A Country Without Toys
By Jin Zhong
The financial crisis induced by Lehman Brothers’ collapse in the US is sweeping the world like a tsunami. How should China, in such a close economic partnership with the US, react to the crisis? How should the fact that the economy provides the basis for China’s political status be assessed? What economic trend does China face in the future? In this issue, we have invited five experts to analyze the current situation. Their well-written articles offer us an opportunity to explore current economic problems around the globe.??
The news headline “Guangdong Toy Giant Shutdown Panics the Industry” has caught considerable attention in recent news coverage. According to the media, 80 percent of the world’s toys are made in China, among which 70 percent are produced in Guangdong Province. Smart Union Group is a leading toy maker in the industry, with an annual sales volume of more than 700 million RMB, and 70 percent of its products are sold to the United States. It is reported that the company has debts of 200 million RMB and owes nearly 30 million RMB in wages to 8,700 workers. Following the closure of the companies factories, the owners disappeared… For the sake of social stability, the government has said it will compensate the workers for their lost wages. The collapse of Smart Union is thought to be the first case of Chinese enterprises going bankrupt amidst the US financial crisis.? ??
The owner of Smart Union is accused of malicious wage default and fraud. The totally irresponsible acts in this case are in fact typical of enterprises operated by mainland upstarts in the past three decades. The first half of this year saw the closure of more than 3,000 toy factories operated mainly for export. We still do not know how many workers will be cheated like those in Smart Union. Moreover, since the financial crisis has just begun and the consumption power of American families is expected to drastically decrease, we still do not know how many enterprises in China dependent on export to the US can survive the crisis. Import and export, domestic demand and investment, the three keys to China’s prosperity, are now threatened by the crisis. Import and export and investment will no doubt be affected, and even in domestic demand China faces a rocky road ahead.?
Interestingly, a survey of the toy market shows that China’s annual per capita consumption of toys is 15 RMB, whilst that of the US is US$349, 170 times China’s consumption! For children under 14, annual toy consumption in the US has reached US$287. The optimistic Chinese media maintain that China’s 300 million children form a huge potential market, and domestic sales should provide a way of avoiding the plight caused by the economic crisis. That may be mere wishful thinking.
Today, China’s toy consumption of toys accounts for only 3 percent of the world total. Per capita consumption of 15 RMB is merely the value of a lunch box. Given the uneven distribution of wealth, this means that for the vast majority of China’s children, toy consumption is virtually nil. What a shocking discovery! The children of a great rising power with skyscrapers, extravagant Olympics, arrogant nouveau riche, and the world’s largest foreign exchange reserves have no teddy bears, Snow White dolls or Christmas trees. China remains an anomaly in the world, even after opening its doors to the world for three decades. Peaceful family culture has been ruthlessly distorted by prosperity as men trifle with money, power and women and neglect their children. Meanwhile, on the other side of the great income divide, the majority of ordinary people continue to struggle for basic survival, leaving them little time or money for toys.
In the Mao era, privacy was destroyed so thoroughly that the people forgot their own birthdays. It is too late to construct a new civilization through a mere 30 years of economic reform. This is reality about China that toys—the token of children’s innocent minds—silently reveal to us.
28th October, 2008
Translated by Isabella Lam