Duc Thanh Wood Processing Joint Stock Co. produces this caterpillar toy, which is CE-certified and made of rubberwood.

Many suppliers are meeting international product standards but old equipment keeps them from attracting more customers.

The toy industry in Vietnam is struggling to remain competitive with neighboring sourcing hubs due to challenges in manufacturing and designing.

There are no official records of the number of toy companies in the country, although there are 95 suppliers accredited by the Ministry of Science and Technology. There are hundreds of SMEs, however, that are unable to obtain government endorsements due to outdated equipment and factories. Because of this problem, these exporters can't establish partnerships with large retailers that order in bulk or have highly technical specifications.

Established enterprises such as those that focus on electronic models are the ones capable of getting an ISO certification, which is a primary requirement of major foreign buyers. These makers comprise less than 5 percent of the manufacturer base.

Aside from issues in production, lack of design variety keeps Vietnam companies from competing with their China counterparts. Since the majority of local exporters are SMEs, they don’t have the budget to invest in R&D. Most of them rely on clients’ specifications for their collections.

Exports

According to the International Trade Centre, toys, games and sport items from Vietnam registered $712 million in foreign sales in 2013. This is a 61 percent increase compared with the previous period. Local trade associations forecast that the nation’s plastic and wooden product industries are expected to grow by about 14 percent over the next 12 months.

The main market is the US, accounting for $245 million of overseas revenue. The EU is another important destination, contributing nearly $173 million. The UK, Germany and Belgium are the top markets in the association. Japan is the third-largest destination, ordering $133 million worth of shipments. Local suppliers plan to target the Asia-Pacific region and the Middle East for business expansion in 2015.

Competitive advantages

The industry has several strengths contributing to its continued development.

The ability to customize designs according to clients’ specifications is the sector’s major advantage. Since buyers from traditional markets such as the EU and the US prefer environment-friendly materials, domestic suppliers are able to incorporate these components, particularly in models designed for babies and toddlers.

To ensure that items are lead-free and follow the requirements of the EU’s REACH policy, large manufacturers obtain international certifications, including CE, which is mandatory for some products sold in the EU.

The electronic toys segment, in particular, is investing in product research to keep up with the fast-paced development of technology. Some companies hire engineers and computer software specialists to test robotics and the durability and longevity of these types of models.

This article is an excerpt from Vietnam Sourcing: Toys, published by the Hinrich Foundation. For the full report with complete Industry Overview and 12 suppliers, click here.

Product gallery

The following is a selection of toy models made by Vietnam suppliers. For detailed industry and production information, and supplier outlook over the next 12 months, visit Vietnam Sourcing: Toys. For information on related industries in Vietnam and other emerging economies in Asia, go to www.developingcountrysourcing.com.

3H Plastic JSC

Model: 005
Price: $5.85
Description: Educational toy; ABS; 3-D design; 250x100x100mm

3H Plastic JSC

Model: 055
Price: $7.04
Description: Building block set; ABS; pagoda design; with guide book; for children at least 3 years old

ABC Toy Co. Ltd

Model: 87879
MOQ: 1,000 pieces
Price: $2.05
Description: Plush crocodile toy; velboa fabric; 48x27x5cm

Doma Vina Production Trading Co.

Model: BSNO001
MOQ: $3,000
Delivery: 14 days
Price: $1.30
Description: Educational toy; corrugated paper strips; DIY snowman design; 6x4x10cm

Doma Vina Production Trading Co.

Model: WIT005
MOQ: $3,000
Delivery: 30 to 45 days
Price: $1.70
Description: Witch doll; corrugated paper strips; 12x6x8cm

Duc Thanh Wood Processing Joint Stock Co.

Model: 66152
MOQ: 500 sets
Delivery: 30 to 45 days
Price: $8.15
Description: Wooden block set; rubberwood; castle design; 252x162x60mm

Duc Thanh Wood Processing Joint Stock Co.

Model: 63112
MOQ: 1,000 sets
Delivery: 30 to 45 days
Price: $5
Description: Stacking toy; rubberwood; teaches basic counting skills; 356x80x98mm;

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This article and its contents are provided by the Hinrich Foundation, a partner of Global Sources in promoting trade across Asia. The products and the suppliers featured in this article are export assistance program beneficiaries of the Hinrich Foundation.