MGA Entertainment is accelerating its manufacturing away from China as it reshapes production amid President Donald Trump’s intensifying trade war with the country according to a Reuters exclusive. Mattel and others are moving in the same direction.
US-based MGA makes its Bratz and L.O.L. Surprise! dolls and other toys primarily in China and is taking steps to move 40% of its manufacturing to India, Vietnam and Indonesia within six or so months, up from around 10% to 15% currently according to CEO Isaac Larian.
Wholesale prices on China-made products may have to increase in order to protect MGA’s already-thin profit margins.
Isaac Larian, said: “It’s going to hurt the consumer because we have to pass the extra cost to the retailer.”
“It’s going to hurt the consumer because we have to pass the extra cost to the retailer”
Mattel is also working to ensure that each of the countries where it produces toys and games makes up less than 25% of its global manufacturing. China currently makes up less than 40%. Less than 10% comes from Mexico, which is also facing tariffs.
Mattel CEO, Ynon Kreiz, said: “We used to have four factories that we owned in China. By the end of the year, it will be down to one.” Mattel’s supply chain diversification strategy began in 2018.
Hasbro stated that tariffs on China is a risk to its business in its annual report filed last month.
Greg Ahearn, CEO of the US Toy Association, said that higher prices will likely be seen on retailers’ shelves before long, adding that 20% tariffs will likely mean as much as 20% price hikes. Chinese factories currently manufacture about 77% of US toys, according to the Toy Association.
