Abstract
This report addresses the concerns Ravensburger management may have in investing in China. We will explain the advantages China has over Hungary and Malta. (advantages from pie chart) We will also address the potential reservations Ravensburger may have (list topics like quality issues, trade costs).
The Cluster Effect
The Chinese Toy Association lists many toy production clusters in the coastal regions of China. The following is a brief description of such a cluster in the city of Chenghai, Guangdong. “The toy and gift industry has always been the feature and backbone industry for Chenghai. At present, Chenghai has more than 2,800 enterprises dealing with toys and gifts, with a total working staff of over 100,000. The toy and gift industry last year alone generated occupied over 40% of total industry output in the region. Enterprises in Chenghai divide the work naturally, and have formed a complex system mixed with printing, coating and packing.” Each cluster is like a production city within itself, “complete with raw materials supply, mould process, assembling, packing, marketing and transportation”.
The cluster effect contributes greatly to China’s advantage for the following reasons. Firstly, the raw material suppliers are nearby, thereby cutting down on transport costs. The suppliers are also competing for business, therefore Ravensburger can choose quality suppliers at a reduced cost. Secondly, the labour market within these clusters will be composed primarily of workers with experience in toy and puzzle manufacturing. This is beneficial to Ravensburger because skilled workers of the industry are abundant and readily available. Thirdly, since toy manufacturing is such an important part of the loc ...