Mattel on China's Manufacturing Sector

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 |  Includes: HAS, JAKK, MAT
by: Judy Weil

The global toy industry's impact on China's economy. From Mattel’s Q408 conference call:

I recently read that during 2008 nearly 1,000 toy exporters shuttered their doors in southern China. And toy retailers weren't immune to the economic downturn, with significant toy sellers in the U.S., U.K., Mexico and other major markets either closing their doors or entering bankruptcy.

Sales in Europe were down 24%... Sales in Latin America were down 12%... Sales in Asia-Pacific were down 12%.

The biggest component was the continued pressure from commodities, then Chinese labor rates, the appreciating Chinese currency, incremental product testing and logistics, which were partially offset by the benefit of price increases, lower recall related costs and favorable forex.

Interesting note: Mattel says that in the downturn, the company has noticed customers are focusing on the top brands. Small toy manufacturers beware:

At least through the September through November period, we had something like five of the top seven brands of toys at retail, so I think consumers in this kind of environment are focusing on core products and brands with which they're familiar.

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