The lifting of China’s one-child policy might have been intended to boost the country’s future workforce, but for toymakers Jakks Pacific Inc. and Mattel Inc., it means an opportunity to sell more products.
Both companies have recently announced partnership deals to grow their foothold in the Chinese market.
El Segundo-based Mattel joined forces in February with Chinese e-commerce giant Alibaba Group to develop education-focused products. Jakks renewed a multiyear licensing deal this month with Walt Disney Co. to distribute the entertainment giant’s toys in China.
Jakks’ growing connection to the Chinese market was highlighted last week when the company announced that it would sell an additional 3.7 million shares of common stock to Hong Kong-based Meisheng Culture Co. Ltd. for $19.3 million. Meisheng already held 1.6 million shares, and the latest deal upped its stake to 19.5 percent of the company and made it the largest shareholder, surpassing a 10.8 percent stake held by Patrick Soon-Shiong. Meisheng also gets a seat on the board as part of the deal.
“Jakks has strategically opened offices in Shanghai as well as in other areas of China,” Stephen Berman, chairman and chief executive of Santa Monica-based Jakks, said in a statement. “The expansion has allowed us to open new distribution channels, sell direct to retail, and focus on the rapid expansion of online sales.”
China saw a slight uptick in birth rates last year after lifting a controversial 1979 family planning law, also known as the one-child policy, in 2015. The number of births rose nearly 8 percent to 17.9 million children in 2016, an increase of 1.3 million from a year earlier, according to China’s National Health and Family Planning Commission.
Even before the country changed its stance, China’s toys and games sector was on the rise, growing about 10 percent between 2010 and 2015, compared with a 1.7 percent increase in the United States, according to market research firm Euromonitor. With a potential baby boom on the horizon and a growing middle class, toy companies are positioning themselves to capitalize on the market.
“China is quickly becoming a key demographic for toymakers, especially with the lift of the one-child policy ban,” said Stephanie Wissink, a senior research analyst at Piper Jaffray.
Neither Jakks nor Mattel is new to the Chinese market.
Mattel, maker of Barbie, Hot Wheels, and Fisher-Price, among other products, has been operating in China since 2002 with mixed results. Two years after opening a $30 million, 36,000-square-foot, six-story Barbie store in Shanghai in 2009, the company shuttered the location.
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