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For nearly 20 years, China's 20,000 domestic factories have served as the elves of Santa Claus's workshop, exporting a remarkable 70 percent of the world's toys, worth nearly 16 billion dollars last year.
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But demand from China's increasingly flush middle class is creating a home market that is expected to grow at 40 percent a year and total about 12.5 billion dollars by 2010, according to consulting group chinaIRN.com.
"As income levels have risen, families have recognised the benefit of toys in a child's healthy development, sparking a swift rise" in the growth of the domestic market, it said in a 2006 report.
The potential for a toy boom at home comes as no surprise to Haixin Group, China's only listed toy group, which began adjusting its domestic marketing strategy for its four companies a couple of years ago.
"As competition has become fiercer, the profit margins in exports have fallen more," Ma Junxian, vice general manager of Haixin Group subsidiary Shanghai Haixin Toys