Developing markets such as China and Russia will be increasingly important to the Hong Kong toy industry in 2005, according to a survey conducted at the Hong Kong Toys and Games Fair in mid-January.

Hong Kong toy exports for the first 11 months of 2004 were up slightly by 1% (to just under US$1 billion), compared to the same period in ’03. While the industry continues to rely heavily on the U.S. market, which accounted for more than 40% of total toy exports last year, shipments to Russia increased by 44%, Brazil by 38%, South Africa by 32%, and the Chinese mainland by 30%.

China seems to be particularly interesting to Hong Kong toy players, and more than half of the survey’s 1,832 respondents plan to begin conducting business in the region by 2008, compared to 30% who operate there now.

Commissioned by the Hong Kong Trade Development Council, the report also indicates that digital and electronic toys will continue to sweep the top spots on buyers’ lists. More than a quarter of the Fair’s buyers voted battery-operated and electronic games as the category to watch this year, followed by educational toys, computer toys and video games. Toys that link to the Internet generated a lot of buzz this year, including a toy robot that lets consumers play games with animated versions of their bots over the Internet.

Making serious headway in the rankings this year, baby toys and sporting goods finished third and fourth respectively, with a third of buyers now sourcing baby toys, and a quarter looking for sporting goods. Within the baby toys category, products for toddlers and preschoolers that foster creativity and language/communication skills should be particularly hot in ’05.

The survey also showed that buyers put the average life cycle of products at 6.6 months. The Chinese mainland has the shortest cycle (4.6 months), followed by Japan (5.0 months), and North America has the longest at 7.2 months.