Despite all the unfavorable factors, Guangdong's toy industry has maintained a bullish momentum.

"Sales and exports in 2006 can speak for the fact, so can the toy suppliers' number of registration for the upcoming international toy exhibition," said Li Zhuoming, vice-chairman of Guangdong Provincial Toy Association.

Citing the latest statistics, he said, Guangdong's toy industry realized sales turnover of 121.96 billion yuan in 2006, an increase of 13.8 percent from 2005.

The province's total toy exports were worth US$14.06 billion last year, a rise of 17.8 percent from 2005. Its exports made up 79 percent of the nation's total.

He said that the expansion of exhibition areas for the 19th Guangzhou International Toys and Gifts Fair, which will be held from April 9 to 11, also reflected the fact that the development of the toy industry in Guangdong is on right track.

The number of exhibitors is expected to soar by 40 percent at the upcoming fair and the exhibition space will cover 18,000 square meters as compared with 13,000 square meters in 2006, he said.

"If toy manufacturers had not done good business or had no confidence in the market prospect, they would not have registered for the exhibition for the big cost," he said.

Li dismissed rumors that toy factories in Guangdong have closed down and many key toy manufacturers have relocated their manufacturing plants in the Southeast Asian countries in the past one or two years.

"As far as I know, only very few toy factories closed down for their private reasons in 2006," he said. "We can not draw such a conclusion like a forest has collapsed from the few trees that have fallen."

Li also denied that the province's toy industry had shifted to the Southeast Asian countries.

"It is a fact that some toy makers in Guangdong have set up manufacturing facilities in the Southeast Asian countries in the past couple of years," he said. "It is also a fact that most of them have moved back to the province or have been considering moving back for the toy industry's heavy dependence on a well-developed industrial chain."

According to the vice-chairman, key toy manufacturers in the province have been resorting to independent innovations and have shifted production to technology-intensive toys to offset the negative factors including the rise of production costs, short supply of power, appreciation of the yuan, and the protection measures of the European Union and other foreign countries, against toys from China.

According to Liu Hanmin, an expert with Jinan University's business administration school, the strategy to increase capital input for toy R&D and more efforts for toy makers to build up their own brands for their products will be crucial for the future development of Guangdong's toy industry.

Liu said that he was upbeat about the analysis of the toy industry's development prospect in the province this year.

"The global market demand is expected to grow by 10 percent in 2007 and the burgeoning market in East Europe as well as the domestic one will beyond doubt intensify the demand for Guangdong's toy suppliers," he said.

Editor: Yan