Gifts / Sports & Toys

Domestic brands are stirring up trouble in various fields. According to the observation report of Huacheng Import and Export Data, in the building block market, the same heat wave is rolling, and the entrants are playing the "Chinese building block" brand one after another. New building block brands are expected to meet certain expectations, but they are bound to go through many hurdles on the way to attack and upgrade.

1、 Industry heats up, and domestic building blocks are favored by capital

China's toy industry is growing rapidly as a whole. According to the observation report of Huacheng's import and export data, China's toy retail sales in 2021 will be 85.46 billion yuan, an increase of 9.6% compared with 2020. Building block toys are one of the largest categories in the toy industry, and the overall scale is expanding rapidly.

With the advantages accumulated in the product and supply chain for a long time, LEGO occupies the leading position in the industry, and the brand effect of "LEGO=building blocks" is deeply rooted in the hearts of the people. According to the analysis report of the Prospective Research Institute, from the perspective of the competition pattern of building block toys, Lego will occupy 68.8% of the global market in 2020 and 42.3% of the Chinese market, ranking first.

In recent years, domestic building block brands such as Senbao, Coincidence, Pinqi, Brooke and Weikki have obtained financing, and Internet giants have also entered the market. In December 2021, Xiaohongshu invested in coincident mortise and tenon building blocks; In the same month, Pinqi was invested by Zhenge Fund and Sequoia China Seed Fund, and then Shunwei Capital and other investments, with a cumulative financing of more than 10 million dollars; In February this year, Alibaba became a shareholder of Senbao Building Blocks. In addition, Xiaomi has also settled in the field of intelligent building blocks.

With the help of capital, domestic brands have made efforts in technology. For example, brands such as Starbucks and Keepley have invested more than 100 million in mold updating. With the improvement of quality, the sales of domestic building blocks have also increased. According to the import and export data of Huacheng, due to the relatively small base, the sales growth of some domestic building blocks in the first half of this year has exceeded that of Lego. For example, the sales growth of Mengxiaoying has exceeded 30% year on year, that of KeepPley has exceeded 150%, that of Senbao Building Blocks has exceeded 50%, and that of Ferrer has exceeded 40%.

Changes are taking place. A number of leading Chinese building block brands are taking the road of branding, making progress in R&D and manufacturing, and gradually making their own characteristics. On August 1 this year, Lego announced an overall price increase, involving more than 100 products, with an increase of about 5% - 25%. Before that, when the news spread, some loyal fans began to stock up. Of course, there were also many consumers who focused on domestic building blocks in pursuit of cost performance.

"China's building blocks look at Chenghai". Shantou Chenghai, the "toy city of China", is an important toy production base in China. The building blocks produced by the toy supply chain have exceeded 50% of the market scale and have the ability to respond quickly. Many domestic building block brands come from here, such as Senbao Building Block, Keepley, Pinqi, TopToy, etc. In the past, toy enterprises in Chenghai were mainly engaged in processing. In recent years, enterprises have upgraded in the direction of data and intelligence. The transformation and upgrading of Chenghai factory also represents the transformation and upgrading of domestic building blocks.

The development of domestic building blocks also benefits from the fitting factories that adapt to local building blocks. In order to meet the special needs of the domestic market, these factories usually carry out a series of localization adaptation work, reducing the cost of building blocks.

In terms of sales channels, domestic building blocks are distributed in stationery stores, shopping malls, boutique supermarkets, mother and baby stores, school side stores, wholesale markets and other channels, in addition to Fali brand franchise stores and e-commerce channels.

2、 The successful experience of Lego, the industry leader

In the bustling market, there is no lack of pessimistic voices. This concern is also well founded. Some domestic building blocks have been criticized by consumers because of their strong sense of copycat, inconsistent instructions with products, and poor hand feel. The prevalence of low-quality imitation building blocks in the early stage has brought a bad reputation to domestic building blocks, and challenging the industry leaders seems to be a lie.

Lego, an old building block enterprise born in 1932, may find more references for domestic building blocks. After the expiry of the self-locking building block patent, the competitors adopted the low price strategy, combined with the rise of other entertainment methods and other factors, LEGO fell into financial difficulties and entered a low tide.

In order to cope with the dilemma, from 1994 to 2004, Lego tried to transform for many times, and constantly opened Lego education centers, Lego theme parks, Lego clothing stores, Lego dolls and other surrounding areas, but ignored the toys themselves. As a result, the efforts made in the past ten years not only failed to find the growth point of Lego's heart, but also made Lego spend a lot of money on non main businesses, lacking breakthroughs in major product lines, and the profit margin continued to decline. In 1998, Lego lost money for the first time, bringing Lego to the brink of bankruptcy.

Since 2004, Lego has developed a "common vision plan" to refocus on its core business. Specifically, Lego sells theme parks, cuts unprofitable SKUs to stop bleeding, focuses on the core business of building blocks, and updates and iterates on popular series such as Star Wars series and technology series. At the same time, the "LEGO tie-in system" enables users to innovate infinitely in a systematic way. After the implementation of the new strategy, Lego turned losses into profits in 2005.

