Heading to Hong Kong 2009

January 2, 2009

I am getting ready for the Hong Kong toy show and, as last year, am excited to be going back to where, in so many ways, the toy year takes its shape. Hong Kong is where pricing begins to finalize, where decisions are made and trends are launched. This also where we get our first inklings as to the general health of Toy Nation.

This year is going to be particularly interesting as it will give us a first look at how business is going to be done under what are obviously very challenging economic conditions. Here are some of the issues I will be looking out for:

How are the Chinese manufacturers going to feel about extending credit this year? Between the challenge of getting credit and a wariness about financially distressed retailers and manufacturers, we may see companies looking more aggressively towards letters of credit and other vehicles that provide credit protection.
How did individual retailers and manufacturers finish out in 2008? We lost KB; will we be losing anyone else?
Are we going to see a surge in acquisitions and buyouts? There are going to be some struggling companies with good products that are going to be very tempting for those who have deep pockets.
Are prices coming down? Last year saw a breakout of inflation due to upward pressure on petroleum and labor costs. Those trends have dramatically shifted in the last few months so will we see a drop in prices? If so, how dramatic will it be?
What is the impact of the new safety laws and are toy companies making any changes to accommodate them?
How are toy industries doing in other parts of the world? I will be in Nuremberg in early February but hope to get some feedback from European companies who come to Hong Kong.
What kind of positions will retailers take on inventory? Will they again hedge their bets by asking US manufacturers to stage goods in America or will they take advantage of sharp price reductions and purchase large quantities on direct import?