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The toys industry in Hong Kong has been facing a dramatic change over the past 20 years. The worldwide increased in the demand for toys enhanced the rapid growth of the local toys industry in the early 1980s. The open-door policy of China provided an opportunity for local manufacturers to produce toys in Mainland China. The comparatively lower direct cost, indirect costs and production overheads are a definite good resource for Hong Kong manufacturers to tap. More than 3000 Hong Kong owned factories were established in China in the 1990s. At the present time most toys companies have already “north-shifted” all production facilities and related manufacturing activities. Due to the proximity to Hong Kong, locations around the Pearl River Delta areas have been selected, such as Dong Guan, Zhong Shan, Zhu Hai and Shen Zhen. The establishment of toys factories in China had significantly impacted on the role of Hong Kong, which was once a famous toys manufacturing centre in the world. Hong Kong is now acting as a toys design and development, and marketing centre. Most of the major toys companies are now running their operation of design and development work in Hong Kong. Different levels of engineers are currently employed to perform the design and development work. The comparatively better exposure and communication skills in liasing with customers from US or European countries, better awareness of toys requirement, broader engineering education, and better self-initiative to problem solving are commonly agreed advantages of engineers from Hong Kong. However, due to the continual competitive toys market, there is a need to further lower the operation cost of toys design and development. Towards the 21st century there is a drastic drive to transfer the toys design and development work to Mainland China also. As a mission to the top management, this will be another step towards relocating the whole office to Mainland China. Some of the companies had already taken the steps. Offices in Mainland China have been set up, with the subsequent action of closing the office in Hong Kong. In the process of transition, problems such as poor schedule adherence, delay shipment and poor quality levels are usually found. Owing to this, many major companies are still performing detail evaluation to formulate the best plan, before taking the big step for the transition process. Apart from this, some other problems such as the mentality and exposure of local engineers are also contributing to the slow progress of the change. Contrarily, there is a major concern as to whether the mentioned job-transfer will further increase the unemployment rate for Hong Kong engineers. This paper examines the existing situation and the problems faced by leading toys companies with regards to the possibility of transferring the design and development work to Mainland China. The authors will propose a smooth transition plan which would reduce the risk involved. In addition, a perspective view of toys design and development work in Hong Kong after the transition will be projected. It is cited that value added work, high technology interactive toys, and innovative designed toys are important ingredients in the future perspective. The impact of the success of China in entering the World Trade Organisation upon the toys industry will also be discussed in the paper.
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