What Japan in the 1950’s, Hong Kong in the 1970’s and China today have in common

Japan, Hong Kong and now China have each taken their place as the low cost manufacturing center for the world’s toy companies. As the authors of “Japan, the U.S. and the Globalization of Children’s Consumer Culture” tell us: Chinese manufacturing firms today, like those in 1970’s Hong Kong and 1950’s Japan, occupy what some call a “sweet spot” within the world economy, combining a capable workforce with low wages, and a concentration of capital. . .”

In other words, the Chinese toy manufacturing juggernaut is not an unrepeatable historic accident but part of the normal economic cycle of developing countries. Some of us are old enough to remember when “Made in Japan” meant that a product was cheaply made. More of us remember when British Hong Kong was the toy industry manufacturing center (in those days the factories actually were in Hong Kong) but missed the significance of the factories moving out of Hong Kong and over the border into what was then commonly called Communist China.

What happened in Japan and Hong Kong, and is happening now in China, is the natural progression of a country becoming industrialized and affluent enough to the point that is no longer finds producing toys to be attractive.   It wants to move up the value chain to producing more complex products like cars and computers.

So is history about to repeat itself? I think the answer is yes and no. Yes because China is already moving up the supply chain and some other country (ies) are going to be taking that mantle on. No, because there does not appear to be any one country with the combination of population and infrastructure that can match that of China. 

So, if China is ready to move on from toy manufacturing and there is no obvious heir apparent, what is going to happen? That will be in my next blog.