Mattel second-quarter profit falls 50 percent

Jul,2008

Mattel Inc.´s second-quarter profits fell by nearly 50 percent from a year ago, as higher costs related to the ongoing Bratz trial and lawsuits from the 21 million toys it recalled last year offset strong sales of toys related to summer movies like "Kung Fu Panda" and the latest Batman film. Those expenses cost Mattel US$25 million in the quarter, of which two-thirds was tied to the Bratz trial.

Mattel, which makes Barbie, Hot Wheels and Fisher-Price toys, said quarterly profit dropped 48 percent to US$11.8 million, or 3 cents per share, from US$22.8 million, or 6 cents per share, a year ago. Revenue rose 11 percent to US$1.11 billion, including a 15 percent rise in international sales that came mainly from the benefit of a weaker dollar. U.S. sales grew just 3 percent.

"Although the second quarter, like the first, is relatively small for us, we are pleased to generate some positive top-line momentum and see clean retail inventory levels as we enter the second half," Mattel chairman and chief executive Robert A. Eckert said in a conference call with investors.

Barbie continued as a weak spot for Mattel, as global sales fell 6 percent, while U.S. sales slumped 21%. However, entertainment business rose 14% from a year ago, helped by toys tied to this summer's Batman, Speed Racer and Kung Fu Panda movies. Products tied to "Kit Kittridge: An American Girl" also performed well, ahead of its opening this month.

Higher costs continued to hamper Mattel´s results. Selling, general and administrative expenses increased 16 percent to US$347.9 million. About US$25 million of the increase came from higher litigation fees related to its copyright infringement lawsuit against MGA Entertainment Inc., which makes Bratz, and product recalls. Increased oil and shipping costs also weighed on its profit margin.

The company expects to see more benefit from the June price increases later this year. Another bright spot will likely be the debut around Oct. 14 of the Elmo Live toy, which can speak and move around.

Video-downloading available for Sony´s PS3

Jul,2008

In an attempt to broaden its audience and grab a piece of the growing content-downloading market, Sony Corp. began a video-downloading service for its PlayStation 3 videogame console from mid July.

The video service would allow users to rent or buy movies and rent television shows produced by major studios - including Warner Bros. and Sony Pictures - and watch them on TV sets through its PlayStation Network in the U.S.

Sony is facing stiff competition from rivals such as Microsoft Corp. and Apple Inc., as they are already a step ahead in providing video-downloading service. Microsoft announced on 14 July a deal with Netflix inc. to stream movies from the Internet to the Xbox game console.

Sony hopes to outweigh its competitors by letting users to view the programs they have purchased on TV sets, in addition to their hand-held PlayStation Portable devices. The new service is estimated to generate US$5.3 billion revenue by 2010 and US$12.4 billion by the end of 2012 in the U.S, according to Park Associates, a market-research and consulting firm.

The new movie down-load service will be a test of how well the company has been able to move towards integrating software, services and content in a way to appeal to customers, away from its traditional hardware-oriented mind-set.

TV-show rentals will cost US$1.99 per episode and movie rentals will cost US$2.99 to US$5.99, according to Sony. Movie purchases will start at US$9.99. Some of the programming will be viewable in high definition.

Microsoft & Sony to woo casual players with new videogames

Jul,2008

Microsoft Corp. and Sony Corp., two of the leading companies in the videogame-console business, are announcing new games and services that target at casual players as never before - in an attempt to regain the market shares that have been gradually bitten by their mutual rival - Nintendo Co.

Nintendo Co. has gained stunning market success with the launch of its Wii system two years ago, a console which targets at causal games players. The machine´s emphasis on intuitive games through its motor-sensing controller had transcended the industry convention, which focuses on pricey and hyper-realistic graphics.

The groundbreaking has achieved record-high sales figures, outselling its major competitors like Sony and Microsoft on a monthly basis. "We are at an inflection point in our business where we´ve secured the core and now we´re reaching out to mainstream audiences," said David Hufford, senior director for Microsoft´s Xbox 360 business.

In order to capture more casual game players in the market, Microsoft and Sony showcased an array of interesting titles that bore little resemblance to shooters, sports and other staple genres of the games business.

One of the new games introduced by Microsoft is You´re In The Movies. With an installed video camera, it records players as they jog in place, shriek in fright and act out other behaviours. A video will then be produced by the collage of the different bodily movements recorded, showing the players running from game monsters. Lips is another game by the company to enter the increasingly popular music-game market. Users can sing along to the lyrics of songs with a microphone that comes with the game, including tunes that they upload to Xbox from their iPods.

Sony, Microsoft´s major competitor, also hopes to attract more casual audience by releasing a new game called Little Big Planet, in which users can control customisable characters to jump, grab and move objects to complete puzzles. A special feature of this game is that users can customise the environment in various levels and share them with other players via the PlayStation 3´s online network.

Meanwhile, Nintendo continues its push in the market by releasing Wii Motion Plus, which is a new accessory for its Wii game system. The device is to be attached to the existing motion-sensing controller to generate greater responsiveness and precision in tracking players´ hand movements. It will enable the slightest movements of the wrist and arm to be projected on the screen. Following the popular Wii Fit physical-fitness game, the company is going to release Wii Music, aimed at attracting causal game players. Game users are able to simulate conducting an orchestra or play certain instruments, such as drums, by swinging the controller.

A stiff battle among these three video-game giants is coming on its way. And the consumers are always to benefit from a large battlefield of new games and services.

A Hello Kitty theme park mulled for HK

Jul,2008

Sanrio, a Japanese entertainment giant, would like to build a Hello Kitty theme park in Hong Kong. It would be the world´s third and the first outside Japan if that realises. The two existing Hello Kitty theme parks are Puroland in Tokyo and Harmonyland in Kyushu. Over the past seven years, the company had at least three on-off discussions with potential investors. However, due to the lack of a site and an agreeable business mode, the talks had come to nothing.

"The Hong Kong market is small but dynamic," said Caroline Tsang Shui-kwan, deputy general manager of Sanrio Wave Hong Kong. "If we were to build a Hello Kitty Land here, we would modify it to meet Hong Kong tastes, not duplicate another Disneyland," added Ms. Tsang. Realising Hong Kong Disney and Ocean Park each has its own special features, with the former´s focus on rides and the latter´s emphasis on animals and educations, "a Hello Kitty Land needs to be different and may be more show-oriented like in Japan," Tsang said.

In order for this multibillion project to be launched, the company would need the government and the investors´ financial backing. However, this does not seem feasible at the moment, as the HKSAR government is having other priorities such as the new cruise terminal, a spokesman for the Commerce and Economic Development Bureau remarked. It is also reported that the government would not take an active role in pushing for the theme park, though there is room for discussion if Sanrio steps up to seek government cooperation.

The not-so-enough brand appeal of Hello Kitty may also be a factor in holding back the feasibility of launching this theme park in Hong Kong. "Disney is a global brand but Hello Kitty is only Japanese. It cannot be an anchor attraction like Disneyland or Ocean Park," said Paul Leung Yiu-Lam, the Inbound Travel Association chairman.

Price cut for Microsoft Xbox 360 Pro

Jul,2008

Microsoft Corp. was cutting the price on its US$349 Xbox 360 Pro, a mid-price version of the game console that comes with a 20-gigabayte hard drive, to US$299. The price drop was reportedly an attempt to boost the sales of the product in the face of stronger competition from rival Sony Corp.

Meanwhile, Microsoft also announced a price cut on an Xbox 360 console with triple the storage space of the original console, to US$349. The company said the console would be available in retail stores in the U.S., and Canada in early August. The price reduction on the existing model is scheduled to arrive before the opening of next week´s E3 conference in Los Angeles, which the video-game industry uses to show off its coming products before the holiday season.

Despite the gloomy economy, the industry is blooming with one of the strongest sales periods as a range of popular titles such as Grand Theft Auto IV, Guitar Hero and Wii Fit continue to perform well. According to NPD Group Inc., U.S. sales of game software in May soared 41% to US$537 million.

However, Microsoft is still facing increasingly strong competition from Sony. The Japanese electronics giant, which suffered several delays and initial poor sales of its PlayStation 3 console, came back much stronger this year as the PS3 began to pick up momentum - following a price drop on the machine last year and an enhancement of the game system. The PS3, which prices at US$399, also benefited from Sony´s cutting-edge invention of a new optical-disc format - Blu-ray to allow high-definition graphics.

Microsoft has seen tough competition from Sony in recent months as the latter has either beat or nearly tied it in monthly console sales in the U.S. 209,000 PS3s were sold last month, compared with 187,000 Xbox 360s, according to NPD.

Ben Schachter, an analyst at UBS Securities, commented that the price drop for the Xbox 360 is a natural progression of price drops for game consoles in the market. However, he added that Sony´s strength was also likely a reason for the cut. "For the back half of this year, a lot of people, myself included, think Sony has a better lineup of exclusive items," Mr. Schachter said. "Sony clearly has more momentum." The two companies, meanwhile, are outweighed by the monthly sales of a third rival, Nintendo Co., which sold 675,000 Wii consoles last month, NPD said.

In spite of the fierce rivalry, the three companies have different target markets. On one hand, Sony and Microsoft produce machines that emphasise sophisticated graphics and online play targeted at a more hard-core gaming audience; thus they are regarded as direct competitors in the console business market. On the other hand, Nintendo has aimed at more-casual players with Wii, which is characterised by its motion-sensing controller and simpler graphics.

Lego to relocate outsourced production

Jul,2008

The Lego Group said in early July that it was moving its production largely in-house, announcing a plan to end its 3-year-old outsourcing relationship with Singapore-based Flextronics by early 2009.

As part of its plan, Lego is in discussions to assume management of Flextronics´ facilities in Juárez, Mexico, and Nyíregyháza, Hungary, a deal it hopes to have completed by the end of July. Ultimately, the company´s plan would move production of toys for US distribution from Juárez to a new site in Monterrey, Mexico, in early 2009.

"We have had an intensive and very valuable cooperation with Flextronics on the relocation of major parts of our production. As expected this transition has been complicated but, throughout the process we have maintained our high quality level," said Iqbal Padda, Lego´s executive vice president in charge of the company's global supply chain. "Jointly, we have now come to the conclusion that it is more optimal for the Lego Group to manage [its] global manufacturing set up. With this decision the Lego supply chain will be developed faster through going for the best, leanest and highest quality solution at all times."

In addition to Flextronics´ sites in Mexico and Hungary, Lego has factories of its own in Billund, Denmark, and Kladno, Czech Republic, and cooperates with other manufacturing suppliers in Poland, Hungary and China. After the change in the production relationship with Flextronics, the LEGO Group will have a total of about 6,500 employees.

Enesco acquires toymaker Gund

Jul,2008

Renowned US-based company Enesco LLC, a producer of giftware, and home and garden décor products in Itasca, Ill, announced that it added stuffed animal maker Gund, to its growing portfolio. Terms of the deal were not disclosed.

Bruce Raiffe, chairman and CEO of NJ-based Gund, said in a statement that it was difficult to sell a business that has been in his family for 110 years, but Enesco "will continue to be very successful with Gund as it builds upon our strong heritage."

Mr. Raiffe would retire immediately from Gund and take a seat on Enesco's board of directors. Matt Bousquette, Enesco's chairman, would add the role of chairman and CEO for Gund.

Gund now joins Boyds Collection, Our Name is Mud and Jubilee Art — collectible manufacturers that have been recently acquired by Enesco, a giftware and décor seller.

The Gund acquisition is Itasca-based Enesco's largest deal to date.

"We continue to focus on building Enesco´s portfolio of strong consumer-driven brands and look forward to the addition of more great artists and brands to the Enesco family in future," said Mr. Bousquette in the statement.

Toys 'R' Us ready for a full launch of 'Clone Wars'

Jul,2008

Toys "R" Us revealed in early July that it would create "the ultimate Star Wars destination" in its US stores and on its website to mark next month´s theatrical release of Lucasfilm´s animated feature, Star Wars: The Clone Wars.

Promotional events would take place this month with the installation of countdown clocks in every store, ticking toward the midnight 26th July launch of toys, construction sets, role-play accessories and other products based on the property, which would bow on 15 August.

"Our partnership with Lucasfilm will bring Star Wars: The Clone Wars to life with stunning in-store boutiques, an unparalleled assortment of products and exclusives, and up-to-the-minute countdowns to Star Wars excitement throughout the year," said Greg Ahearn, senior vice president of marketing and e-commerce for Toys "R" Us, the US.

The biggest celebrations would take place at Toys "R" Us Times Square and Toys "R" Us Mission Bay in San Diego, where Star Wars aficionados would be encouraged to come dressed as their favourite characters and take part in a "Cloned Costume Contest." Star Wars enthusiasts attending these two events would also be treated to trivia, games and prizes. As an added bonus, customers who purchase Star Wars merchandise at any Toys "R" Us store during the midnight events would have the chance to receive special gifts, including a Star Wars Holographic General Grievous action figure from Hasbro or a Lego reversible poster.

To help prepare for The Clone Wars, www.Toysrus.com/StarWars would become a Star Wars hub, offering Star Wars: The Clone Wars content and the movie trailer for Star Wars: The Clone Wars.

Toys "R" Us would also offer four exclusive SKUs: Lego versions of The Twilight, the powerful but temperamental starship piloted by Anakin Skywalker, and a Separatist Spider Droid, a spider-like machine the story´s Separatists unleash against the Republic´s forces; and from Hasbro, 3¾-inch versions of a T.I.E. Fighter and STAP Attack Battle Packs, a set featuring two STAP (Single Trooper Aerial Platform) vehicles, two Battle Droids and one Super Battle Droid.

Nintendo DS serves as English teaching tool in Japanese schools

Jul,2008

Nintendo DS (NDS) is not just fun and games anymore for English students at Tokyo's Joshi Gakuen all-girls junior high school. The world-renowned portable video game console is now used as a key teaching tool, a breakthrough from traditional Japanese academic methods.

A giggly class of 32 seventh-graders used plastic pens to spell words like "hamburger" and "cola" on the touch panel screen, the key feature of the hit console, following an electronic voice from the machine.

It is a kind of high-tech spelling bee. When the students get the spelling right, the word "good" pops up on the screen. Then the student would go on to the next exercise. The first five students to complete the drills are awarded colourful stickers.

"It's fun," said Chigusa Matsumoto, 12, who zipped through the drills to get her sticker. "You can study while you have fun," she said. Like many other Japanese young people, she has NDS at home and plays the console's popular games like Mario Kart and Animal Crossing. But she insisted her favourite was her English class software.

The drills, which the school began using earlier this year, are the first linked to a widely used Japanese public-school textbook series, according to Yasuhiro Yamamoto, manager at software maker Paon Corp., which made the NDS English program. "This is quite revolutionary for a Japanese schoolroom," he said.

Japanese education has long been infamous for failing to develop English conversation skills and instead focus on rote memorisation and grammar. To ride over the problems, NDS boasts a series of brainteasers and puzzle games designed to improve maths and other academic skills, as part of a larger effort at Kyoto-based Nintendo to appeal to newcomers, older people and women. The company's Wii - with its baton-like "Wiimote" for fishing, tennis and golfing games, has also been a smash hit.

The NDS, which is being used in a handful of schools on a trial basis, was part of a course that included video of an American ordering at a fast-food restaurant, as well as audio of the dialogue that the students listened to on headphones and repeated.

Some teachers acknowledged she has never before seen the kind of enthusiastic concentration the NDS classes have inspired in her students.

A school is getting 40 NDS machines and free software for agreeing to be part of a test in a real classroom. "Some teachers aren't quite convinced this is good," Principal Tsuneo Saneyoshi said, adding that the verdict is still out on the educational value of DS.

Li Ning aims to become a top global brand

Jul,2008

Li Ning, a 17-year old sportswear brand, has a newly built headquarters equipped with facilities somewhat extravagant for a Chinese firm of its age: an indoor swimming pool, basketball court as well as a museum.

The 105-mu complex in Beijing's countryside not only showcases the firm's growing size, but also its ambition to compete with global giants like Nike and Adidas.

Chief financial executive Tan Wee Seng revealed that the company aimed at making Li Ning, which is named after its founder and chairman, one of the top five sportswear brands in the world within a decade, though its focus for the next five years would remain in China.

Mr. Tan noted that the Olympic Games had helped the company to record huge profits and provided a golden chance to upgrade the brand through sponsorship of the national gymnastics, shooting table tennis and diving teams coupled with Spain's national basketball teams.

Orders for the first five months of this year have reached the company's revenue target for the year 2008. Revenue growth this year would be at least 6 per cent higher than in 2007. It recorded a 36.7 per cent gain in sales to 4.35 billion yuan. “Becoming a global brand is vital for Li Ning. Upgrading the brand will boost domestic sales in the near term and open up the global market in the long term,” Mr. Tan disclosed.

In terms of retail revenue in 2007, Nike has a mainland market share of 16.7 per cent, followed by Adidas' 16.4 per cent, a Goldman Sachs report said. Li Ning and Anta ranked third and fourth with 11.4 per cent and 7.8 per cent respectively.

In an endeavour to compete with its international competitors, Li Ning has signed up US basketball team Miami Heat's centre Shaquille O'Neal and recently opened a design centre in Portland, Ohio, where Nike is based.

It plans to open 800 retail outlets in each of the next three years, targeting 6,900 stores by the end of 2009.

Analysts said one of the challenges for Li Ning was that more domestic competitors have or are considering going public, helping them to raise both capital and brand awareness. They may not threaten to Li Ning's high-end products, but they can offer fierce competition in third-and fourth-tier cites.

China achieves growth despite global slowdown

Jun,2008

Mainland China's industrial production successfully achieved a wholesome growth of 16 per cent in May since factories there shrugged off increased uncertainty concerning slowdown of global consumer demand.

In spite of the encouraging data, a number of manufacturers and economists are worried about the worsening economic turmoil in the US, Europe and Japan that could pour cold water on China's growth momentum.

The Chinese National Bureau of Statistics revealed on 17th June that the growth was 0.3 per cent higher than April's figure, but 2.1 per cent lower than the same month a year ago.

"Global demand is holding up well," JP Morgan economist Wang Qian said. "But in the near term, there are intensified headwinds, with Europe and Japan following the slowdown in US consumer demand."

Manufacturers are also facing staggering raw material and energy costs, increasing wages and emission control expenses, coupled with the growing strength of the yuan.

Federation of Hong Kong Industries deputy chairman Stanley Lau Chin-ho disclosed that sourcing appetite for Chinese-made goods in the US would eventually unfold in the coming months.

"Orders from the US were relatively sluggish in the past few months, but we have seen higher demand in Europe, the Middle East, SE-Asia and even the mainland market," Mr. Lau said. "This shows we can reduce reliance on the US."

Referring to worsening macroeconomic conditions in the US, Mr. Lau predicted that China's industrial output in the second half of the year would be subdued.

In the first five months of the year, industrial output growth stood at 16.3 per cent year on year.

Credit Suisse chief economist Tao Dong said the slowdown in industrial output growth in May from the year earlier period was manageable for Beijing's policymakers. He said the easing of consumer price inflation in May to 7.7 per cent as well as possible moderation in economic growth was likely to push Beijing towards a pro-expansion strategy.

Mr. Tao expected that China would spur domestic consumption demand especially in the lead-up to the Beijing Olympic Games in August.

JP Morgan's Miss Wang said that reconstruction in quake-struck Sichuan would trigger demand for building materials, for example, cement, steel and aluminium, which would help increase full-year industrial output to an estimated 16 per cent.

In May, industrial output growth was led by the transportation equipment industry, which expanded 22.9 per cent, followed by the electricity generation equipment industry's 20.8 per cent growth.

Fisher-Price pursues sales growth in developing markets

Jun,2008

n the past five years, Fisher-Price's sales in developing countries have more than doubled, and its sales of baby swings as well as infant rockers in those markets have jumped tenfold. In the meantime, Mattel reported its first quarterly loss in over three years, partly because Fisher-Price's sales dropped 13 per cent in the US, where electronics have increasingly cut into the market for toys. Although Fisher-Price's international sales were down 7 per cent in the quarter ended March 31, its overseas results have grown speedily in many previous quarters.

Aiming Fisher-Price toys at preschoolers overseas is also crucial to Mattel since it helps lay the groundwork for the company's other brands such as toddlers graduate from stacking plastic rings to collecting toys like Barbie and Hot Wheels. "Fisher-Price is the tip of the spear for Mattel into these developing markets," said Kevin Curran, Fisher-Price's senior vice president and general manager.

Fisher-Price is in particularly hot pursuit of markets, for example, Brazil, Russia and Poland, where brand-name American toys for toddlers are just beginning to appear and are thus perceived as novelties. Another draw: The countries have fast-growing middle classes with new disposable cash and children they want to pamper, the company said.

In order to capture consumers, however, the company has to distinguish itself from entrenched local toy makers. At the same time, it must keep costs down, to make the products affordable enough to sell in developing countries.

Hitting the mark on products for these markets has presented some unexpected hindrance, for instance, the problem recording Putonghua. Earlier, Fisher-Price ran into trouble with a reading toy called "Storybook Rhymes" featuring a traditional Turkish poem paired with an illustration of a pig. "We realised this wasn't appropriate for a Muslim country," said Kelly Chapman, who heads product design, pointing out cultural restrictions on pork. In development, the company replaced the pig with pictures of cats.

Fisher-Price is now pursuing the Chinese market, which offers sheer size and big seasonal gift-giving events like Chinese New Year. While the "one child" policy has slowed the country's birth rate, marketing researchers said Fisher-Price could target the large number of adults, including both parents and grandparents, doting on each child.

Toys R Us' revenues up in first quarter

Jun,2008

Toys "R" Us Inc. saw its revenues for the first quarter of 2008 grow US$138 million, or 5.3 per cent, to US$2.7 billion, due to a combination of gains in foreign currency, higher online sales and a net of 16 store locations.

Nevertheless, quarterly earnings before interest, taxes, depreciation and amortisation dipped 2.5 per cent to US$114 million.

First quarter net sales for the 13-week period ended 3rd May, 2008, include the effect of foreign currency translation that increased net sales by around US$109 million, the company reported. Excluding foreign currency translation, net sales for the period grew primarily because of the net addition of 16 new wholly owned stores in the retailer's International and Babies "R" Us segments, the conversion of certain stores to a side-by-side and "R" superstore formats, increases in net online sales and higher comparable store net sales at the BRU segment.

Partially offsetting the increases were decreased comparable store net sales at its domestic toy stores and in its International business, the company said.

Toys"R"Us' reportable segments include Toys "R" Us–US, which operates toy stores in 49 states in the US and Puerto Rico as well as online, Toys "R" Us–International, which operates or licenses or franchises stores in 33 foreign countries and Babies "R" Us, which operates in 42 states. The retailer currently has 1,530 wholly owned stores worldwide.

In the US, net sales for the quarter increased by US$12 million, or 1.2 per cent, to US$1.03 billion, which was partially offset by a 0.4 per cent decrease in comparable store net sales, which was mainly the result of decreases in the seasonal, learning and apparel categories even though the entertainment category rose, the company reported.

Cooler spring weather during the quarter and an earlier Easter holiday depressed the seasonal and apparel categories, while the learning category suffered from lower board game and plush toy sales. The increase in the entertainment category was driven by the strong demand for the Nintendo Wii video game system and related accessories.

Internationally, net sales for the quarter increased by US$100 million, or 11 per cent, to just over US$1 billion. Excluding an US$109 million increase in net sales because of foreign currency translation, international net sales decreased primarily due to a decrease in comparable store net sales of 4.1 per cent, partially offset by increased net sales from the addition of 11 new wholly owned stores opened since 5th May, 2007.

The decrease in comparable store net sales was primarily driven by decreases in the electronics and seasonal categories due to strong prior year sales of video game hardware and software related to Nintendo Wii, Nintendo DS Lite and Sony Playstation 3. Seasonal product sales fell due to cooler spring weather and a subsequent decrease in sales of outdoor products.

In the Babies division, net sales for Babies "R" Us increased by US$26 million, or 4 per cent, to US$675 million, primarily as a result of net sales from 7 new stores opened since 5th May, 2007, as well as a 1.9 per cent increase in comparable store net sales. The comparable store net sales increase was primarily the result of increases in the commodities and infant care categories.

The commodities category was positively affected by continued strong demand for value-packaged products, baby foods and household cleaners. The infant care category increased due to strong demand for infant feeding products and monitors. Increases in these categories were partially offset by lower sales in the apparel category, which were affected by cooler spring weather and an earlier Easter holiday.

Hasbro regains rights to Care Bears, Strawberry Shortcake

Jun,2008

Hasbro has reacquired rights to American Greetings Properties' (AGP) iconic Care Bears and Strawberry Shortcake characters in a master toy deal that would come into effect in January 2009. AGP is a Cleverland-based studio which is dedicated to developing character-based properties for entertainment and consumers products like Care Beers, Strawberry Shortcakes, etc.

Hasbro ponders over releasing a full line of toys for both Care Bears and Strawberry Shortcake, with plush, dolls, play sets, games, puzzles and figures, as well as new categories included.

Both brands were originally marketed as toys by Hasbro's Kenner division during the 1980s. They were revived lately by opponents Play Along (Care Bears) and Playmates (Strawberry Shortcake).

"We are very happy to welcome Strawberry Shortcake and Care Bears home to Hasbro," said Sharon John, general manager of toy marketing, Hasbro Toys. "We look forward to working with AGP to build on the strong foundations of both brands. Our strategy includes incorporating new technology for breakthrough, adorable Care Bears plush, plus introducing a new line of Strawberry Shortcake toys, including small dolls to little girls everywhere."

At this year's Licensing Show in the US, AGP unveiled updated versions of the Strawberry Shortcake characters and the world they inhabit. Hasbro's new line of strawberry-scented toys is scheduled to hit shelves in fall 2009 in conjunction with new Strawberry Shortcake entertainment projects, including a CGI movie and DVD release. Additional DVDs and a new television series are also in production.

Hasbro's new Care Bears toy line would also be part of the company's preschool-oriented Playskool brand and would feature the new look of the Care Bears from the animated series, Care Bears: Adventures in Care-A-Lot, which airs during the KEWLopolis on CBS block. The toy line would debut in fall 2009, also timed to coincide with a new CGI movie and DVD release.

"Both Care Bears and Strawberry Shortcake have a strong history with Hasbro, and we are thrilled to be working with them on our two biggest classic brands," said Tamra Knepfer, AGP's senior vice president for consumer products. "Hasbro has unparalleled experience leveraging evergreen franchises with toy lines at retail and we are incredibly excited about the innovation, marketing, and retail presence that this alliance brings to both brands as we look to grow both here in the US and around the world." According to AGP, combined worldwide sales of the revived brands have neared US$5 billion since 2002.

China factory prices increase 8.2 per cent as costs surge

Jun,2008

Factory-gate prices in mainland China accelerated at the fastest pace in more than three years due to higher energy and raw material costs.

The producer price index (PPI) augmented 8.2 per cent in May from the same month in 2007 after gaining 8.1 per cent in April, the China National Bureau of Statistics revealed.

Blizzards and the Sichuan earthquake have aggravated inflation in China, with officials referring the rising prices as the country's No.1 enemy. The latest data indicated that inflationary pressures were continuing to build in spite of the government measures on reining prices of some retail products, notably fuel and foodstuffs.

As part of the endeavours to counter inflation and stem liquidity growth, the People's Bank of China ordered commercial banks to keep cash in reserve. That raised the reserve requirement ratio by 1 percentage point, to a record 17.5 per cent.

Jing Ulrich, the chairman of China equities at JP Morgan Securities, said the rise in producer prices threatened to hit consumers even as food prices, the main contributor to the current bout of inflation, stabilised.

Ben Simpfendorfer, the chief Asia economist at Royal Bank of Scotland, said there was mixed news on inflation, with consumer price inflation expected to drop in coming months but producer price inflation rising on raw material costs and earthquake and snowstorm-related reconstruction.

The National Development and Reform Commission of China, the top planning agency , ordered local governments in areas affected by the May 12 Sichuan earthquake to ensure supplies of construction materials and curb "irrational price increases".

NDRC vice-chairman Zhang Guobao said the current price curb policy was good for social and economic stability. Despite government price controls on oil products, petrol prices rose 11 per cent from 10.8 per cent in April and diesel prices climbed 11.8 per cent from 10.2 per cent. Crude coal prices rose 24.1 per cent in May, up from 20.9 per cent in April, a statement posted on the statistics bureau's website said.

Ulrich said any relaxation of price controls would open the door to further increases in the PPI and CPI as producers and consumers faced higher prices for fuel. "With global commodity prices rising and demand from China showing no sign of moderating, upstream costs may contribute to sustained higher prices," she said. Miss Ulrich expected that higher structural core inflation might be a continuing concern for policymakers and investors in the Chinese economy.

"Learning toys" are likely market winners

Jun,2008

Higher quality as well as "play" value are likely to be the key to success in the crucial lead up to Holiday 2008, from comments made at the New York International Toy Fair earlier this year and among commentators lately. Parents are finding toys that speak to their child's unique personality and interests - and they are likely to be looking for the kind of toys that add value and would be completely safe.

"A toy or doll that has been individually designed or customised for someone special is destined to become their treasured keepsake," said Sheliah Gilliland, spokesperson for leading national online toy retailer eToys.com.

The 23-inch personalised My Twinn doll is a case in point, which is customised to look like the child who would receive it, using a photo which the purchaser provides. Children could even select matching outfits for the doll and themselves by visiting the company homepage.

Also popular among girls aged three to six is the elegant Disney Princess: Enchanted Tales Throne. This toy is designed to address the child personally, with personal esteem and discriminating quality in mind.

A fun, personalised gift for young pet lovers aged three to eight is called the Puppy Grows & Knows Your Name. Children could name their "puppy" - an electronic mechanised plush dog that could be personalised on the computer and includes software. As the toy puppy actually "grows", it learns to speak, could be taught its own name, as well as the child's name, its favourite place and birthday.

IlluStory, the multi award-winning activity kit, is a gift that allows youngsters to write, illustrate and design their very own professionally typeset, hardbound book.

Regarding children who enjoy games on the Internet, there are several toys providing innovative fun and, most importantly, ensure safe and secure computer play. These include cuddly stuffed animals called Webkinz, Rescue Pets, My e-Pets and the Littlest Pet Shop. Each comes with an individual secret code that allows children to unlock their own virtual interactive world.

The online activities include games, educational trivia, building and selecting virtual rooms, and communicating with friends in a safe online space.

Taking cyberspace into outer space are Shining Stars. These plush toys include a secret code that allows aspiring astronomers to register and name a real star with the International Star Registry. Shining Stars also have a child-friendly website where children could get unlimited access to the virtual Shining Stars Web World.

Toys requiring input from the child are likely to be particularly well-received by parents, including the Laugh & Learn 2-in-1 Learning Kitchen from Fisher-Price for six to 36 month-old toddlers. The toy includes alphabet learning, counting, sorting shapes and colours, coupled with encouraging singing and learning different sounds.

Another of Fisher-Price's likely favourite toys is the Little Superstar Sing-Along Stage for babies of six months and above, aiming to promote cognitive skills and have fun at the same time.

As most suppliers are becoming aware, there is an increasing premium on electronic add-ons to the play experience in toys.

HK SMEs remain positive despite US economic slowdown, survey finds

Jun,2008

Hong Kong's small and medium-sized enterprises (SMEs) are upbeat about business conditions ahead despite the hardship posed by the US subprime crisis, according to a survey conducted by HSBC.

Hong Kong SMEs are branching into the mainland China and other Asian markets to counter the effects brought by the US economic crisis, the survey indicates.

Polling 500 SMEs in April, the bank's commercial banking division found most businesses that relied on the US as a key market experienced poorer demand there.

Many firms had been hit by the subprime crisis, spiraling costs for raw materials and environmental protection, increasing labour cost as well as the weaker US dollar.

However, according to HSBC commercial banking sector senior executive Nixon Chan, many SMEs expected business would remain stable over the next year in all markets except the US. Exporters, especially those engaged in consumer and electronic goods, were vulnerable to the US economic downturn.

"Hong Kong's smaller businesses are increasingly turning to the mainland and the rest of Asia, whose economies are robust and are growing at double digit," Mr. Chan said. "Many of them believe they will weather the economic turbulence and adapt to the changing environment."

The survey found that 68 per cent had not been affected by the worsening economy in the US. "While increasing exposure to the China market, many respondents believed the US remains a strategically important market for their business," Mr. Chan added.

Nevertheless, China's economy is not without challenges as the Sichuan earthquake, prevailingly high inflation rate and staggering wages and raw material costs all add to pressures on business.

In regard to higher costs, many respondents would choose to change suppliers, trim staff and sub-contract work to cheaper locations, the survey shows. About 40 per cent of those polled also showed that they would reduce the amount of credit they extended to customers to manage business risks while about 28 per cent would rely more on trade services provided by banks.

Factory workers wages in Shenzhen to overtake Shanghai & Guangzhou

Jun,2008

Shenzhen would surpass Shanghai in labour costs once the municipal government lifts the minimum monthly wage by 17.6 per cent to 1,000 next month.

The new minimum pay, which would exceed Shanghai's 960 yuan and Guangzhou's 860 yuan, is designed to make the special economic zone more appealing to live and work amid high inflation and labour shortages.

However, manufacturers, especially toy, shoe, watch and garment makers, feel dismayed with the news, saying higher wages would add to spiraling production costs and shrinking profit margins. The move also raised concern that wage increases would add fuel to inflation, which reached 8.5 per cent in April.

With reference to the website of Shenzhen's labour and social security bureau, the minimum wage inside the zone would be lifted by 150 yuan to 1,000 yuan per month, while outside the zone wages would increase 20 per cent to 900 yuan. Minimum pay for part-time workers would also rise.

Shenzhen was excluded from the wage increases in Guangdong province in February, when an average rise of 12.9 per cent was permitted.

