Bandai Builds Philippines Factory
Bandai recently announced they will build a new factory in the Philippines. Here’s the release:
The question mooted by some is whether this is the start of a trend away from China?
So I thought I’d proffer my opinion on this. Starting firstly with China…
And here’s the thing about China, yes it may have seen rising costs and inflation in recent years, and yes that may have lead to price inflation for many Toy companies, which in turn has lead to ‘friction’ (to put it mildly) between suppliers and retailers.
However, the reality is that speaking right here, right now, there is just nowhere in the world that compares to China for the following reasons:
- Massive population.
- High proportion of less well off people.
- Sheer scale of factories – when the downturn hit I remember reading that 100,000 factories in China were closed due to low or no work. That wasn’t every factory in China, that was just the ones that closed!
- Established trading patterns.
- Established excellence/competence.
- Established and much visited trade shows.
The reality is that China as a manufacturing hub is not going away, far from it. Because as hundreds of millions of Chinese people build their own wealth and escape from factory employment, there will still be over a Billion more in need of all and any work available.
I’ll leave the debate about ethics to one side, as there are certainly points to discuss there, but the reality is that there is no alternative when you look at the macro picture. If China suddenly stopped manufacturing Toys tomorrow, there is no obvious and easy alternative. Costs would rise. Capacity would be a major issue for years.
The reality is that while there is likely to be a trend towards less developed countries over the next decade or two, China is still going to be the source of the majority of Toy products for the forseeable future in my opinion.
So that’s the macro picture. On the micro scale, for sure companies are looking at alternative manufacturing locations, and if yours isn’t perhaps you should question that. There are several obvious candidates – South East Asia has numerous countries likely to grow their manufacturing base over the next decade or two. Companies are seeking a). competitive advantage and b). to reduce the risk of sourcing from one location/region.
As far as the Philippines is concerned, there are several advantages they have over there. Firstly there population, while dwarfed by China’s is still a very weighty 95m. They have anywhere from a reasonable to an excellent level of English language in general, and they are also used to using the $USD as a working currency.
The challenge they have is they don’t have the established excellence and competence en masse compared to China, but there’s no doubt that they could easily build that over time.
So I would say that sourcing in the Philippines is going to be a growing trend, and we will see others join Bandai, if not in establishing their own factories, at least in terms of sourcing more products there.
If you need help finding good, reliable, cost effective manufacturing, please feel free to drop me a line, I work with dozens of factory across China and the world, and have helped numerous companies save costs / increase reliability. My email is firstname.lastname@example.org
Finally, one other opportunity the Philippines provides is a fantastic array of skilled virtual workers. Speaking from personal experience, I have had Web design, Graphic Design inc. packaging, admin support and even technical services such as CAD design done via the Philippines at a fractional cost versus what I would pay otherwise. If you haven’t investigated this opportunity I believe you may be spending more money across your business functions than you need to!
All the best
P.S. I have a Free guide on Top mistakes Toy Companies make which you can download from here: