The global toy industry looks to China, and China’s toy industry looks to Chenghai. Walking through Chenghai, toy brand stores line the streets, and rows of towering buildings house over 50,000 toy production and management units, cultivating industry leaders like Sunfun Toys, Alpha Animation and Culture, Rastar Group, and Sembao Blocks. In 2023, the industry’s revenue exceeded $6.98 billion.
Known as China’s Toy and Gift Capital, Chenghai has developed a comprehensive industry chain from R&D and design to manufacturing and trade. The district produces half of China’s plastic toys, with the nation’s highest number of authorized brands, IPs, and patents, launching over 300,000 new toys annually for export to more than 120 countries. In 2024, Chenghai’s Toy Creative Industry Cluster was recognized as a specialty industrial cluster in Guangdong Province for small and medium-sized enterprises.
Despite this success, Chenghai’s toy industry faces challenges of low overall quality and homogeneous competition. As international competition intensifies, many Chenghai companies are shifting from contract manufacturing to building their own brands, moving up the value chain to higher-end segments.
Toy Factories Embrace Digital Intelligence
In Moyu Cube’s exhibition hall, there is an array of Rubik’s Cubes, including various types like traditional, anisotropic, magnetic, maglev, and AI-enhanced models, spanning hundreds of styles. “We’ve embedded Bluetooth chips, sensors, and gyroscopes in our Rubik’s Cubes, allowing users to follow guided steps for solving the cube and learning formulas,” explained Yang Jiandong, Moyu Cube’s marketing director. Since 2016, the company has utilized a fully automated production line, where AI-enabled machines have boosted production efficiency by 80 times. Moyu Cube’s digital upgrades reflect the broader transformation underway in Chenghai’s toy industry.
Huang Liang, Executive Vice President of the Shantou Chenghai District Toy Association, highlighted that in the 21st century, Chenghai’s toy sector adopted CNC machine tools, automated CNC injection molding machines, and other advanced equipment, resulting in large-scale production and industry clustering. Today, Chenghai has developed China’s most complete toy production chain, covering raw materials, R&D, IP creation, manufacturing, sales, and trade. The city’s products span early education, blocks, video games, and remote-controlled toys, producing one-third of the world’s and nearly half of China’s plastic toys.
Data from Shantou’s Bureau of Industry and Information Technology show that in 2023, Shantou’s 264 toy and creative companies generated an industrial output value of $4.31 billion, accounting for 8.8% of the city’s regulated industries, with an added value of $990 million.
Hong Kong’s Chen Hsong Holdings, a global leader in injection molding machinery, entered Chenghai in 2000. Over two decades, Chen Hsong’s machines have evolved from quantitative and variable injection models to servo and all-electric versions, aligning with Chenghai’s toy industry’s advancements. In 2016, Chen Hsong launched a specialized machine for building blocks and educational toys, capturing 50% of the local market and establishing Chenghai’s first smart factory in 2019 with local partners.
“With 12,000 injection molding machines in Chenghai, the toy industry has largely automated and is moving toward digital, intelligent production,” noted Chen Jianbo, a senior manager at Chen Hsong. Chen Hsong now holds a 60% local market share and up to 85% in sectors like blocks and Rubik’s Cubes. The company is exploring AI models for the toy industry, aiming to improve quality and yield by using big data for real-time adjustments and enhanced process intelligence.
Moving from Product to IP Overseas
Globally, nearly 75% of toys are IP-based, with popular IPs often driving growth across related industries. Recognizing this potential, Chenghai companies began exploring IP’s value over a decade ago. In 2009, Alpha Animation and Culture went public on the Shenzhen Stock Exchange, pioneering the “IP + industry chain” model with popular animation series like Super Wings, Balala the Fairies, Pleasant Goat and Big Big Wolf, and others.
Chenghai’s toy manufacturers are leveraging the domestic animation IP boom, expanding brands internationally. “Our foreign sales increased 35% this year, reaching $42–56 million,” shared Xie Yipeng, assistant general manager of Guangdong Jianjian Intelligent Technology. By tapping into markets in North America, Europe, and Asia, the company has doubled its overseas sales, responding to demand for remote-controlled vehicles with 30–40 new models annually.
Chenghai exports toys to over 120 countries through multiple channels, controlling about one-third of the world’s toy production. Sembao Blocks, a local leader in block-based toys, has grown through both independent IP and licensed partnerships since 2019, collaborating on themes like the Wandering Earth, Shandong aircraft carrier, CASCI, and Forbidden City Culture. Popular series such as Huayan Tea Language Flower sold 1 million units immediately after launch, achieving $2.8 million in single-product sales.
Chenghai’s “toys + IP” model has fostered numerous top IP-based toy companies, like Sembao Blocks and Rastar Group, giving the district the largest concentration of toy patents in China, with over 10,000 patents authorized each year.
To support this industry, Chenghai’s government has strengthened IP protections, establishing the country’s only dedicated rapid intellectual property rights center for toys. “Ordinary patent applications take three to five months, but our center’s fast track reduces this to just ten days, a critical advantage for product development and sales,” explained Chen Shunli, Director of Shantou’s (Toys) Intellectual Property Rights Center. This support helps Chenghai’s toy manufacturers thrive in a competitive global market.
Building a New Industrial Ecosystem through Chain Innovation
In the Guangdong Yuxing Technology, a streamlined process unfolds: blocks are sorted into barcode-labeled boxes by 36 robots, while an intelligent platform collects and analyzes production data in the cloud. Six years ago, company founder Xie Weichun, with nearly 20 years in toy manufacturing, saw an urgent need for automation due to labor shortages and quality control challenges. In response, Yuxing partnered with Shantou Gooders Precision Technology in 2018 to create an automated production line, marking a pivotal shift toward intelligent manufacturing.
Michael Porter’s competitive strategy model underscores the importance of new production factors—like skilled talent and research facilities—in bolstering industrial clusters. Chenghai exemplifies this model, evolving from traditional competition to collaborative innovation. Shantou Gooders Precision Technology, founded by Du Kehong in 2017, epitomizes this shift by specializing in precision block toy production through advanced mould-making and large-scale manufacturing. By adopting industrial-scale production and sharing resources like public warehouses, Chenghai’s toy industry has fostered a cooperative, resource-efficient ecosystem.
This collaborative model drives cost-effectiveness and competitiveness: Huang Liang notes that mass production enables Gooders to lower the cost per block to as little as 0.0014 dollar, reducing overall manufacturing costs by over 20%. Through initiatives like shared design spaces and a “community of destiny” for brands, Gooders has positioned Chenghai as a hub for high-end, scalable, and digitally advanced toy manufacturing. Sembao Blocks, one of Gooders’ first partners, leverages this model to sustain a 200-person design team and launch 500 new products annually, achieving a 102% increase in revenue in 2022.
In a broader push for industrial modernization, Shantou Chenghai has formed a plastic precision manufacturing alliance and China Telecom’s Toy Industry Digital Intelligence R&D Center, supporting automated production methods, where factories operate with minimal lighting and human intervention. Chenghai now hosts 78 national high-tech creative toy enterprises and over 40,000 support units, further solidifying its leadership in smart toy manufacturing.
Chenghai is driving digital and green transformations, integrating new information technology and digital trade networks. This chain innovation approach is propelling Chenghai up the “smile curve” of high-value production, reinforcing its status as a global leader in the toy industry’s digital future.
Source: amazon, aliexpress, CGTN, xinhua, guangdong news