Tommy Leung Yung, the president of the 630-member Hong Kong Watch Manufacturers Association, said higher labour costs would force companies to use machines instead. "Literally everything is getting expensive," said Mr. Leung, who

heads a watch factory in Shenzhen with a workforce of 1,200. "Our plants minimum wage is already higher at 1,200 yuan on average, but still it is very difficult to hire workers."

The shortage of workers in Guandong shows no sign of abating amid the new labour contract law, a continuous shift of workers from the south to the north, and state policies to disperse the dense population of migrant workers.

A report on district finances released by China's central bank said rising wages and a surge in production costs such as raw materials and energy would increase the overall cost of industrial production, pushing up prices. A poll by the central bank showed 66 per cent of firms raised their product prices last year and 70.6 per cent of enterprises with exportable products increased their export prices.

Sichuan quake dampens Chinese online game firms

Jun,2008

China's online game companies are feeling the influence of the tragic Sichuan earthquake's aftermath.

Online game companies including Shanda Interactive Entertainment, Perfect World, The9, Giant Interactive Group, NetEase.com and Tencent stopped operations following a government order of suspending public entertainment for three days out of respect for earthquake victims.

The share price of Perfect World dropped as much as 24 per cent during the week when the quake happened, while Giant shed 18 per cent.

Alicia Yap, an analyst at Citigroup, estimated that around 3 to 4 per cent of second-quarter revenue for game companies would be lost due to the Sichuan earthquake.

"There were three days for the mourning period, plus 12th May, the day of the earthquake when everyone's attention was on the television," she said. Moreover, beyond the service stoppage, general gaming activities would not necessarily return to normal immediately.

"I have not played a game in the last 10 days," said Andy Yuan, a longtime gamer in Beijing.

Instead of playing online games with his friends, Mr. Yuan has been mostly watching television programs about the disaster.

Television and newspapers on the mainland have been full of horror of the quake and solicitations for donations. Even the web lost its colour. Every leading portal, for example, Sina.com, NetEase, was in black and white.

Nevertheless, it was found that after the 3-day mourning period, many gamers returned to their favourite pastime, Ms Yap said. "Usage of World of Warcraft [run by The9] has returned to normal levels. Game companies also arranged donations, with special in-game events have been organised to let game players express their feelings. At the same time, promotions such as double experience points are offered to attract players back."

Not every company has been hit equally by the earthquake. In an earnings conference call, Perfect World chief executive Michael Chi revealed that around 4-6 per cent of the company's gamers were from Sichuan area.

In the meantime, Giant Interactive chief financial officer Eric He said in an earnings conference call that Sichuan-based gamers accounted for about 9-10 per cent of the company's total, being less affected than Perfect World.

The impact of the earthquake on the game firms under different business models is different. Shanda uses, "game play is free and users pay for the items within a game". With a time-based model, which NetEase and The9use, however, users pay for the amount of time they spend on a game.

It was expected that there should be no long-term impact to the industry. Everything should be back to normal by summer.

Canada tightens rules on plastics chemical BPA

Jun,2008

Canadian consumers have been avoiding plastic bottles and containers, particularly feeding bottles for babies that contain the industrial chemical Bisphenol A (BPA). Retailers have pulled these products off the shelves after a number of negative reports over recent months and the Canadian government would soon respond with tighter regulations.

With these developments, the plastics industry, manufacturers, importers and retailers, including those from Hong Kong and the mainland China, are monitoring the situation closely to gauge the effect on the practical applications of BPA.

According to the newspaper reports, a panel of Canadian scientists has endorsed official findings by Health Canada showing that BPA could disrupt the hormonal systems of living creatures. Though the quantity of BPA which would have to be ingested to be dangerous reportedly far exceeds the ambit of recent tests, there is the possibility of BPA being banned in certain products.

BPA is an industrial chemical used to make a hard plastic called polycarbonate. It is also used to produce epoxy resins. Polycarbonate is used in a lot of household items that include baby bottles, reusable water bottles, pitchers, tableware and storage containers. Polycarbonates and resins made from BPA are used in wide choices of products, such as medical devices, dental sealants, sporting and safety equipment, electronic products and automotive parts.

While the government scientists have concluded that current BPA exposures are not generally hazardous, they are concerned that the margin of safety for babies up to 18 months old is not sufficiently large.

Meanwhile, Environment Canada scientists have also found that, at low levels, BPA could harm fish and aquatic organisms over time. Studies have indicated that it could currently be found in wastewater and sludge treatment plants in Canada. Environment Canada is expected to work with the Canadian Provinces and others to keep BPA out of the environment and take the necessary measures to ensure its safe use and disposal.

Canada's action contrasts from that of Europe and the US, which officially views the use of BPA as safe and has not given the chemical a "toxic" designation. However, the New York Times reported that the US Department of Health and Human Services toxicology programme also endorsed the finding, with "some concern" about behavioural changes in humans who consume BPA.

While the Canadian government is on track to ban polycarbonate baby bottles, it is assuring the public that they could still use the products as well as the reusable water bottles and plastic tableware if they choose, and the government would be providing some advice on how to use them properly.

However, retailers have been scrambling to find alternatives to BPA products that they have pulled off store shelves. They are searching for replacements for plastic baby bottles, sip cups, pacifiers, water bottles and food containers. Manufacturers are also looking for alternative plastics. "BPA-free" is fast becoming a growing market trend in Canada.

Disney recalls merchandise over lead paint

Jun,2008

Thousands of sleeping bags and magic wands contaminated by excessive levels of lead paint are being recalled by Walt Disney, US federal inspectors revealed on 26th May.

The recall targeted at 4,100 Pirates of the Caribbean sleeping bags and 8,000 Tinker Bell wands sold at Disney Stores in the US between April and October of 2007, the US Consumer Product Safety Commission said. No injuries have been reported yet.

The sleeping bags have lead paint on the zipper, while the wand contains lead paint on pearl beads in flowers on the top of the toy, the agency said.

Consumers were advised to stop using the bags and wands and return them to stores for a full refund. The problems were discovered during random product tests in late 2007, when the stores were owned by Children's Place Retail Stores, said Gary Foster, a spokesman for The Walt Disney Co.'s consumer products division.

The made-in-China products were pulled off store shelves at the time and Children's Place reported the problem to the US Consumer Product Safety Commission.

In early May, Disney took back control of 220 Disney Store outlets in North America from Children's Place and announced it would close about 98 stores in the US and two in Canada. Disney would also take back responsibility for testing products at the Disney Stores, Foster said.

Since last September, Disney has been independently testing toys featuring its characters at retailers rather than the Disney Store. The move came following a series of recall of millions of toys by Mattel Inc.

Among the items that had been recalled were 436,000 Mattel-made cars based on "Sarge," a character in the Disney-Pixar movie "Cars," which were believed to contain lead paint.

The subsequent random checks "turned up a few labeling issues, but nothing that rises to the recall level," Foster said. Disney requires its manufacturers to test each product for lead before the items are shipped, he added.

China's 1st Q toy export tumbles

May,2008

The growth of China's toy exports slowed substantially in the first quarter this year, hurt by rising production costs, a stronger Renminbi currency and safety concerns after spates of recalls, the official Xinhua News Agency disclosed on 22nd May.

Toy exports from January through March rose by 3 per cent, down from a 23.6 per cent growth rate in the same period in 2007, the Xinhua News Agency said. Toy exports for the quarter totalled US$1.5 billion, the agency said.

Xinhua blamed higher production costs and the rise of China's yuan currency, against the US dollar, which pushes up prices of Chinese goods in markets where importers pay in dollars. The yuan has fallen against the euro, which has helped to boost Chinese exports to Europe. But few importers outside Europe pay in euros.

Exports were also hurt by consumers' concerns about the safety of Chinese toys following a series of warnings and recalls abroad, the report said. Beijing has banned some toy makers from exporting due to safety concerns.

In the first quarter, toy exports to the US fell 5.8 per cent to US$590 million. Sales to Hong Kong, where many goods are re-exported to the US and other foreign markets, were down 26.8 per cent at US$110 million. Exports to Europe rose 14.8 per cent to US$380 million, Xinhua said.

Game consoles contain eco hazards, says Greenpeace

May,2008

According to a study conducted by the reputable environmental lobby group Greenpeace, quite some game consoles contain toxic chemicals that would not be allowed in young children' s toys, even though the technology to eliminate them is available. Manufacturers are starting to eliminate some toxic substances from their products, Greenpeace said.

Greenpeace revealed in its report "Playing Dirty" that it had analysed a PlayStation 3, a Wii, and an Xbox 360 Elite.

The consoles, all bought in Europe in November, 2007, appeared to comply with the recently introduced European Union legislation on the reduction of hazardous substances (RoHs), as Greenpeace found no mercury or cadmium, and only small amounts of lead and chromium. Some chemicals might have slipped by the testers, as Greenpeace did not have the resources to analyse every single component in the devices, it said.

Nevertheless, the consoles all contained toxic or undesirable chemicals, such as beryllium, found in circuit board contacts' PVC, found in electrical insulation; phthalates, used to soften plastics, and bromine, used as a fire retardant. Phthalates could have an effect on sexual development, especially in males, and some are banned from children' s toys and childcare articles, especially if they could be chewed. Other chemicals typically give rise to problems when products are dumped: in landfills they could lead to pollution of water suppliers, while if incinerated, they might release toxic particles into the atmosphere. Beryllium poses the biggest hazard to workers involved in recycling, Greenpeace said.

Use of the toxic chemicals varied greatly between consoles, though no one console stood out as "cleaner" than any other, Greenpeace said.

Sony avoided the use of bromine in two of the circuit boards in its PS3, the only manufacturer to do so, while Greenpeace found no trace of beryillium in the Nintendo Wii' s circuitry. But those two consoles contained the highest level of bromine overall, at 13.8 per cent and 12.5 per cent respectively. The Xbox leads the way in reducing the use of brominated materials in its plastic casting. The Xbox, on the other hand was the only one to contain a phthalate, DiNP, which is prohibited from use in toys and childcare articles if children can place them in their mouth.

Greenpeace published a similar study of phones, PCs and Personal Digital Assistants (PDAs) in March. It had hoped to include game consoles in that report, but Nintendo' s failure to respond on time led it to delay publication of its analysis of the consoles.

Mattel settles lawsuit with Bratz dolls inventor

May,2008

Mattel Inc said on 19th May that it had settled its lawsuit against ex-employee and Bratz dolls inventor Carter Bryant, but its case against MGA Entertainment, which makes the Bratz collection, would proceed.

The world's largest toymaker imparted that it would not disclose the terms of its settlement with Carter Bryant. Mattel had said Bryant conceived the big-headed, pouty-lipped toys while he worked at the company as a Barbie designer.

In April 2004, Mattel sued Bryant seeking US$35 million in royalties paid by MGA in connection with his work on Bratz dolls. A federal judge in California in April cleared the way for Barbie doll maker Mattel to go forward with its lawsuit.

Mattel said it planned to proceed with its copyright infringement lawsuit against MGA, due to start this month.

Sales of Barbie dolls have waned in recent years amid fierce competition from Bratz dolls, which burst onto the market in 2001. Mattel revealed in April that the Bratz litigation was a factor in its US$46.6 million first-quarter loss.

"Mattel has finally acknowledged that its suit against Carter Bryant was without merit," MGA said in a statement in May, adding that it looked forward to its chance to prove that Mattel's claims against it were equally baseless.

