next six months. However, 60% of production will still be maintained in China during this shift.
CEO Isaac Larian expressed concerns that rising production costs may necessitate higher wholesale prices for toys made in China, potentially impacting consumers as these costs are passed down through retail chains. The adjustment comes as U.S. manufacturers respond swiftly to ongoing tariffs on Chinese products, with price increases expected to be reflected on store shelves soon, according to Toy Association CEO Greg Ahearn.
In a broader context, MGA’s plans signal a changing landscape for American toy companies heavily reliant on Chinese manufacturing. Prior to the new tariffs, MGA had aimed to shift 20-25% of its manufacturing overseas. Approximately 77% of U.S. toys are currently manufactured in China, leading companies like Mattel to consider production alterations, including the planned closure of a factory by 2025. Mattel’s CEO stated that the firm intends to diversify its supply chain and ensure that no single country represents more than 25% of its global production.
Hasbro, known for its Play-Doh toys, has identified tariffs on Chinese imports as a business risk, although it did not confirm any plans to relocate manufacturing. Meanwhile, Beautiful Curly Me, a doll supplier to Target, is actively exploring sourcing options from various Asian and South American countries. The implications of tariffs imposed during Trump’s administration have presented challenges, with the Toy Association noting that toy manufacturers had previously not been impacted by such tariffs.
Although MGA has a facility in Ohio, Larian indicated that domestic labor costs make it impractical for certain productions, stating, “There is no way to get American labor to do that tedious work.” In the past year, about 70% of toys sold by MGA were priced below $15. In light of the increasing costs associated with tariffs, consumer preferences might shift towards cheaper, potentially hazardous alternatives, according to statements from the toy subscription service Lovevery.
In conclusion, MGA Entertainment’s shift in manufacturing reinforces the broader trend of U.S. toy makers relocating production to mitigate the adverse effects of tariffs imposed during the trade war with China. As prices are anticipated to rise due to increased production costs, it remains critical for companies to adapt and diversify their supply chains. The ongoing situation underscores the complex dynamics between trade policies, manufacturing decisions, and consumer affordability in the toy industry.
Original Source: www.usnews.com
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