China’s Toy Supply Chain: Too Big to Replace Overnight

Why relocating toy production is more complex than headlines suggest

Following U.S. President Donald Trump’s announcement of a sweeping trade agreement with Vietnam on July 2, 2025, toy industry stakeholders around the world took notice. The deal includes zero tariffs for Vietnamese exports to the U.S., alongside a steep 40% on Chinese goods transshipped through third countries. While this move aims to bolster manufacturing outside of China, it raises a pressing question:
Can Vietnam—or any other country—realistically compete with China’s deeply entrenched toy-making engine? The answer, for now, is no.

More Than Just Factories

China has spent the past four decades building more than just manufacturing sites; it has constructed a full ecosystem. Cities like Dongguan, Shenzhen, and Shantou have evolved into global toy production hubs where proximity between suppliers, mold engineers, packaging facilities, and export infrastructure ensures speed, scale, and cost-efficiency. Supply chains span raw materials, tooling, packaging, electronics, and skilled labor. These networks are geographically concentrated, streamlining logistics and lead times.

This synergy is a result of long-term investment, government planning, and deep industry know-how. Replacing it would mean reinventing every link in the chain—something even well-resourced countries struggle to achieve overnight.

Toys Are Low-Tech, but Highly Complex

While toys aren’t semiconductors, they span a wide diversity of formats and technologies. From wooden building blocks to battery-powered RC vehicles, each category demands specific expertise, materials, and compliance protocols. Transitioning from one supplier to another, let alone from one country to another, introduces significant complexity—from redesigning molds and retooling processes to conducting new rounds of safety and quality verification.

What’s more, toy buyers often face hidden challenges: language barriers, different engineering practices, unfamiliar compliance standards, and extended development cycles. These are not superficial hurdles—they can delay launches, drive up costs, and dilute product quality.

Vietnam: Promising, But Not Yet a Rival

Vietnam has made impressive strides in expanding its manufacturing capabilities, drawing interest across electronics, furniture, and apparel. For toys, however, its infrastructure remains nascent. It lacks the density of supporting industries that China has cultivated—such as plastics processing, mold fabrication, and regulatory testing. While the trade deal opens doors, building comparable capacity will take years.

Strategic Patience Will Win the Game

For toy companies and brands, diversification is a smart long-term strategy—but it should be approached with realism. Relocating production is a marathon, not a sprint. Instead of abandoning China, many companies will likely adopt hybrid models: maintaining core production in established Chinese facilities while slowly developing supplemental capacity in countries like Vietnam, India, or Indonesia. This approach balances agility with reliability, minimizes disruption, and allows time for new partnerships to mature.

Toymag Asia will continue to monitor developments in global sourcing and trade policy. As the landscape shifts, our mission remains clear: to inform, to connect, and to help the industry navigate the road ahead.