| March 10
March 10 Mattel Inc is doubling down to
corner a bigger share of China's fragmented yet lucrative toy
market, but the success of its efforts hinges on its ability to
navigate strict regulation and adapt to local preferences.
The maker of Barbie dolls struck deals with Chinese
e-commerce giant Alibaba Group Holding Ltd and online
content developer BabyTree last month to sell interactive
learning products based on its Fisher-Price toys.
The deals mark a shift for Mattel, which has built its
business selling Barbie and Ken dolls in brick-and-mortar
stores, and highlight the pressures U.S. firms face as they try
to expand in new markets with sales stagnating back home.
Alibaba's reach and China's preoccupation with education
could give Mattel the thrust it needs to win over the country's
so-called "tiger mothers", who aggressively push their children
to be the best in school.
"Chinese parents tend to buy more educational toys, science
kits and learning toys than all their counterparts in America
and Europe," said Shaun Rein, managing director of China Market
While Mattel has garnered a nearly 2 percent share of the
estimated $31.5 billion toys and games market in China, it has
been unable to replicate the success it has enjoyed in the
The company's inability to gain a firmer foothold in the
Chinese market is in contrast to the brisk pace of growth in the
country's toy market since 2010.
China's toys and games sector expanded about 10 percent
between 2010 and 2015, compared with a meager 1.7 percent
increase in the United States, according to market research firm
Market leader Guangdong Alpha Animation & Culture Co Ltd
held 4.4 percent of the market in 2015, while Danish toymaker
Lego commands a 2.8 percent share.
Mattel opened shop in China in 2002, selling Barbie dolls in
regional stores, and later introduced Ling, a Barbie with black
hair and traditional Chinese attire.
An aggressive push to expand in 2009 by launching a 36,000
square feet "House of Barbie" store in Shanghai, the world's
largest at the time, backfired due to high costs and low sales.
The company shuttered the store after just two years in
The setback proved that Chinese customers preferred
tailor-made products and their buying decisions were not always
"Some of the partnership push is also done to make sure that
they understand right and better cater to that market," said UBS
Securities analyst Arpiné Kocharyan.
Mattel's new strategy reflects an acknowledgement of the
fact that one size does not fit all, especially in China where
one in every five customers prefers to shop for toys online
rather than in hypermarkets and toy stores.
Regulation is another stumbling block - getting approvals
for educational content is difficult in China, where government
censorship is high.
Mattel isn't the only U.S. company that has struggled to
navigate the Chinese market.
Wal-Mart Stores Inc sold its online grocery store
Yihaodian in China last year in return for a stake in e-commerce
firm JD.com Inc, saying the country's e-commerce market
was hyper competitive.
Several others including Home Depot Inc, Hershey Co
and Costco Wholesale Corp have also struggled
For now, nearly everything is riding on Mattel's partnership
"It is just one of a hundred initiatives for (Alibaba),"
said Rein. "But for Mattel, it is really do or die."
(Reporting by Gayathree Ganesan and Siddharth Cavale;
additional reporting by Sruthi Ramakrishnan; Editing by
Sayantani Ghosh and Saumyadeb Chakrabarty)