Quake aggravates China factories' labour shortage

May,2008

China's recent worst earthquake happened in Sichuan has raised fears of further worsening labour shortages in Guangdong as the production peak season is coming.

Many of the 80,000 Guangdong migrant workers with their hometowns in quake-stricken Sichuan province either had headed home or were tempted to go home for searching their family and friends, according to the industry.

The earthquake posed the latest challenge to manufacturers chasing a diminishing pool of workers to ensure time-pressed shipments of goods.

The natural disasters have compounded China's manufacturing situation with the global economic slowdown and labour disputes arising from the controversial labour contract law that came in effect earlier this year.

"Pressure on labour supply is rising especially in Shenzhen and Dongguan," Hong Kong Toys Council chairman Lawrence Chan said. "The situation is getting worse because the peak season is coming up soon." He added that toy factories usually hired thousands of workers during the production high season in summer to prepare shipments for September and October.

Eddie Lam Kwong-Tak, a shoes exporter with around 40,000 workers mainly in Guangdong and Shanghai, imparted that many Sichuan migrant workers were so worried about their family members that they could not concentrate on work, which meant a loss of productivity.

"Many of the workers can't focus on work, and we let them watch the TV to keep up with the latest news," Mr. Lam said. "We still have about 20 workers who don't know the whereabouts of their folks." He furthered that the quake, which destroyed highways and infrastructure, would probably discourage Hong Kong producers from moving their factories from Guangdong to inland regions such as Sichuan.

"The migration would only be [feasible] if logistics and other parts of the supply chain services are available," Mr. Lam said, adding that rail and road transportation inland was relatively insufficient and logistics costs were higher than in Guangdong.

Manhattan Group recalls choking-prone rattles

May,2008

Manhattan Group, which is a reputable toy manufacturers in the US, is recalling approximately 7,000 Manhattan Toy baby rattles since they pose a potential choking hazard.

With reference to the US Consumer Product Safety Commission, the company's Tumble Tower Infant Rattles have blue plastic end caps that could break, resulting in the release of small parts and thereby posing a choking hazard to young children.

Manhattan Group has received two reports of the blue plastic end caps breaking. No injuries have been so far reported.

The recalled rattle is 5 inches long and made of clear plastic with blue end cap pieces. The two clear handles feature colourful beads inside and brightly coloured rings on the outside. A blue face spins on a purple post inside the rattle centre when it is turned.

The problematic made-in-China toys were sold at gift and specialty stores in the US, mail order catalogs and online retailers from September 2007 through April 2008.

Sony's PS3 drives growth in operating income

May,2008

Sony Corp., the world's second largest maker of consumer electronics, forecast operating income would increase 20 per cent this year since PlayStation 3 console unexpectedly turns lucrative.

Operating income is expected to grow to 450 billion yen in the 12 months to March next year, from 400 billion yen in 2007, the company said on 14th May. The forecast is 13 per cent higher than the median estimate in a survey of five US analysts. Sony predicted the games business would post its first annual profit in three years after cutting the cost of making PlayStation 3 consoles, against the 40 billion yen loss projected by analysts.

The company lost US$3.4 billion from the PlayStation 3 division in the past two years after its flagship player was outsold by Nintendo Wii. "I don't think we have to worry about Sony's game business anymore," said Naoki Fujiwara, the chief fund manager at Shinkin Asset Management. "Although sales of the PlayStation 3 don't match those of Nintendo's Wii, they show unexpected resilience."

The company said that it would double dividend payments to 50 yen a share after net income almost tripled to a record last fiscal year, aided by sales of buildings, chip-making assets as well as shares of its financial unit.

Sony forecast profit would drop 22 per cent to 290 billion yen in the 12 months to March, saying profit at the electronics business, its biggest by sales, would fall this fiscal year after more than doubling to 356 billion yen in the 12 months to March.

Earnings at the division would fall to 317 billion yen this year, according to a survey. Yet, Sony forecast its television operations would turn profitable by the end of March.

Sony projected operating income at the movie division would fall this year. Earnings increased 26.5 per cent to 54 billion yen last fiscal year, helped by the release of Spider-Man 3 and Superbad. Profit at the business would probably decrease to 40.7 billion yen this fiscal year, according to the survey.

Toys 'R'Us raises US$1.5 million for autism program

May,2008

On 13th May, US Toys"R"Us and the local Toys"R"Us Children's Fund announced that their second annual nationwide in-store fundraising campaign for benefiting Autism Speaks, which is the nation's largest autism advocacy organisation, raised more than US$1.5 million. All Toys"R"Us stores from coast-to-coast and www.Toysrus.com collected cash donations for Autism Speaks to help fund crucial autism research and advocacy. The campaign coincided with Autism Awareness Month in April.

"We are truly gratified by the generosity of our customers and the support of our employees who made this campaign so successful," said Jerry Storch, Chairman and CEO, Toys"R"Us, Inc. "At Toys"R"Us, we have a strong commitment to doing whatever we can to improve the lives of children and families in need, and we're proud that our efforts will help Autism Speaks funds much-needed research to solve the autism puzzle."

In line with the fundraising campaign, Toys"R"Us, for the second year, also created a special edition of the Toys"R"Us Toy Guide for Differently-Abled kids that identifies "Ten Toys That Speak To Autism." This authoritative resource for families, friends and caregivers of children with autism features everyday toys that promote development of language, creativity and social skills.

Toys"R"Us and the Toys"R"Us Children's Fund continue to serve as the national sponsor of the Autism Speaks Walk Now for Autism program, a series of over 75 walk events in cities nationwide. Across the US, Toys"R"Us' employees are joining in the effort by forming teams in their local communities to take part in the walk events.

All money raised in Toys"R"Us stores, online through www.Toysrus.com/AutismSpeaks and through the Walk Now for Autism program would go directly to Autism Speaks to help fund research and advocacy efforts.

Since the partnership began in 2007, Autism Speaks has received US$3.2 million through money raised during the Toys"R"Us in-store and online fundraising campaigns and through donations from the Toys"R"Us Children's Fund and Toys"R"Us, Inc.

Nintendo launches downloadable games for Wii consoles

May,2008

Nintendo launched on 13th May a new service, WiiWare, allowing owners of its Wii game system to download web-exclusive casual games directly to their consoles and to pay for those games using pre-purchased points.

According to Nintendo, WiiWare games are easy to download. Users could go to the WiiWare section of Nintendo's online Wii shop channel, find a game, redeem Wii Point purchased either as pre-loaded cards from a local Nintendo retailer or via the Wii shop channel with a credit card and start streaming the game's code to their Wii.

New games, at various point values, with corresponding real-world prices of around US$5 to US$15, would be added to WiiWare every Monday. The newly launched Nintendo channel on Wii would allow customers to view videos of and read information about WiiWare games and other Nintendo products. Users can see players' opinions on different games to help them decide what to buy next.

The inaugural lineup of WiiWare games has six titles, including an exclusive Final Fantasy game (Crystal Chronicles: My Life as a King), a blackjack title (V.I.P. Casino: Blackjack) and a game show-style trivia game (TV Show King). The innovative initiative should give smaller, less financially flush software developers a golden chance to create games for Nintendo's popular motion-sensitive game system.

"WiiWare is to the video game industry what independent films are to Hollywood," said Cammie Dunaway, Nintendo of America's executive vice president of sales and marketing. "WiiWare lets developers experiment with new ideas and experiences. Combined with our collection of classic Virtual Console games, Wii provides one-stop shopping for the greatest games of the past—and the future."

Nintendo in no plan to cut consoles price

May,2008

Nintendo disclosed in April that the company did not plan to cut prices of its popular Wii game console or DS handheld game system anytime soon.

While the price of various game consoles is used to being reduced after it is on market for certain period, leaving gamers who purchased early feeling ripped off, Nintendo President Satoru Iwata said that he did not perceive that such "price-cutting" model was correct.

The Wii retails for around US$250 in the US and 25,000 yen in Japan, unchanged since its launch in November, 2006. By contrast, Sony has slashed the price of its 20-gigabyte PlayStation 3 twice so far to increase demand.

Nintendo Co. expected to sell 28.0 million NDS units this year through March 2009, down from 30.3 million in 2007.

Mr. Iwata insisted that while sales in Japan have slowed, NDS could uphold its strong momentum in the US and Europe, still with large room for growth. The NDS Lite sells for 16,800 yen in Japan and US$129.99 in the US.

Nintendo’s main focus has been to keep gamers playing by continually offering new software, services and accessories. The company hinted that there were new projects undergoing, but did not elaborate.

The falloff DS sales seems to be the main reason why the company tempered its growth expectations this year after a nearly 48 per cent surge in net profit in 2007 to US$2.5 billion and a 73 per cent gain in global revenue to US$16.2 billion.

"The speed last year was beyond our expectations," Iwata said. For this year, Nintendo projects a 26.3 per cent increase in net profit and just a 7.6 per cent increase in sales. It pegs a modest 8.8 per cent climb in operating profit.

Just like all other Japanese exporters, Nintendo is wrestling with a stronger yen that threatens to erode the value of overseas sales, which accounted for 81 per cent of total revenue in 2007.

Nintendo’s main driver of growth this year seems to be Wii—a runway hit that has outsold Sony Corp.’s PlayStation 3 and Microsoft Corp.’s Xbox 360 since its release in November 2006.

With easy-to-play games and motion-detecting controllers, the Wii has done well by attracting new and casual gamers, including women and senior citizens.

"Historically, the video game business has not been affected by economic swings," Iwata said, adding that in tight economic times, people often opt to stay home and play video games rather than going out and spending money.

Nintendo would release several new games this spring, including a racing game called the Mario Kart Wii. The Wii Fit exercise game, which has sold well in Japan, will also make its debut soon in the US and Europe.

LeapFrog's sales stalled in first quarter

May,2008

The US-based Leadfrog Enterprises recorded a net loss of US$27.4 million, for the first quarter of 2008, compared to a net loss of US$30.4 million, for the first quarter of 2007. The lower loss was primarily because of an improved loss from operations and lower tax expenses, in part offset by lower interest income in the first quarter of 2008, compared to the first quarter in 2007.

The reputable educational toy maker’s net sales during the first quarter dropped 4.3 per cent from 2007 to US$58.3 million. The company said that excluding the effect of foreign currencies, sales would have declined 5.6 per cent. The decrease in net sales was driven mainly by the continuous decrease in sales of the products being phased out or replaced in 2008, partially offset by higher sales of continuing educational gaming products.

Net sales from the company’s US consumer segment totalled US$40.6 million for the first quarter of 2008, down from US$43.4 million for the first quarter in 2007. Net sales from the company’s international division totalled US$12.7 million for the first quarter of 2008, up from US$12.5 million for the first quarter 2007. Net sales for its school segment were flat from 2007 at US$5 million.

"We entered 2008 expecting the first half to be weak ahead of new product launches," revealed Jeffrey G. Katz, LeapFrog’s president and CEO. "First quarter results were slightly better than our expectations due primarily to the continued strength of our Educational Gaming business, led by our Leapster product."

Gross margin for this year’s first quarter was 36.3 per cent, down 4.2 percentage points from the corresponding period of 2007.

"Our 2008 product launches are on track," said Mr. Katz of the company’s near future. "We begin shipments of our Tag reading system in less than two weeks and our new educational gaming systems, Leapster 2 and Didj, will ship this summer. We expect that these new products will contribute to significant sales growth and margin improvement in the back half of the year."

