For a toy company such as Hasbro that has created countless classic IPs such as Transformers, Monopoly, and Little Ma Baoli, to encourage them to move out of China’s injection molding production, US government’s participation in US 300 billion tax levy on China is somewhat “tragable”.
Although at previous two hearings, other business community peers have stated that they are unwilling to increase US government’s reasons for increasing tariffs, they still have not prevented Mr. Trump from repeatedly applying tariffs on Chinese goods.
Trump’s reason is: Not to produce in China. Go to Vietnam, or better to return to United States to create more jobs for United States.
Since 2008, labor cost of southeast coast of China has risen, Hasbro is already considering transferring industrial chain; by 2014, Trump had not yet been elected president, and Hasbro’s product Transformers had begun to mark “made in Vietnam”.
Time have passed for nearly 10 years, how can Hasbro’s 70% products still depend on Chinese production?
Shift of industrial chain to other countries is not as good as imagined.
Consumers in China’s Transformers spoke, Hasbro’s transfer of production lines to Vietnam mean over: there is almost no quality control. Toys generally have same injection molding for right and left hand, shaft is snoring, mold is inaccurate and cannot be closed.
“Bishang Village, Gongle Town, Siqi County, Haiyang Province, Vietnam” is simply a nightmare for Transformers fans around the world.
Foreign consumers are more straightforward. Under post on “Made in China vs. Made in Vietnam” section of Transformers enthusiast community, someone smashed phrase “made in Vietnam”.
Why are Transformers products difficult for American manufacturers?
First, in 1983, Japanese toy company TAKARA first proposed concept of a deformable robot, and launched two robots, DIACLONE and MICROMAN. These two toys received unprecedented praise in US market, and sales volume was amazing.
Hasbro identified this opportunity and reached an agreement with TAKARA to use their patents and images to develop US version of Transformed Toys. In order to maximize sales, Hasbro also teamed up with Marvel to launch robot comics. “Transformers” was born.
To increase sales, Hasbro produced a three-episode commercial cartoon for “Transformers” and paid it to TV station. It was broadcast on TV as a commercial advertisement, and Marvel series comics also also available for sale. In story setting, machine people divided into righteous car people and evil Decepticons, which can transformed into cars and planes.
In 1987, Hasbro opened Chinese market and brought “Transformers” to Guangzhou TV and Shanghai TV for free. On July 30, 1988, Shanghai TV station premiered in mainland. Since then, “Transformers”, “Wei Zhentian” and “Decepticon” have become famous names in China.
Today, Transformers has a series of derivatives such as movies, animations, games, etc., but it is essentially a toy. Although it is essentially a toy, it is a high-precision toy that requires high-precision mold and assembly processes. It has a clear classification system and price system, has detailed marketing and scientific management processes.
Second, what kind of production process does a Transformer have to go from design to final packaging?
Company will send hard data such as characters, design requirements, grades, number of toy parts, and total weight of toy materials to design team in Japan. These designers draw, model, and sample according to company’s rigid requirements to complete design requirements. After that, it issued to OEMs in China and Vietnam.
Problem is coming.
Today, I saw a professor’s remarks. His logic is: “China’s domestic education system and concept of education are rigid – students’ thinking is rigid and paranoid. Social ability is poor. – If you work in US, you can only do technical work. – Doing technology in United States is not a good job – indicating that there is a problem with Chinese education system.”
Expression of this professor means that design is a high-end job and technology is a low-end job.
But this kind of remark is wrong, because, for consumer, product design that is not new is an X, design is good but quality is no good is also an X, there is no essential difference.
A Transformers enthusiast said that behind quality of OEM is industrial leve. High quality of Transformers foundry is because foundry uses high-precision machine tools with good mold accuracy.
Due to comprehensive national strength, after importing high-precision machine tools from Germany, Japan, and United States, Vietnam must first invest in military industry. There is no surplus of production capacity for toys and daily necessities.
In addition to importing foreign machine tools, China has always been striving to independently develop machine tools. Although precision of independent research and development has not reached the best level, it is already at first-class level. The most important thing is to reduce price of machine injection molding to range that domestic toy and commodity manufacturers can afford.
Without technology, technology and equipment, design and production of Transformers was out of touch in Vietnam.
This point is also very clear to foreign manufacturers, quality not expected. Purpose of their choice to leave China is very clear, and cost of newly opened foundry is kept to a minimum.
It is no wonder that those Transformers who are not Chinese OEMs will have a few buckles, half of arms painted and half empty, two parts can not be combined and so on.
3, Level of management
Even more terrifying is level of management. There is a mold for new product at Vietnam factory, and an improved version of injection molding from Chinese manufacturer has already injection molding.
Among requirements for quality of toy products and environmental protection requirements in United States, United States is the most stringent and demanding. Manufacturers in southeast coast of China, especially in Chaoshan area of Guangdong, can perfectly meet demanding requirements of US customers.
And different resource endowments and industrial advantages formed by China’s vast territory make Transformers a sophisticated toy that can form a complete industrial chain from raw materials to batteries and flashlights. It is no wonder that Hasbro is so reluctant to give up China. After cost of southeast coast increased, Hasbro first thought of moving assembly link to Chinese mainland.
4,Workers’ enthusiasm for labor
Discipline of Chinese industrial workers who are hard-working and disciplined also unmatched by other countries. Toy industry is a labor-intensive industry, and it is greatly affected by season. Christmas orders come in July and August, and may work overtime until late at night and continue tomorrow morning. In off-season of November and December, it is 6 hours a day to work. I am afraid that no more workers in several countries can be as willing to make great efforts and time to invest in high-intensity overtime like China. If industry moved back to United States, are American workers willing to work like this?
5, Legal environment
What left of Hasbro is rule of law environment in which China continues to progress. Transformers, in addition to Hasbro and TAKARA are official, there are many third parties, they will also make red and blue color car people, but will not call Optimus Prime, so trying to cleverly avoid issue of intellectual property. What is more embarrassing is that quality of some third-party products in recent years has defeated creation of Hasbro.
6, Market environment
For this kind of third party, Hasbro sometimes closes one eye and sometimes appeals to court. At the end of last year, Dongguan People’s Court of Guangdong Province ruled that Hasbro won case in connection with alleged infringement. Incident shocked Western media, which represented Chinese government’s recognition of intellectual property protection.
At present, China is the world’s largest toy producer. More than 80% of toys in United States need to be imported from China. Toys originally enjoyed zero tariffs in United States. If toys included in tariff range, price of American toys will rise. It would still be American consumers to share cost.
China is still second-largest toy seller. As Europe is increasingly immersed in a younger age, growing middle class in China is straw that American toy industry must seize in an increasingly difficult situation.
It’s no wonder that when New York Times published an article that “Hasbro will move production line out of China to avoid trade war”, Hasbro immediately wrote a confession. CEO immediately clarified: We are still advising government and Congress. Tax increase is not possible. We will not move most of our business out of China. Please ask media not to send fake news.
In addition, there is news that Hasbro and CCTV co-produced “Transformers: Nezha” is about to be released, no matter what, Hasbro really does not want to move injection molding production from China.