Follow the Money: The journey of a $30 toy from China to America

Sam Fenwick (0:04)

I'm in a toy shop and I'm holding a box of brightly colored plastic. Now if you turn it over, you'll always find the same three words, made in China. This same box is on the shelf in Lagos, in Manila, in Sao Paulo and San Francisco, where it sells for around $30.

About a third of the world's toys come out of one corner of one Chinese province. Most of us think we know the reason for that is cheap labour. But that changed about three decades ago.

I'm Sam Fenwick. This is Business Daily from the BBC World Service. And on Follow the Money this week, you paid $30 for a toy. Where did the money actually go?

On Thursday, China's President Xi Jinping is expected to arrive in Washington for meetings with Donald Trump. Unsurprisingly, trade and tariffs will be top of the agenda. This year's Christmas toys are already on their way to the shops. So whatever those two men agree, it's too late to change the price of what's inside those shipping containers. Nearly eight in every ten toys imported into the United States comes from China. And for Christmas goods, that percentage is even higher, around 85 percent. Which is why when the tariffs came in last year, the American president had an answer for everyone worried about the toy in the aisle.

Jay Foreman (1:31)

Somebody said, oh, the shelves are going to be open.

Sam Fenwick (1:33)

Well, maybe the children will have two dolls instead of 30 dolls.

Jay Foreman (1:38)

And maybe the two dolls will cost a couple of bucks more than they would normally.

Sam Fenwick (1:42)

Fewer dolls. Try explaining that to a toddler on Christmas morning. The toy industry threw its toys out of the pram. One toy maker took the government to court over the tariffs and won.

But it didn't stop the toys from arriving at US ports. What it did do was change the price of them. There are four links in a toy's journey to a child. The factory in southern China that makes it, the ship and the border it crosses, the brand that puts it on the shelf, and the ever changing tariffs imposed by the White House and challenged by the industry.

Our chain starts in a place most of us have never heard of.

This is Dongguan in Guangdong province in southern China. Here workers are popping little plastic figures, what look like pigs, out of a mold. Thousands of them are being placed into big crates ready for painting. The factory is run by MyHawks. It makes plastic toys. Some have got electronics inside them. And according to them, about half of their customers are American, while 30% are Japanese. I spoke to its founder, Stella Yan, on a video call. Behind her is a cabinet full of their toys. Melanie Wang from her sales team did the talking.

Melanie Wang (3:03)

After we've gotten requests from our customer, we get design from them. We can make the 3D drawing for them. And after confirm our drawings, then we will make the prototype for them. And we will ship in this prototype to them to confirm it. And we will make a mold for the toys.

And after confirm it, we will production these toys for our customers.

Sam Fenwick (3:31)

The mold is a steel tool that the hot plastic is forced into. Every part of a toy needs its own mold. Melanie grabs a small light up wand from the cabinet behind her. That alone needs six molds.

Melanie Wang (3:46)

The lead time is about one month for injection mold.

Sam Fenwick (3:50)

That's just the mold. So how long from someone's idea to make a toy that is then sold in the shops?

Melanie Wang (3:58)

And this is about one to two years. They modified the design again, again and again to improve it.

Once they confirm the design, it will mold very quickly. It's about three months to make the mold and the production. And the shipping time is about one month.

Sam Fenwick (4:19)

So it takes well over two years to design and manufacture one small toy. I asked Melanie how much of the shop price the factory actually gets.

Melanie Wang (4:29)

It's about 20 percent. The cost is about 20 percent.

Sam Fenwick (4:34)

Of the retail price.

Melanie Wang (4:35)

Yes.

Sam Fenwick (4:37)

MyHawks is a large business. It employs more than 800 people. It says it makes around 55 million toys a year for the US market. And its base in Guangdong is known as China's toy province.

Sam Sin-Kou is president of the Toy Manufacturers Association of Hong Kong. Many of his members moved their factories across the border into mainland China in the 1980s for lower labour costs and land costs. He says they've not changed much since then.