Overview of the Journey of a Toy from China to US Retailers

China is the world's largest toymaker, producing the majority of toys on sale in the US. Nearly eight in 10 toys (78.3%) imported into the country in 2024 came from China, according to US government figures. Last year, toys imported from China were worth $9.8 billion. With Christmas approaching, the toy industry in the US is preparing for its busiest time of the year. The BBC World Service's Follow the Money series examines how a toy gets from a factory in China to the US and where the money goes. Guangdong province, which neighbors Hong Kong, is the heart of China's toy manufacturing industry. In Dongguan, workers at the Mihox factory produce plastic toys, preparing them for painting. The factory employs over 800 people and manufactures around 55 million toys annually for the American market, which constitutes half of its business. The process begins with a design from an American toy company, followed by the creation of a prototype and molds for production. The entire process from idea to finished product can take one to two years, with significant time spent on design modifications. Once approved, mold creation takes about a month, and production lasts approximately three months. The factory receives about 20% of the retail price, which is $6 for a $30 toy. Chinese factories typically earn a profit margin of 3% to 10%. Samson Ko, president of the Toys Manufacturers' Association of Hong Kong, notes that many factories moved to mainland China in the 1980s for cheaper labor and land. Despite rising costs, fewer than 10% of his members have relocated production outside China, primarily due to customer requests. The manufacturing process often requires multiple steps across different facilities, which are conveniently located in Guangdong. After production, toys are transported by truck to ports like Shenzhen, the largest in Guangdong. Ivy Tse, co-founder of FreightAmigo, states that shipping takes about 15 days to the US west coast and 25 to 30 days to the east coast. Freight costs typically add about 10% to the manufacturing cost. Currently, there is a tariff on Chinese toys that must be paid to US Customs and Border Protection. Following recent discussions between US and Chinese leaders, lower tariffs have been recommended, but no new rates have been established. The basic tariff rate is 12.5%, charged on the manufacturing price, which amounts to 75 cents for a $30 toy. This tariff is paid by the importing American company. Rick Woldenberg, CEO of Learning Resources, confirms that his company pays all tariffs. The total cost of producing, shipping, and importing the toy is $7.35, leaving $22.65, or 75.5%, in the US. This amount remains with the US transportation company, the retailer, and the toy company. If $2.65 is allocated for the delivery firm, the toy company and retailer typically share the remaining revenue equally, resulting in approximately $10 each. Industry studies indicate that both the toy firm and retailer can achieve profit margins of up to 25%. The process of getting a toy onto US shelves involves considerable effort and a lengthy journey.