Chinese consumers browse toys in a Toys"R"Us store in Shanghai. (Photo: Xie Jun/GT)
Despite struggling with their global businesses, foreign retailers are thriving in the Chinese market
Toys"R"Us Inc is reportedly scrambling to uphold its global business, but what is certain is that the company is thriving in the Chinese mainland market, with its 140th Chinese store recently opening in Shanghai. Similarly, other overseas toy brands like Lego and IKC are also enjoying double-digit growth numbers in the Chinese mainland at the moment. The country's economic rebound and Chinese parents paying more attention to their children's all-round development are two reasons behind the phenomenon. However, consumers argue that the high quality of foreign brands is the top explanation, though some remain worried over safety standards as most toys are still being manufactured in China.
"Which toy character do you like most?" a ceremony hostess asked a little Chinese girl in front of a brand new Toys"R"Us store inside a glistening eastern Shanghai shopping mall.
"Barbie," the girl replied gently.
"She's a Barbie girl!" the hostess cried to a crowd of people gathered at the opening ceremony of the 140th Chinese mainland store of the half-a-century-year-old U.S. toy retailer.
While the ceremony unfolded, parents and children simultaneously swarmed the store to browse shelves packed with Western-themed toys like Transformers and Iron Man figures.
The Barbie fan is archetypical of the new generation of Chinese children who have grown up exposed to Western culture through mediums such as Hollywood movies and overseas comic books. And this new trend is permitting global toy sellers to find a growth market in China, despite losing ground in many of their traditional markets elsewhere.
China hot, world not
Andre Javes, president of Toys"R"Us Asia Pacific, told the Global Times with a confident tone that the company's "recipe in Asia is working very well", and that the Chinese market is a highlight of its Asian operation.
"We have had significant double-digit growth for at least four years in the [Chinese] mainland. It has been our best-performing market in the world for quite some time," he said on Saturday, seated in the Fastlane home site at the new Toys"R"Us store in Shanghai.
"In terms of the amount of new stores we are opening, the Chinese market is unique. In other words, we are investing disproportionately in China versus the rest of the world," Javes told the Global Times.
The Toys"R"Us stores opened in China are not just restricted to big cities, they also exist in second- and third-tier cities like Hohhot, capital of North China's Inner Mongolia Autonomous Region and Nanning, capital of South China's Guangxi Zhuang Autonomous Region. Hohhot is about 2,600 kilometers away from Nanning.
The American company's rapid success in China is in stark comparison with the fact that its global business is reportedly at risk.
According to a report by the Washington Post on September 19, Toys"R"Us filed for bankruptcy on September 18 after struggling for years to pay off a large amount of debts. But Javes stressed that the bankruptcy stories circulating in the media at the moment are "misinterpretations" as the company is in fact undergoing a "refinancing of debt" operation in the U.S., which will not affect the Chinese market.
"We are not closing down," he said. "Once this process [of refinancing] is closed, we will become an even stronger company."