Toymaker Lego aims at rapid expansion in China
Copycats remain a problem despite an announced government clamp-down
Nuremberg — Danish toymaker Lego plans to more than double the number of shops in China in 2019 to 140 in its most rapid expansion in any market as demand for its colourful plastic bricks remains unaffected by a broader slowdown in the economy.
With declining or stagnating sales in its core US and Western European markets, China is still a bright spot for Lego though copycats remain a problem despite an announced government clamp-down, the head of the toymaker said.
Lego plans to have about 140 shops in 30 different Chinese cities at the end of 2019, up from 60 shops at present, most operated by local partners.
“I’m not really seeing any stagnation [in the Chinese toy market] at this time,” CEO Niels B Christiansen said at a toy fair in Nuremberg.
China reported its slowest economic growth in 28 years in 2018, and a trade war with the US and rising amounts of personal debt have added to concerns about a slowdown in the world’s second-biggest economy.
China, whose toy and games market is worth $31bn, accounts for less than 10% of Lego’s overall sales. But the importance of the market is growing after Lego opened a factory south of Shanghai in late 2016 and as Chinese parents shift away from a disciplined focus on learning towards free play.
“[At least] 95% of Chinese parents want their kids to play more, and they are interested in giving them high-quality toys,” he said.
Lego, an abbreviation of the Danish “leg godt” meaning “play well”, plans to open its second flagship store in Shanghai in March and continue its partnership with Chinese internet giant Tencent. It did not give any financial details on the planned 80 new shops.
The privately owned toymaker has with some success increased its efforts to fight breaches of copyrights in China, but copycats remain a big problem despite an announced government clamp-down, Christiansen said.
“It’s clear that China’s ambition is to do something about this problem, but we haven’t really seen the implication of it yet,” Christiansen said.
Lego has won two court cases over copyrights in China.
“One of the biggest hurdles is that court cases take a long, long time. We would like that when we win a court case, the enforcement would be better and stronger,” he said.