Gifts / Sports & Toys

Domestic brands are stirring the wind and cloud in various fields. According to the observation report of Huacheng Import and Export Data, in the building block market, the same heat wave is surging, and the entrants have played the "Chinese building block" brand. The emerging building block brand has been placed with certain expectations, but it is doomed to break through many hurdles on the way to fight and upgrade.

1、 The 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 Import and Export Data, China's toy retail sales in 2021 will reach 85.46 billion yuan, up 9.6% from 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 block" is deeply rooted in the hearts of the people. According to the analysis report of the forward-looking research institute, from the perspective of the competition pattern of building block toys, Lego's market share in the global building block toys reached 68.8% in 2020, and its market share in China also reached 42.3%, ranking first.

In recent years, domestic building block brands such as Senbao, Coincidence, Pinqi, Bruco, Weiji and Wekki have obtained financing, and major Internet manufacturers have also entered the market. In December 2021, Xiaohongshu invested in mortise and tenon blocks by coincidence; In the same month, Pinqi won the investment of Zhenge Fund and Sequoia China Seed Fund, and then received the investment of Shunwei Capital, with a total financing of more than ten million dollars; In February this year, Alibaba took a stake in Senbao Building Blocks. In addition, Xiaomi has also entered the field of intelligent building blocks.

With the help of capital, domestic brands have made efforts in technology, such as Starbucks, Keepley and other brands 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 of Mengxiaoying increased by more than 30%, KeepPly by more than 150%, Senbao building blocks by more than 50%, and Feile by more than 40%.

Changes are taking place. A number of leading Chinese building block brands are taking the road of branding, making progress in research and development and manufacturing, and gradually making their own characteristics. On August 1 this year, Lego announced a comprehensive price increase, involving more than 100 products, with an increase of about 5% - 25%. When the news has spread before, some loyal fans began to stock up. Of course, there are also many consumers who are looking at domestic building blocks in order to pursue cost-effectiveness.

"China's building blocks look at Chenghai", "China's toy capital" Shantou Chenghai is an important toy production base in the country. The building blocks produced in 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, the toy enterprises in Chenghai were mainly engaged in processing. In recent years, the 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 processing plants of local building blocks. In order to meet the special needs of the domestic market, these factories usually carry out a series of local adaptation work, reducing the cost of building blocks.

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

2、 The successful experience of Lego, the industry leader

In the bustling market, there are pessimistic voices, and this concern is also groundless. Some domestic building blocks have been criticized by consumers because of the strong sense of copycat, the inconsistency between the instructions and the products, and the poor feel. The rampant use of inferior imitation building blocks in the early stage has brought bad reputation to domestic building blocks, and it seems to be a false statement to challenge the industry leaders.

In Lego, an old building block enterprise born in 1932, domestic building blocks may find more references. After the expiration of the self-locking building block patent, the competitors adopted a low-price strategy, combined with the rise of other forms of entertainment 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 many times, opening LEGO education center, LEGO theme park, LEGO clothing store, LEGO dolls and other surrounding areas, but ignored the toy itself. So all the efforts 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, lack of breakthroughs in major product lines, and the profit margin continued to decline. In 1998, LEGO suffered losses 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 sold theme parks, deleted unprofitable SKUs to stop bleeding, focused on the core business of building blocks, and updated and iterated for best-selling series such as Star Wars series and technology series. At the same time, the "Lego Collaborating System" enables users to carry out unlimited innovation in a systematic manner. After the implementation of the new strategy, Lego turned losses into profits in 2005.

Lego builds 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 should not exceed 0.001 mm. To achieve such accuracy, a large amount of money needs to be invested in the mold. The cost of a single part mold of Lego varies from EUR 40000 to EUR 250000. In order to ensure the quality of the mold, these molds also need to be repaired and maintained every three weeks. High-standard molds ensure the quality of building blocks, thus improving the quality of user experience and ensuring the brand advantage.

There was a time when Lego excessively pursued the number of particles, which led to higher cognitive difficulty. After that, Lego stipulated that the number of new parts should not exceed 13.5% of the total, balancing the innovation and threshold. Lego continues to subtract the types of building blocks, and after improving the utilization rate of basic building blocks as much as possible, it will also move the Lego factory 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 a global box office of more than 500 million dollars; The Lego dimension series developed by TT games and released by Warner Brothers was listed, combining Lego building blocks with interactive console games; Lego and Tencent cooperate in the field of mobile games.

3、 How can domestic building block brands break through?

Lego holds well-known IPs such as Marvel, Harry Potter and Disney, bringing considerable profits to Lego. However, products such as Wukong Xiaoxia and the Great Wall have also been launched, and consumers' comments are mixed. Some consumers believe that there is deviation in the understanding of Chinese elements.

In terms of IP co-branding, domestic brands are catching up and developing new products based on traditional culture and "memory killing". Senbao building blocks have won high-quality IPs such as Three-body, Wandering Earth and the Forbidden City. Lizhi building blocks have launched Journey to the West series products, and Pinqi has launched the Wulin Outlaws co-branded products, targeting the loyal fans of the Wulin Outlaws, focusing on nostalgia. Bruke has also launched several new IP products such as "One Cultural and Creative" co-branded products, "Palace Museum Culture" and so on.

Domestic brands have unique advantages in acquiring some IP. Take the Shandong ship launched by Sembo as an example. In the design process of Sembo, the staff need to communicate with the officers and soldiers of the Shandong ship carrier frequently. Each version should be sent for review. The details of the Shandong ship should be restored without disclosure.

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 establish an IP moat belonging to Senbao building blocks. Among the 1200 employees, the design team has nearly 200 people. At present, the annual R&D cost accounts for 5%.

In addition to co-naming with IP, building blocks+education has also become one of the development paths of domestic building blocks. Bangbao launched STEAM puzzle blocks, and Bruck also provided parent-child block courses through the supporting APP, and arranged in advance through the self-made animated film "Bruck in a Hundred Changes". The scene where the host announced Bu, Lulu, and Coco summoning weapons was also a building block collage scene 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 earn adult money. For a long time, Lego and other international brands have occupied the adult building block market, while domestic brands mainly focus on children's products. Now, building blocks+innovative play is also one of the growth strategies of domestic brands, adding building block functions and enriching playability to attract adults. The audience of domestic building blocks has expanded from low age to full age.

According to Huacheng Import and Export Data Observation, 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 the building blocks with the mecha model to attract the mecha collection players. After the completion of the assembly, they can both play and collect. In addition, building block products used as desktop ornaments and other decorations are also favored by building block manufacturers.

Some products are innovated in combination with Chinese ancient architecture and technology. For example, by coincidence, the building blocks were mainly used for mortise and tenon structure, and the "Ancient Chinese Terracotta Warriors Series" developed by the National Museum of China was crowdfunding on Modian, raising nearly 1.2 million yuan in total, which won a high praise rate. In addition, mortise and tenon are also developed to splice animal models, ancient building models, tanks, aircraft models, etc.

Xiaomi Youpin has released several full mortise and tenon building blocks, including the Temple of Heaven Prayer Hall, which is made up of more than 870 parts, once attracted a lot of attention from building block players when it was released. Xiaomi has also settled in the field of smart fashion play, focusing on science fiction, mechanical group, robot and other building block sets. 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 product quality and other issues are still urgent for domestic brands to solve. 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.