Looking ahead, the company expects net sales to grow at an annual percentage rate in the mid-to-high teens; gross margin continues to improve, and selling, general and administrative expenses and research and development expenses to decrease around 10 to 15 per cent. However, it still expects to report a nominal loss for the year, even though it is projecting a second half of "substantial improvement."

Hasbro reports 13 per cent jump in revenues

May,2008

Helped by sales of its Transformers and Littlest Pet Shop toys, US-based toy maker Hasbro reported in late April that it achieved a 13 per cent jump in net revenues to US$704.2 million during the first quarter and a US$37.5 million profit, up from US$32.9 million in the corresponding period of 2007. Factoring in foreign exchange rates, revenues rose 9 per cent.

"We had a strong 2007 and the momentum continues in 2008," said Alfred J. Verrecchia, Hasbro's president and chief executive officer. "While it's early in the year and there is still a lot of business to be done, our first quarter performance reinforces the confidence we have in achieving our full-year financial goals."

In addition to the strong performance of its Transformers and Littlest Pet Shop lines, Verrecchia also cited its Playskool, Star Wars, Baby Alive, My Little Pony and board game sales as helping to fuel Hasbro's growth.

Net revenues for Hasbro's US and Canada segment for the quarter rose 6 per cent to US$428.5 million. The segment reported an operating profit of US$37.3 million compared to US$45.8 million in 2007. The decrease in operating profit is primarily due to investments the company is making to grow its business, including a Wizards of the Coast digital initiative and the acquisition of Cranium.

Net revenues for the company's international segment, including Mexico, for the quarter were US$248.3 million, an increase of 22 per cent, or an increase of 12 per cent net of the favourable foreign exchange impact of US$21.9 million. The international segment reported an operating profit of US$13.0 million compared to a US$1.8 million loss in 2007, an improvement primarily attributable to higher revenues.

Effective at the beginning of fiscal year 2008, Hasbro reorganised the reporting structure of its operating segments. The company's Mexican operations were transferred from the North American segment to the international segment, and the North American segment has been renamed the US and Canada segment.

Toys 'R' Us' profits surge 40 per cent

May,2008

US-based Toys “R" Us Inc. revealed in early May that its net earnings soared about 40 per cent for the fourth quarter and fiscal year ended on 2nd February, 2008, compared to the similar periods in 2007.

The giant toy retailer reported a 39.3 per cent increase in net earnings to US$312 million, up from US$224 million for the fourth quarter ended 3rd February, 2007. Operating earnings increased 17.5 per cent to US$671 million while net sales increased 2.6 per cent companywide to US$5.827 billion.

Toys “R" Us recorded a 40.4 per cent increase in net earnings to US$153 million. Operating earnings in fiscal 2007 rose 7.2 per cent to US$696 million while net sales increased 5.7 per cent to US$13.794 billion.

“We are very pleased with the continued progress we made in 2007 to improve company performance across all segments of our business," said Jerry Storch, Toys"R"Us' chairman and CEO. “Better gross margins, improved comparable store sales and the positive effect of new store openings all give rise to higher net earnings for both the fourth quarter and the year. These results are especially gratifying given the difficult economic climate and the unique challenges experienced by the toy industry during the past year."

For the quarter, comparable store net sales rose 3.2 per cent at Toys"R"Us' toy stores in the US. Net sales for the period decreased 0.5 per cent to US$2.897 billion, primarily as a result of the absence of a fourteenth week in the fourth quarter of fiscal 2007 compared to the fourth quarter of fiscal year 2006. This was partially offset by increased comparable store net sales.

Operating earnings for the US toy stores division in the fourth quarter were US$360 million, up from US$318 million in fiscal 2006. The increase in operating earnings was primarily because of an increase in gross margin as a percentage of net sales, reaching 31.9 per cent in the fourth quarter of fiscal 2007 compared to 30 per cent in the fourth quarter of fiscal 2006 as a result of increased sales of private label products and improved comparable store net sales. The increase was partially offset by the increases in selling, general and administrative expenses due in part to planned increases in promotional activities.

At Toys “R" Us' international division, comparable store net sales increased 1.2 per cent during the quarter, while net sales rose 8.4 per cent to US$2.331 billion, primarily due to changes in foreign currency translation of US$193 million, new store openings and the increase in comparable store net sales.

For this year, comparable international store net sales increased 2.7 per cent, while net sales for the segment increased 11.8 per cent to US$5.344 billion. Sales increased primarily thanks to changes in foreign currency translation of US$329 million, new store openings and the increase in comparable store net sales.

Operationally, the international division saw operating earnings increased to US$305 million during the quarter, compared with US$251 million in fiscal 2006. For the year, operating earnings were US$336 million, up from US$233 million.

Buyers still find Chinese toys competitive, survey at Canton Fair reveals

May,2008

Foreign buyers at China's 103rd Import and Export Fair or Canton Fair, held in late April, revealed in the interviews during the event that they were generally positive about the competitiveness of Chinese toys, despite average prices having surged by 20 per cent over the past few years.

Toy makers have been worried about a possible sharp fall in orders this year. But according to a toy exhibitor Jiangsu Hongye, the situation was better than they had expected. “The toy market may get better after April, and we are expecting more orders."

Chinese toy exports slowed in 2007 due to increased prices and the yuan's appreciation. Meanwhile, there was large-scale toy recalls primarily because of excessive lead content, thus hurting the toy industry in China. Statistics indicated that Guangdong province exported 14.7 billion yuan, i.e. 2.1 billion US dollars worth of toys in 2007, up just one per cent year-on-year.

However, the toy industry has seen initial signs of recovery lately. In the first two months of 2008, Guangdong province's toy exports surged 43.5 per cent to 1.79 billion yuan.

"I have been to the Canton Fair every time since 1985. I am confident of Chinese products," said Peter Zollner, a buyer from Sweden's Allan Flink Souvenir AB. "The quality of the products has been improving every year." He said he would purchase more goods this time, and his business was "going better and better".

Quality issues gave China's toy industry some tough times during the second half of 2007. Western countries like the US raised quality standards and issued a series of recalls on Chinese toys. One company being affected drastically was Mattel, which recalled more than 18 million toys from China in August, 2007, but later were traced to its design flaws.

Amid a series of recalls, China conducted special campaigns to improve toy quality and banned many unqualified companies from exporting.

A buyer from the US at the Canton Fair said the negative news about Chinese toys in 2007 had only a limited impact on consumers. "Parents are smart shoppers. They know the best price," she said. "Our company has an independent testing centre, and we've never found any quality problems with Chinese toys. We don't worry about the quality. The price is our main concern."

However, higher prices of Chinese products seem to be inevitable. "Prices of raw materials are increased by more than 15 per cent last year, and the yuan is going up too fast," said Wang Liyu, an exhibitor from Shanghai Toys Import & Export Co., Ltd. The yuan has strengthened by over 18 per cent since the government de-pegged it from the US dollar in 2005. So far this year, it is up more than 4.4 per cent, and it broke the 7-yuan on April 10.

"Some customers didn't attend [Canton Fair] or reduced orders," Yan Lulu of Nanjing International Gifts Co., Ltd. said. "But fortunately, most buyers could understand the situation and accept new prices…We have no choice," John Magginnis, president of the U.S.-based J&L Toys Inc., said. "Chinese products are still the most competitive in the world. We considered shifting to other countries before, such as India and Indonesia, but the shipping costs were too high. The overall cost would be even higher."

Japanese toy makers go beyond China

May,2008

Chinese is losing some of its luster to a number of large Japanese toy makers. Takara Tomy, a top toy maker in Japan, is developing a new production line in Vietnam to transfer its miniature toy car production there within three years. Japanese big names like Bandai and Epoch are expanding their production capacity in Thailand.

All the aforementioned companies used to be heavily dependent on the Chinese production, with up to 90 per cent of their toys produced in China alone. Nevertheless, increasing labour costs, together with the reduction or even a cut in export tax rebate by the Chinese government, have made China less advantageous for manufacturing.

Moreover, volatility in the currency markets has sparked off these three Japanese companies to reduce dependence on the Chinese production, while diversifying to other low-cost Asian countries.

In Haiphong, northern Vietnam, Takara Tomy's new factory for its flagship miniature toy car Tomica is about to be up and running by the coming September. A Hong Kong construction company would build the factory with the area of 10,000 square meters, while the Japanese toy maker would spend around US$500,000 to put its production equipment in place.

The new factory could produce up to 3 million toy car units by March, 2009, and would boost its capacity by up to 15 million units to take over the entire production line from China within three years. Moreover,Takara Tomy is expanding its production capacity in Vietnam to include more regular products like Plarail and its Choro-Q pullback toy cars. The objective is to reduce a 90 per cent concentration of production in China to a more manageable 60 per cent over three years. Company executives expect there will be more balanced output, in which factories in Vietnam and Thailand would comprise around 30 per cent of overall production.

Meanwhile, Epoch has decided to form a capital alliance with Takara Tomy and to consolidate its production sites at the Takara Tomy factory in Thailand for a new product to be released in July.

Epoch is said to have stepped up its factory operations in Vietnam in an effort to reduce its dependence on Chinese factories from the current 90 per cent to 70 per cent in the coming decade.

In December, 2007, Bandai invested US$9.6 billion to reinforce production capacity at its factory in Thailand. Monthly production of robot toys and capsule toy vending machines has increased by 30 per cent to 200,000 units and 5,500 units respectively. The company is closing down its Chinese mainland plants.

Looking to the new trend, Hong Kong companies with manufacturing bases in SE-Asia would gain new opportunities for new orders from Japanese clients.

Toys (Industry News) Mattel reports sales drop in first quarter

May,2008

Mattel reported in April a net loss of US $46.6 million in the first quarter of 2008, a substantial decrease from the comparable period of 2007 when the reputable toymaker pulled in a US $12 million profit.

"Results were not completely surprising compared to last year's strong first quarter, which benefited from depleted retail inventories and hot properties such as T.M.X. Elmo and Cars," said Robert A. Eckert, Mattel's chairman and CEO, of the company's first quarter performance. "Our consumer takeaway, though, outperformed shipments, which is a positive sign for the remainder of the year."

For the first quarter, net sales were US$919.3 million, down 2 per cent compared to US$940.3 million in 2007. On a regional basis, the gross sales decreased 11 per cent in the US and increased 8 per cent in international markets, including favourable changes in currency exchange rates of 11 percentage points. Operating loss for the quarter was US$36.5 million, compared to 2007's operating income for the quarter of US$20.6 million.

Negatively affecting the company's first quarter were factors like higher production costs and legal fees. Eckert added that they expected price increases effective in June to boost profitability in the latter half of the year.

At its core Mattel Girls and Boys Brands unit, worldwide gross sales for the quarter rose 5 per cent to US$592.8 million. Within the unit, worldwide gross sales for the Barbie brand were flat, with increases in international markets offsetting declines in the US. Worldwide gross sales for the Wheels category, which includes the Hot Wheels, Matchbox and Tyco R/C brands, were up 15 per cent, led by sales of the new Speed Racer toy line.

First quarter worldwide gross sales for Mattel's Fisher-Price Brands business unit, which includes the Fisher-Price Core, Fisher-Price Friends and Power Wheels brands, were down 13 per cent versus the prior year to US$341.3 million, a result primarily due to declines in Fisher-Price Friends products. First quarter gross sales for the direct-to-consumer American Girl Brands business unit, rose 10 per cent to US$69.1 million, driven by sales at boutiques in Atlanta and Dallas opened during the second half of 2007.

