BUDDING ENGINEERS cluster around a table-sized model of the China Art Museum, a landmark of Shanghai, adding helipads, carrot patches and other improvements with colourful bricks. Prising a child from Lego’s vast shop near People’s Square can be like unsticking two stubborn bits of Lego. Li Yang, visiting for a few days from Shenzhen, has been waiting for her daughter for two hours. Zhu Yunfei, watching his son, marvels at the variety: “Coming here to play with him is making up for my childhood,” he says. They drop by every week.
Lego’s rise in China has been vertiginous. In 2017 it overtook Alpha Group, a local giant, to become the country’s leading toy company (not including video games). In the past two years it has opened 89 stores. It wants 50 more by December, which will bring it to 30 cities. Its first Chinese factory started moulding bricks in 2016. The toy industry is growing by 9% annually in the country, but the Danish firm’s Chinese arm notches up “very strong double digits”, says Paul Huang, its boss.
It has done so even as the brickmaker’s global business has looked shakier. In 2017 Lego cut 1,400 jobs and recorded its first drop in revenues and profits in over a decade. But last year both ticked up again, by 4% each. Lego has thus retained its status as the world’s biggest toymaker, snatched from Mattel in 2014—even as its American rival last year earned its highest revenues in five years from its Barbie dolls.
Newly affluent parents in China have helped Lego recover. “We have not maxed out there, by far,” says Niels Christiansen, whom Lego brought in as chief executive two years ago. As in the West, the educational merits of bricks appeal to Chinese parents. Last year 98% of those surveyed by Lego said that play was essential for their child’s well-being, even more than Americans and Danes.
Lego has also astutely catered to local tastes. This year the firm launched three sets specifically for China, the first time it has done so for any country. Fans were delighted at the attention to cultural detail. One was a Chinese New Year’s Eve dinner kit, with tiny red envelopes and chunlian, lucky couplets on banners pasted around doorways. A dragon boat race set included a sticky-rice dumpling, a popular festival snack. The high-quality kits are pricey, costing up to 700 yuan ($100) apiece.
With Barbie, Mattel tried to localise in the wrong way. A former Chinese manager at the American company calls its promotion of a line of cheaper, flimsier dolls “arrogant”. Because no effort was put into making her locally relevant, Barbie held none of her usual aspirational appeal, even for spendthrift Chinese. In 2009 Mattel opened the world’s largest Barbie shop on a luxury shopping street in central Shanghai, stuffed with 800 dolls. The six-floor pink colossus confused Chinese parents by offering mothers a spa, designer fashion and “Barbietini” cocktails, and their daughters more age-appropriate attractions. It was a flop and shut two years later.
It is hard to convince prudish parents of the creative merits of frivolous dolls, and grown-up Chinese collectors prefer short and chubby Molly, a popular local poppet. The Chinese market for construction toys is six times bigger than for dolls. In Mr Zhu’s words, “there is no art to a Barbie”. Tellingly, Mattel’s most successful brand in China is a maker of educational baby toys, Fisher-Price, with a market share of 1.1%, according to Euromonitor, a data provider. Barbie, with 0.3%, comes a lowly 31st. By contrast, Lego’s 4.5% share puts it firmly in first place: a fortification that will serve it well, as China’s market for toys and video games, worth $45bn, overtakes America’s in the next few years.■
This post was originally posted at https://www.economist.com/business/2019/07/27/why-chinese-parents-prefer-lego-to-barbie.