We all have had a favorite toy growing up. It’s in children's nature to love things meant for playing. Children in Pakistan have long been getting joy from toys - the ones for entertainment only, or those that help kids develop cognitive abilities.
But, the current economic scenario and toy industry trends have greatly affected the number and the types of toys exported from and imported into Pakistan is badly influenced. The importance of the toy industry has never been taken seriously in Pakistan, although there is a big percentage of the population i.e, more than 34%, that falls in the age group of 0-15 years in Pakistan. This blog post will discuss the challenges for the toy industry in Pakistan, the current scenario and how things can be improved.
- The Enigma of the Domestic Toy Industry in Pakistan.
- What’s Trending in the Toy Industry Today?
- The Negative Impact of Inflation.
- Categories of Toys.
- Insights from Retailers and Wholesalers.
- Limited Variety of Toys.
- Impact of the Dragon Effect.
- Present Conditions of Toy Trading in Pakistan.
- Global Perspective of Toys Trade.
- Overly Charged Duties.
- Conclusion and Policy Recommendation.
The Enigma of the Domestic Toy Industry in Pakistan
Back in the 90s, the toy industry in Pakistan was booming, with local manufacturers of toys holding up to 75% of the market share. In this 75 percent market share held by local Pakistani manufacturers, there were three leading toy manufacturers and a few manufacturers in the unorganized sector.
However, on the one hand, most of the early and late 90s saw 75% of the share being held by local toy manufacturers, and the rest of the 25% was held by international players. Whereas, in 1998, things shifted towards a decline in the local industry.
1998 saw a whopping decline in Pakistan’s local toy market share of up to 40 percent as the Chinese toy importers gradually flooded the market. At this time, the Chinese importers captured a 90% market share for toys. The decline in market share resulted from the local manufacturers actively importing toys from Chinese manufacturers rather than manufacturing their own toys.
What’s Trending in the Toy Industry Today?
At present, there is no one major manufacturer of toys in Pakistan. But, only the small manufacturers in the unorganized sector produce toys within the price range of PKR 30 to PKR 100.
Whereas, when it comes to more expensive high-end toys, they are fully imported, with no local production. This can be substantiated by the fact that in 2020, Pakistan imported toys and video games, valuing more than USD 40 million.
Also, low-priced toys are mostly sold in the local markets, which fall under the price bracket of PKR 50 to PKR 1500. In local markets, one can rarely find slightly expensive toys, such as remote-assisted ones with chargeable batteries.
Among all the toy types, the cheapest is simple plastic toys. It is deplorable to see a nation with more than 34% very young population has not even a single major toy manufacturer.
The Negative Impact of Inflation
Due to unstable economic growth, an increase in inflation, and a decline in the nation's purchasing power, large swathes of society are unable to buy toys for children. The remote-assisted toys that used to cost a few hundred rupees now cost thousands of rupees - making it hard for the poor and lower-middle class people to buy their children such toys.
Therefore, they look for cheap alternatives, which are mostly outdated. This can be substantiated by the fact that 90% of the new innovative toys manufactured in the international market are never introduced in the Pakistani toy markets.
Categories of Toys
In the past decade, educational toys have increased in popularity, mostly bought for children aged 2 to 6 years. According to research done by Express Tribune, by economist Malik Zaman only a few international toy brands like hot wheels, Barbie and Disney are present in Pakistan.
But this is not it, as more new and popular brands have joined the bandwagon, such as Shopkins, Nerf Guns etc., but toys from these relatively new brands are unavailable in Pakistan. On top of this, the purchasers of expensive toys, i.e., toys ranging from PKR 2000 and above, are much fewer. Here are three main toy categories made internationally:
- Chargeable remote-controlled toys
- Toys powered by batteries
- Simple non-interactive plastic toys
Insights from Retailers and Wholesalers
According to a study by Iqra Tariq and Dr. Khalid Mustafa at the Trade Development Authority of Pakistan TDAP, the two main hubs of toy manufacture in Pakistan are Lahore and Karachi. Mainly, better quality toys are produced in Lahore.
Whereas, small and medium-sized toy producers prefer Karachi. However, the toys produced in Karachi are compromised in quality due to a lack of quality control and safety regulations.
Limited Variety of Toys
Pakistan’s toy industry is unable to produce a distinctive variety of toys. And a few of the businesses that do manufacture toys are known for making very basic types such as plush toys, dolls, tableware and some other types of basic toys.
This situation has created a big gap between the Pakistani and international toys market. Comparatively, the international toy industry continues to produce high-quality and technologically advanced toys with a flair of innovation. Sadly, Pakistan is not yet ready to catch up and keep pace with international players.
Impact of the Dragon Effect
The ‘Dragon Effect’ has literally stormed the toy market in Pakistan. As mentioned above, more than 80% of toys in the Pakistani market are Chinese-made. It is because Pakistani toy vendors prefer to import Chinese toys as these are less costly and offer a wide variety - known as the dragon effect.
Present Conditions of Toy Trading in Pakistan
The research done by TDAP also suggested that the different varieties of toy items exported by Pakistan in 2020 had an accumulative value of more than USD 178 million. This value is expected to increase gradually but slowly from 2023 onwards. Here are the most popular types of toys being exported by Pakistan:
- Plastic and metal scooters
- Pedal-driven vehicles
- Certain types of wheel toys
- Dolls and some other sorts of toys
Global Perspective of Toys Trade
On a global level, China is the biggest exporter of toys, with a valuation of USD 28 million. After this, the second largest producers are the Czech Republic and Hongkong, with an export value of more than USD 2000 million. On the other hand, the biggest importing countries of toys are the United States, France, the United Kingdom and Japan.
Overly Charged Duties
Now when we talk about Pakistan’s duty charges, Pakistan has forced a duty of ten percent on the tricycles it imports from China, although a single tricycle from China costs around USD 12. Also, the imported tricycles from the United States come at an imposed duty of thirteen percent, whereas the price of the same imported tricycle is around USD 10 in the United States.
Conclusion and Policy Recommendation
The above discussion shows how and why the whole toy industry of Pakistan is so disorganized. The situation has deteriorated further as some small and medium-sized toy makers produce substandard toys. There is no dividing line between the organized and unorganized portions of the toy market. The small and medium-sized sectors are making toys for the lowest end of the market only - which means toys ranging from PKR 50 to PKR 100.
To make the situation better, here are a few recommendations to take a jumpstart toward betterment in year 2023 to 2030:
- The government should find and locate areas in toy manufacturization where an investment can be made. The goal should be to fulfill the local need for toy supplies currently being fulfilled by the overwhelming Chinese imports.
- To boost local toy manufacturization, the toy sector can import advanced tools and machinery from the east-Asian countries like South Korea and Japan.
- Fostering a quality control regime is important for boosting domestic toy manufacturing.
Although there is high demand for toys in Pakistan i.e., more than 34% of the population’s age is 0 to 15. Still, more than 80% of Pakistan’s toy market has Chinese toys due to the dragon effect. And the government continues to ignore the toy sector, which has worsened the situation.