Lego, the Danish toy company, is gearing up for a big expansion in China, reported Reuters.
According to a report in Reuters, Lego is planning on doubling the number of stores it has in China, reaching 140. The expansion, reported Reuters, is the company’s fastest in any market and is in response to huge demand for its toys. The demand in China comes at a time when Lego is facing a decline in the U.S. and Western European markets. Those two are core markets for Lego but China remains a bright spot, noted the report. Reuters reported Lego will have roughly 140 shops in thirty Chinese cities by the end of 2019. Currently, the company operates 60 stores in China. They are run mainly by local partners, noted the report.
“I’m not really seeing any stagnation (in the Chinese toy market) at this time,” Chief Executive Niels B. Christiansen told Reuters. “Ninety-five percent of Chinese parents want their kids to play more, and they are interested in giving them high-quality toys.”
The Chinese toy market stands at $31 billion. It represents less than 10 percent of Lego’s sales and is seen as an important growth avenue for the company. The expansion for Lego in China does come when the country is facing the worst slowdown in economic growth in 28 years. China is also embroiled in a trade war with the U.S. that is shaking consumer confidence.
In addition to the Chinese economy, Lego does have to contend with counterfeits and copycat products that hurt sales. The CEO told Reuters its a problem even with a government clampdown. “It’s clear that China’s ambition is to do something about this problem, but we haven’t really seen the implication of it yet,” Christiansen said. “One of the biggest hurdles is that court cases take a long, long time. We would like that when we win a court case, the enforcement would be better and stronger.”