Looking ahead, Eckert said the company was bullish about the introduction of toy lines based on this summer movies such as Speed Racer, Kung Fu Panda, Batman: The Dark Knight and Kit Kittredge, An American Girl.

TIA strives for toy safety standards 'harmonisation'

Apr,2008

When US Washington state governor Christine Gregoire signed in the expansion of the US 's Children's Safe Products Act in early April, the toy industry's lobbying efforts assumed a new posture: working with non-governmental organisation (NGOs), lawmakers and state officials to resolve two sections that were vetoed, as well as the implementation of the new law.

"Although the bill is signed, the work is far from over in Washington state," said Rob Herriott, the Toy Industry Association (TIA) 's director of international and government relations, in a telephone interview.

State govenor Gregoire vetoed two sections of the bill. In her message to members of the US's House of Representatives, Gregoire said she objected to the language in one section affirming the need to regulate toxic chemicals in children's products since it could be interpreted to create obligations that were beyond what the US government could deliver. She vetoed the second section as well because it required the US Department of Ecology to identify chemicals of high concern for children.

Furthermore, Gregoire acknowledged that without careful implementation, the new law could negatively affect the availability of safe toys in the US. For that reason, she said she would convene an advisory group to work with state agencies to find a "common sense" way to implement the bill and work on "needed legislative fixes" for the next session. "I will ask both large and small toymakers and children's products retailers, children's health experts and public interest representatives to work together on these tasks, and I will invite state legislators to participate," she wrote.

Indeed, the TIA's work to encourage what it terms "achievable" regulatory "harmonisation" is actively underway in jurisdictions around the US, as well as globally. Dozens of measures are pending in 30 states in the US seeking to eliminate certain chemicals used in the production of children's toys, including phthalates, lead, cadmium and bisphenol A, as well as dealing with broader safety issues.

"It's a global industry. As much as we strive for harmonisation in the states and domestically on the federal level, we also strive to harmonise it internationally. It's a very big-picture strategy — giving [legislators] the understanding that this is a highly regulated industry already and there are very robust safety standards already applied to the toy industry," Herriott admitted that the industry's challenge had been exacerbated by the seemingly unending series of recalls that began in 2007, essentially spawning much of the state-level legislative efforts.

"The recalls from last year do make our job more challenging," Herriott said. "What you saw was literally 0.01 percent of all toys recalled. That's not to discount the fact that the toys that were recalled, broke the rules and needed to be recalled. The fact that they were recalled so quickly is part of the argument that the system works. Recalls will always exist; they are part of the success of the system. Even with that, TIA went back and reassessed why these toys even made it to market. We found we could do better."

The TIA remains supportive of the general effort involving the Consumer Product Safety Commission, including toy-specific provisions, such as the conformity assessment program, reducing allowable levels of lead, and advertising. In some cases, the federal law could preempt the state laws. "It's a multi-tier effort and you put the resources you do have against it, and hope that your message is heard and understood," Herriott noted.

EU sees China as top source of unsafe toys

Apr,2008

China is deemed as the main source of unsafe products imported to Europe. The European Commission on 17th April said that toys are the most commonly found product to pose the threat to consumers.

Over half of all dangerous products detected in 2007 by European Union authorities are originated from China with notifications for some 700 goods, according to the EU's executive arm.

Revealed in an annual report on its so-called Rapex system for detecting risky goods, the Commission said that with 80 per cent of all made-in-China toys sold in EU, toys were the product most often found to pose a severe threat.

The Commission put the poor safety record of Chinese goods down to the sheer number of imports from the country and the fact that European authorities had increased monitoring following waves of recalls of Chinese-made toys in 2007.

The world's largest toy maker, US company Mattel, recalled millions of China-made toys deemed as unsafe though it later admitted that many of the problems were because of flaws in design, instead of manufacturing.

In September, 2007, the Commission raised the prospect of using bans if the Chinese authorities failed to provide adequate evidence that they were cracking down on the problem. In November, the Commission backed down from that threat after discovering that Beijing had made "considerable progress" in handling the problem, and the European authorities had tightened their controls. "The summer of recalls prompted a winter of evaluations which has paved the way for a spring and summer of change," said the EU consumer commissioner Meglena Kuneva. "More and more products are being detected and destroyed before they can harm EU consumers…Public authorities are clearly stepping up to their responsibilities when it comes to consumer protection."

Miss Kuneva will visit China in June to review its efforts in cracking down on dangerous goods. She will look into ways of further improving cooperation with Europe.

EU & US toymakers in support of new global safety standard

Apr,2008

Toymakers in UE and US backed the plan on 9th April for a compulsory global safety standard for toys to prevent unsafe products from reaching consumer, but they heeded that it must not be a barrier to innovation or entry into the market.

The European Union is mulling new legislation in the area of toy safety, while the US has proposed a stricter, independently verified regulation for toys following spates of recalls, mostly of Chinese goods in 2007.

Brussels and Washington are due to hold talks in June to reach a trans-Atlantic agreement, which they hope could pave the way for a global safety mark.

Leading toymakers like Mattel Inc., Hasbro and Hornby said they favoured an independent global standard, but were concerned about its scope and how it should be policed.

In early April, EU Consumer Commissioner Meglena Kuneva also supported the idea of a trans-Atlantic standard, which she said would force countries such as China to follow suit.

Hornby and Lego, which are Europe's biggest toymakers, expressed concerns that any new legislation could hinder industry's future. "We have concerns about the scope and any overzealous adoption of any new regulation which might prevent competition in the market," Hornby chief executive Frank Martin said following a meeting of Europe's major toymakers in Brussels.

Lego CEO, Jorgen V Knudstorp urged for a sensible legislation. They had concerns that those rules, if not properly thought through, could damage new innovation and new producers.

European and US lawmakers have criticised current regulations in the wake of the recall of over 20 million toys worldwide in 2007 due to excessive levels of lead paint and other unsafe components.

European consumer groups have urged that the EU's CE mark, which is questioned only if a product draws complaints, be abolished in favour of a new, stricter standard awarded by an independent regulator.

The vast majority of European toymakers said they favoured an independent body to award the new standard. "We are in favour of a global standard supplied by a trusted authority," Knudstorp of Lego said.

Nevertheless, US companies said they favoured an independent third party and were opposed to any authority set up by the EU's executive Commission or any US federal agency. "We prefer a more transparent approach," Carter Keithley, president of the US Toy Industry Association said.

Sources within the European Commission, which monitored EU consumer safety rules, said Brussels was mulling a new standard similar to Germany's "GS" safety mark.

Such a new stamp, known as "CE PLUS", would replace the EU's CE mark, which manufacturers need to trade across the 27-member bloc. The German label is awarded through an independent and certified monitoring authority.

US new Children's Safety Products Act heralds tighter toy safety requirements

Apr,2008

The US Washington State Governor Chris Gregoire signed on 1st April the state's Children's Safety Products Act, which is the US's strictest toy safety regulation.

The governor vetoed sections of the measure on its scope and timing of regulations in a bid to strengthen the protection for children, minimise bureaucracy and protect good businesses that would like to sell good toys.

Before the implementation of the law in summer, 2009, Gregoire pledged to convene an advisory group composed of children's advocates, doctors, toxicologists, manufacturers and toy store representatives and owners to guide the implementation of the bill in a manner that "makes sense for Washington". The group would be charged with helping to develop additional legislation for the governor to pursue during the 2009 legislative session.

In an endeavour to improve upon the bill in the short term, Gregoire requested the drafting of the administrative rules to clarify some provisions of the bill, creating an advisory group to look at standards for the outer surface and inside of toys, and to consider timelines needed for the industry to implement new standards.

According to a press release announcing Gregoire's signing of the act, the objective of such efforts is to develop the right scientific standards that protect children without putting good companies out of business and without removing great toys from the shelf.

Gregoire expressed worries about the reporting and testing requirements that could make it difficult for small toy makers and independent toy retailers to provide toys in Washington, as well as the various concerns and issues over lead restrictions in electronic toys. "While we are increasing protections, we must also avoid eliminating the many interactive and educational toys that have internal electronics. Without modifications of this law, those would be taken off the shelf,"Gregoire noted.

Gregoire has instructed the US's Department of Ecology to prepare expedited rules to clarify that the bill does not apply to internal electronic components that are not accessible to children, for example, chip boards and wiring, and determine how Washington fits with national, international and other state standards, notably in California and the European Union to establish a degree of consistency for the industry.

Responding to Gregoire's moves, the US Toy Industry Association said on its website: "We are encouraged that the Governor vetoed two key parts of the bill and issued strong caution about the remaining sections, as the state legislators ignored complex issues in their rush to pass the law.TIA supports federal legislative efforts to strengthen toy safety laws and believes the comprehensive, unified set of regulations is the best approach to ensure the safety of our nation's children…The toy industry is deeply committed to the health and safety of children. We have long supported tough national and international safety standards covering every aspects of toy manufacturing and our toys comply with these standards."

Magnetic toys for EU markets must carry clear warning labels

Apr,2008

A Commission Decision proposing requirements on magnetic toys was endorsed by EU Member States represented in the EU Committee set up under the general product safety Directive 2001/95/EC. The proposal follows a series of recalls by Mattel in the summer of 2007, of toys containing small magnets that could come loose, including Polly Pocket, Batman Magna, Doggie Daycare and One Piece playsets.

The Commission is suggesting that compulsory warning labels should be required for all toys containing or consisting of detachable or loose magnets, or magnets which are of a size and shape which could be swallowed by kids.

The Commission believes a warning label on toys with magnets is essential. The warning label is foreseen as a temporary solution while an EU-wide standard is being revised to cover risks posed by magnets in toys.

The Commission has stated that the risk from such toys is higher than in the past, since magnets being used in toys are more powerful. If swallowed, magnets could connect to one another and other metal objects, potentially causing an intestinal blockage or rupture. Certain powerful magnets could also cause serious harm if inhaled.

Details of the warning requirement:

• A new safety warning is required, which would read "Warning! This toy contains magnets or magnetic components. Magnets sticking together or becoming attached to a metallic object inside the human body can cause serious or fatal injury. Seek immediate medical help if magnets are swallowed or inhaled."

• The warning would be clearly visible to consumers on the packaging or toy at the point of purchase.

• The warning would apply to all toys in the supply chain, as well as those not yet placed on the market.

• The proposal is likely to come into effect from July 2008.

These are temporary measures only. The Commission has asked the European Standardisation Committee (CEN) to revise the relevant European standard i.e. EN 71 to cover the specific risks of toys containing small magnets by May 2009. Manufacturers should note that toys with magnets must comply with current general safety requirements, as set out in the general product safety Directive 2001/95/EC and the toy safety Directive 88/378/EEC.

Given the action taken by the Commission at an EU level, the German authorities have confirmed that no law or ordinance was finally adopted. Pending the Commission's decision, measures have been taken in Germany and France at a market surveillance level, with voluntary recommendations taken place concerning the introduction of warnings.

The Commission's proposal is currently being considered by the European Parliament. The Commission would then formally adopt its decision. Member States would have 3 months to ensure that the measures are implemented.

Toys 'R' Us launches new green line

Apr,2008

Toys "R" Us would launch a proprietary line of environmentally-friendly wooden toys, dolls and plush after March.

The first toys in the collection Natural Wooden Toys, Natural Cotton plush animals and Organic Cotton Dolls would be available exclusively at Toys"R" Us stores in the US and online at www.Toysrus.com by the Earth Day, 22nd April, 2008. Additional items in the line would be introduced later this year.

