The escalating trade war with China is creating uncertainty for the global toy industry, with tariffs on toys, if they are implemented, potentially affecting the profitability of manufactured-in-China playthings in the U.S. market. But that isn’t stopping Western entertainment and toy companies from continuing to make inroads into the Chinese market by forging distribution, co-production, master toy licensee, and agency representation deals with Chinese companies.
Some of the toy-focused agreements of each type announced in 2017 and 2018 have included:
- Distribution deals. Spin Master entered into a strategic partnership this month with Alibaba in China, with plans to create a digital presence for the Spin Master brand and the company’s various toy lines, many of which are strong licensed properties. Alibaba and Mattel have had a similar agreement in place since 2017, with Alibaba selling Mattel products on its Tmall site and helping the latter develop tech-based toys and educational resources for the Chinese market. Previously, Spin Master paired with Toys ‘R’ Us (which is still in business in China), as well as a variety of department stores and ecommerce companies including Tmall and Jingdong (JD.com), to bring Hatchimals and Paw Patrol to the market.
- Co-production deals. Jazwares formed a strategic partnership with WeKids Asia, an animation distributor and brand manager. The two companies intend to collaborate on new toy and media properties for distribution in China and globally. WeKids is also distributing some of Jazwares’ licensed toy lines in China, starting with Hotel Transylvania-branded products.
- Master licensing deals. Benlai Pictures licensed The Alpha Group as its Chinese partner for the preschool TV series Super Builders. Alpha will serve as the master toy licensee and as a co-investor and co-producer of the TV show. Both TV and toys are set for a fall 2019 debut. Alpha Group also is working with Entertainment One as the master toy licensee for PJ Masks, as well as with DHX for a new series called Rev & Roll, for which it will serve as global master toy licensee as well as a co-producer, and the rebooted preschool property Teletubbies, for which it is the master toy licensee. Separately, ITV named Hengxin Shambala Kids (HSK) as its master toy licensee for Robozuna in China.
- Agency representation deals. Outfit7 partnered with Alibaba this month in a strategic agreement that will see the latter represent Talking Tom and Friends’ licensing interests in China. Alibaba’s mandate includes developing licensed products, facilitating distribution of the products through its ecommerce network, and supporting the brand with marketing activities. Chinese content creator and distributor Zhejian Jinke Culture has owned Outfit7 since 2017.
Note that many of these examples cross over into more than one of these deal types, as licensing, distribution, animation production, and other tasks go hand in hand and are often integrated into a single partnership agreement.
Read a past post about how other Western entertainment/character and toy companies have been entering China, here.
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