MGA Entertainment, based in California (USA), produces Bratz and LOL Surprise dolls! Along with other types of toys mainly in China. MGA Entertainment is taking steps to transfer 40% of the company’s production activities to India, Vietnam and Indonesia within 6 months or longer, up from about 10% to 15% today, according to the CEO Isaac Larian revealed to Reuters.
Mr. Isaac Larian, CEO of MGA Entertainment, in 2021
Mr. Isaac added about 60% of MGA Entertainment’s production activities will still take place in China after moving faster to India, Vietnam and Indonesia in the coming months. He noted that MGA Entertainment must increase wholesale price for products made in China to protect the company’s thin profits. “This will harm consumers because we have to transfer extra costs to retailers,” he said.
MGA’s plan shows that US commodity manufacturing companies depend heavily on Chinese factories that are adjusting as quickly as possible due to the trade war between President Donald Trump’s administration and China. They also raised prices to cover tariff costs for the remaining products made in China.
According to the American toy Association, Chinese factories currently produce about 77% of American toys, forcing companies such as Mattel Barbie Doll manufacturer to consider increasing prices to compensate for a 20% accumulated tariff for Chinese goods. Mattel also plans to reduce dependence on and calculate the closing of a factory in China later this year, according to Reuters.
Greg Ashearn, CEO of the toy Association in the US, said that the higher price may appear on retailers’ shelves at the beginning of the school year, and the 20% tax rate may mean the price increases by 20%.
Chinese officials met Walmart’s representative (a large grocery retailer in the world) this week to discuss information from the press that Walmart asked Chinese goods suppliers to discount to offset the impact of the Trump administration, according to Reuters, to quit social network posts associated with China Central Television (CCTV).
Mr. Trump applied a 10% tax rate for all imports from China in early February, in addition to the existing tax rates and doubled to 20% earlier this month.
Before Mr. Trump applied new tariffs on imported goods from China, Walmart’s supplier, MGA Entertainment, planned to transfer about 20% to 25% of production from China to other countries in the same 6 -month time frame, according to Larian CEO.