The toys would be packaged in earth-tone coloured boxes that bear a stylised "R" seal featuring a green leaf, encircled by the words "Recycle, Renew, Reuse, Re-think," to signify that they are eco-friendly toys. The packaging itself would be made from no less than 70 per cent recycled materials.

"We know that kids are becoming more environmentally conscious and are curious about how they can do their part to help protect the planet," said Karen Dodge, chief merchandising officer, Toys"R"Us. "Going green is more than just a trend. It's becoming a lifestyle. This is just our first step in offering our customers the best selection of eco-friendly and organic products in all of our Toys ‘R' Us stores nationwide."

The line's Natural Wooden Toys are decorated by making use of a "unique" wood-burning technique. The eight-SKU assortment includes a fire engine, utility crane, shape sorter, trailer truck, racing car, formula car, alphabet blocks wagon and stacking train. All of them are designed for kids aged 2 and up.

All wooden toys have been given Forest Stewardship Council (FSC) certification to testify that materials used in the toys were sourced from well-managed forests, using a system of 10 rules that define responsible forest management. Each toy would be marked with an identifiable FSC logo.

Toys"R"Us' Natural Cotton plush animals and Organic Cotton Dolls are coloured using natural or water-based dyes and made with unprocessed, unbleached and untreated cotton. The plush assortment includes four designs: lamb, monkey, bunny and teddy bear. The dolls, designed with "a natural feel" are available in pale pink and light brown.

China online games tap into overseas markets

Apr,2008

China's online game companies are becoming increasingly successful overseas, especially in smaller countries that cannot support their own game industries. Fuzhou-based NetDragon was earning over US$1 million per month from overseas sales, or around 20 per cent of its total revenue, said company chairman Liu Dejian.

More than 500,000 overseas users now play three of NetDragon's games. The English version of Conquer Online, which is a massive role-playing game set in a mythical Chinese background, was launched in 2003.

Mr. Liu of NetDragon revealed that the company's users included a wide coverage of nationalities. Around 30 per cent came from North America and 20 per cent from Europe. Another 20 per cent, surprisingly, were from Egypt, even though most of them did not pay. The remaining customers were from Asia.

NetDragon's games are free-to-play, but users are charged when they want better costumes or weapons. "All of this is done with very low overheads," said Mr. Liu. The company has set up computer servers in San Francisco, USA with two employees. It has also 40 Fuzhou-based customers service staff and four to five programmers, who modify the company's self-developed Chinese-language games into English, French, Japanese and Spanish.

On average, NetDragon's overseas users pay more than their Chinese counterparts, about US$25, or 200 yuan per person per month, compared with 100 to 200 yuan for mainland game players.

According to International Data Corp, overseas sales at mainland online game companies surged over fivefold in 2007 to US$55 million. Twelve companies exported a total of 28 games worldwide. Still, Chinese companies' overseas exposure is still small when compared with Korea, where annual overseas game sales could reach US$200 million.

Beijing-based Kingsoft's JX online, which is another multiplayer online role-play game about Chinese martial arts, has been Vietnam's top game since Kingsoft licensed it to a local operator, Vinagame in 2005. JXonline has on average over 200,000 users playing at any one time. Kingsoft has over 50 per cent of the Vietnamese market, according to IDC.

Kingsoft also licenses its games to Taiwan, Malaysia and Singapore. It had over 50 million yuan in overseas sales in the first nine months of 2007, increased 60 per cent from a year earlier, said company chief financial officer Kevin Wang. "In the long run, China can be a supplier of online games in nearby countries and regions," said Mr. Wang. "Many of these countries are too small to support their own game-developing companies." Another Beijing-based company, Perfect World, has its games licensed in 13 countries and regions, including Japan, Korea, and Russian-speaking countries. It had 73.3 million yuan in overseas sales in 2007, up from 1 million in 2006.

Shanda, the largest China online game firm, is also starting to boost overseas sales and has put a vice-president in charge of international licensing. In 2007, it collected US$10 million in upfront licence fees and from 4 games in 7 countries and regions.

However, the problem facing China's companies in certain markets, such as the US and Japan, is that game players got used to playing console games, which are more advanced and with better graphics and smoother animation. "Online games are about community-a concept that is absent in console games," said Zhuge Hui, public relations director of Shanda.

Mr. Liu of NetDragon also believes online games attract a different crowd. "Console games are about people playing against a machine, while online games are more about people playing with other people." But in his view, anyone who enjoyed online instant messaging could be a potential online game player. "A lot of what you do in online games is the same as what you do with MSN—make friends, chat with them. It's just that in the game, there is a common goal, for example, to kill a monster."

However, cultural differences can be a strong barrier to the adoption of mainland online games in the west. Part of the reason why mainland games are popular in neighbouring regions is that many of these countries are strongly influenced by Chinese culture.

Mr. Liu commented of NetDragon that a game with a western cultural background could be an "ice-breaker" in other markets. "What we may need is content such as Superman or Spiderman," said Mr. Liu, adding that sales in western markets could increase fivefold if such games were developed. Nevertheless, Mr. Wang of Kingsoft expressed doubts that Chinese companies could develop a successful game that was very different from Chinese culture.

Sony to launch new PSP console as an entertainment hub

Apr,2008

The next update of Sony Corp.'s PlayStation 3 console, slated late in March, would include features that let users download games, video and ring tones.

Sony said that the system update would add Blu-ray Disc Profile 2.0, or BD-Live capability, to the PS3. It would also let users copy photos and music playlists on to their handheld PlayStation Portable (PSP), use the PSP as a remote control for playing music on the PS3 and stream linked video files from the Web. This would make the PS3 the first Blu-ray player with access to Internet content and downloads. Matsushita Electric Industrial Co., which owns the Panasonic brand, also plans to ship a BD-Live player this spring.

With the updates, Sony would like to build the gaming console's status as an entertainment hub. The downloadable content would range from bonus movie scenes and trailers to "interactive movie-based games." "With Blu-ray established as the high-definition optical disc standard, more consumers are ready to jump in and take advantage of everything the format offers," said Scott A. Steinberg, vice president of product marketing of Sony, in a statement.

The free update also adds a "resume play" feature, enabling users to restart Blu-ray discs and DVDs at the point where they stopped even if they take the disk out of the drive. Sony is planning to release a stand-alone Blu-ray player this summer that would feature an Ethernet port to download bonus materials. However, it would not be BD-Live capable, meaning that users would not be able to access Web content, until a subsequent software update.

In this respect, Blu-ray players are playing catch up to the recently defunct HD DVD systems, which always had internet capabilities. The BDP-S350 player would cost about US$400, a second player, shipping later this year, would cost around US$500 and be able to download web content.

Babies"R"Us caters to needs for up-to-date nursery design

Mar,2008

In a bid to help new and expectant parents to design their baby's nursery in a decent manner, Babies"R"Us, which is long considered one of the most experienced toy and baby-related furniture providers, revealed several predominant trends in fashionable nursery furniture and bedding.

Babies"R"Us leveraged its unique insights as the baby products authority to identify the more up-to-date trends in design themes that would be crawling into nurseries across the country in 2008. From parents desiring designs that extend their home décor into the baby's room, to finding natural and organic baby products to raise a green baby, Babies"R"Us provides customers with a wide variety of fresh and contemporary furniture and bedding to satisfy modern sensibilities.

"While every parent wants their baby's room to be special and full of love, ongoing conversations with moms and dads who visit Babies"R"Us stores from California to New York have revealed similar style and colour preferences in the furniture and bedding they want for nurseries," said Cari Shapiro, Vice President, Divisional Merchandise Manager, Babies"R"Us.

"Throughout the year, Babies"R"Us works diligently to identify and stay at the forefront of trends in nursery design to help parents create tranquil yet stylish rooms for their babies. Our new assortment of modern and contemporary nursery furniture and bedding will help parents design fashionable, functional and affordable nurseries that can easily transition into rooms for older children to maximise the investment."

US video game sales jump 34 per cent in February

Mar,2008

US sales of video game hardware and software hit US$1.33 billion in February, 2008, up 34 per cent from a year earlier, with Sony Corporation's PlayStation 3 topping Microsoft Corp's Xbox 360 for the second month in a row.

Nintendo's Wii was still the best-selling console, moving 432,000 units and topping the 281, 00 PlayStation 3 and 250,000 Xbox 360s, according to market research firm NPD.

"With several marquee titles still to come in the front half of the year, the industry is poised to achieve another year of record-breaking sales despite difficult economic conditions," NPD analyst Anita Frazier said in a statement. Software sales in February increased by 47 per cent year-on-year while hardware sales rose 19 per cent, NPD revealed.

Microsoft, which outsold Sony every month up until January, blamed its weak showing inventory shortages caused by stronger-than-expected demand over the holidays.

"Our manufacturing team guesses five months out. They made their forecast and didn't have as high a forecast as they should have," said Microsoft spokesman David Dennis. "We're doing everything we can, pulling all the levers" to boost output, he said.

Microsoft said it expected to have a healthy supply of Xbox 360s by April when Take-Two Interactive Software Inc's "Grand Theft Auto 4" hits shelves in what is widely expected to be the biggest game of the year.

Nevertheless, the company, which cut Xbox prices in Europe in a bid to boost sales, might feel pressure to take a similar move in the US if it continues to trail the PS3, said Jesse Divnich, an analyst with The simExchange, an online prediction market for game sales.

"Given these past two months and the momentum that the PS3 has gained, Microsoft must react quickly as the PS3's momentum will only get stronger," Divnich commented.

Sony's PlayStation 2, which uses 8-year-old technology but costs just US$130, around one-third of the cheapest PS3, saw surprising strength, selling 352,000 units, 19 per cent more than a year ago.

Military shooting game "Call of Duty 4" from Activision Inc was the top game for a single console, moving 290,000 copies for the Xbox 360, NPD said.

"Devil May Cry 4," a demonic-themed fighting game from Japan's Capcom, sold a combined 529,000 copies for the Xbox 360 and PS3.

The top games for Nintendo's Wii were its "Wii Play," which came in at number three with 290,000 copies, and Activision's "Guitar Hero 3," with 223,000 copies.

"Our momentum has not let up since the holidays and we expect it to continue throughout the year," Cammie Dunaway, executive vice president of sales and marketing for Nintendo of America, said in a statement.

Microsoft blames Xbox shortages for lagging sales

Mar,2008

Microsoft said a shortage in console availability is the main reason Xbox 360 console lagged substantially behind its competitors in recent US sales for the second month in a row in February, according to the latestfigures from the NPD Group.

Xbox 360 sold 254,600 consoles in the US in February, compared to 587,600 for the Nintendo DS, 432,000 for the Nintendo Wii, 351,800 for the Sony Playstation 2, and 280,800 for the Sony PS3. Xbox 360 console sales also trailed competitors in January, according to NPD.

"Our retailers are telling us that Xbox 360 is selling as fast as they can restock, but due to this high demand, Xbox 360 is experiencing temporary shortages," Microsoft said in an e-mail from its public relations firm in mid-March. "We are working as quickly as we can to replenish inventory," said the representative from Microsoft.

Meanwhile, Microsoft painted a rosy picture around other numbers associated with sales of games and accessories for the Xbox console. In its e-mail, the company said a combination of "consoles plus content plus community" is what "makes a winning platform," and besides console sales, Xbox 360 keeps on leading competitors in other areas of the market.

According to NPD, Xbox 360 has a US installed b