Lego built barriers in terms of product quality and design capability. Take the part mold as an example. In order to make the splicing of building blocks more comfortable, the error of each block cannot exceed 0.001 mm. To achieve this accuracy, a large amount of money needs to be invested in the mold. The mold cost of a single part of Lego varies from 4 to 250 thousand euros. In order to ensure the quality of the mold, these molds need to be overhauled and maintained every three weeks. High standard molds ensure the quality of building blocks, thus improving the quality of user experience and ensuring brand advantages.

There was a time when Lego excessively pursued the number of particles, which caused high cognitive difficulty. Later, Lego stipulated that the number of new parts should not exceed 13.5% of the total, balancing innovation and threshold. Lego continuously subtracts the types of building blocks. After improving the utilization rate of basic building blocks as much as possible, Lego also moves its foundry to China. Through these measures, the proportion of basic building blocks was increased, and the cost was reduced at the supply chain end.

After consolidating its core business, LEGO launched its exploration in film, game and other fields. Lego Film jointly produced by Lego and Warner Brothers has grossed more than 500 million dollars worldwide; Lego dimension series developed by TT games and released by Warner Brothers are listed, combining Lego building blocks with interactive host games; Lego and Tencent cooperate in mobile games.

3、 How do domestic building block brands break through?

Lego holds well-known IP addresses such as Marvel, Harry Potter and Disney, which brings considerable profits to Lego. However, Wukong Xiaoxia, Great Wall and other products have also been launched, and consumers' comments are mixed. Some consumers believe that the product has a biased understanding of Chinese elements.

In terms of IP co branding, domestic brands are catching up and developing new products based on traditional culture, "memory killing" and other aspects. Senbao Building Block has won the three body, wandering earth, the Forbidden City and other high-quality IPs. Lizhi Building Block has launched the Journey to the West series of products, and Pinqi has launched a joint brand version of the Wulin external biography, targeting loyal fans of the Wulin external biography, focusing on nostalgia. Brooke has also launched a number of new IP products, including "one major cultural innovation" joint brand products and "the Forbidden City Culture".

Domestic brands have unique advantages in obtaining some IPs. Taking the Shandong ship launched by Senbao as an example, during the design process of Senbao, the staff needed to communicate with the officers and soldiers of the Shandong ship aircraft carrier frequently, and each version should be sent for review. While restoring the details of the Shandong ship, they should not disclose secrets.

Cultural and creative authorization is an important direction for the future development of many domestic brands. Taking Senbao building blocks as an example, the company plans to build an IP moat belonging to Senbao building blocks. Among 1200 employees, there are nearly 200 design teams. At present, the annual investment in research and development accounts for 5%.

In addition to co branding with IP, building blocks+education has also become one of the development paths of domestic building blocks. Bangbao launched STEAM puzzle building blocks, Bruco also provided parent-child building block courses through the supporting APP, and arranged ahead of time through the self-made animated film "Changing Bruco". The master announced that the scene of Bu, Lulu and Coco summoning weapons was also a scene of building blocks, so as to attract children's interest in building blocks. The series has played more than 4.2 billion times in the whole platform.

Good toys also make money for adults. For quite a long time, international brands such as Lego have occupied the adult building block market, while domestic brands mainly focus on children oriented products. Now, building blocks+innovative play is also one of the growth strategies of domestic brands. Add building block functions and enrich playability to attract adults. The audience of domestic building blocks has expanded from the low age group to the full age group.

According to Huacheng Import and Export Data Observation Report, 38.17% of collection consumers also said they would like to increase the frequency of buying building block toys in the future. Many building block manufacturers combine building blocks with mecha models to attract mecha collectors. After the completion of assembly, they can both play and collect. In addition, the building block products as table decorations are also favored by building block manufacturers.

Some products are innovated in combination with Chinese ancient architecture and technology. For example, Coincidentally, the building blocks are mainly made of tenon and mortise structures. Together with the "Ancient Chinese Terracotta Warriors Series" developed by the National Museum of China, crowdfunding was carried out on Modian.com, raising nearly 1.2 million yuan in total, which has won high praise. In addition, we have also developed animal models, ancient building models, tanks, aircraft models, etc. to be spliced with tenon and mortise joints.

Xiaomi has released several types of all mortise and tenon structure building blocks, including the Temple of Heaven Praying for Good Harvest Hall, which was made up of more than 870 parts. At the time of release, it once attracted a lot of attention from building block players. Xiaomi has also entered the field of smart games, focusing on science fiction, mechanical groups, robots and other building block package series. With intelligent AI, the product can be connected to APP for intelligent remote control.

Domestic building blocks usher in the era of building brand power, but problems such as product quality still need to be solved urgently by domestic brands. To really blow the wind of domestic building blocks, we need to polish the details, enrich the playing methods, and create emotional connection between products and consumers. Huacheng Import and Export Data Observation Report.