Graeme Bissett of Tech4Kids.Kevin Van Paassen/The Globe and Mail
Getting a foothold in the Chinese toy market is tough, even when you already make your products at factories in China.
Just ask Tech 4 Kids Inc. The company, which is based in Mississauga, designs its toy line, which includes soft, light-up toys that it combines with a licence for the popular Despicable Me minions and My Little Pony characters, in Canada. But it actually manufactures them in China.
Originally founded in Red Deer, Alta., the company only distributed toys until it switched to manufacturing them in 2006. It has about 50 employees in Canada and China.
Despite shipping products around the world since then, the firm was able to secure a deal to actually enter the Chinese toy market only six months ago.
"It's very difficult to enter," said Graeme Bissett, the company's international sales manager, who blames strict testing regulations and a "decentralized" retail market in China for the trouble.
To enter the Chinese market, companies selling certain products, including medical devices, audio and video equipment and toys, need to receive a Chinese-issued certification. This includes product testing by a laboratory in China, and factory inspections by certified personnel, according to the Canadian Trade Commissioner Service's website.
To prepare for all of this, Mr. Bissett says the company had to "get internal processes to the point where we could actually handle and successfully go through all of those testing procedures."
Tech 4 Kids also needed to find a Chinese partner to help it tackle the market. Unlike Canada, where large retail chains such as Wal-Mart and Toys R Us dominate markets nationally, in China, stores are regional, with few chains.
"You need a partner who is hungry enough to go out into those different regions, get products placed and meet with customers to sell products," he said. "We've met with so many distributors in China over the years, but hadn't been able to find that right partner."
It was one of the company's toy-industry contacts, a Canadian resident who was born in China, who found the partner Tech 4 Kids was looking for.
Jacqueline Vong, who had connections in China, connected the company with its distributor, King Bee Toys. Ms. Vong has since relocated to China and works with King Bee Toys.
Despite the hurdles the company had to tackle to get into the Chinese market, Mr. Bissett says he is confident the launch into China will be successful. Tech 4 Kids has already shipped just under 200,000 toys into China, and is planning a second instalment of shipments next month.
"We do a lot of business in Europe, Latin America, and used to do a lot in [the former Soviet Union] Commonwealth of Independent States, and all of them right now … are in very difficult situations from an economic and currency standpoint," he said.
"I'd say that right now China is the No. 1 market that has shown huge growth, outside of the U.S."