Most children’s toys sold in the United States carry the same label on their underside: “Made in China”. US government figures show that 78.3% of toys imported into the country in 2024 came from China. Trade figures put the value of those Chinese toy imports last year at $9.8bn (£7.4bn).
With Christmas approaching, the toy industry in the US and elsewhere is heading into its busiest period of the year. Retailers, from large online companies to small family-run shops, are preparing their stock for the festive rush. To show how a toy gets from a factory in China to an American shelf, and where the money goes, a World Service series followed one product’s journey.
Inside a Guangdong factory that makes toys for America
Guangdong province, which borders Hong Kong in southern China, is the centre of the country’s toy manufacturing industry. In the city of Dongguan, workers at the Mihox factory pop plastic toys out of steel moulds and stack them in crates ready for painting. The company says it employs more than 800 people and makes around 55 million toys a year for the American market, which accounts for half of its business.
Every toy begins with a design from a customer, such as an American toy company. The factory then builds a prototype and makes the moulds that form plastic parts and other components. Melanie Wang, from Mihox’s sales team, said going from the first idea to a finished toy takes one to two years, much of it spent with the customer revising the design.
Once a design is approved, production moves much faster. According to Wang, a mould takes about a month to make, and the production run lasts about three months.
Wang said the factory receives about 20% of a toy’s US retail price. On a toy that sells for $30, that is $6, which must cover plastic and other materials, production costs including wages, and the factory’s profit. Jay Foreman, chief executive of the US toy firm Basic Fun, said Chinese factories typically make a profit of between 3% and 10%. On a $30 toy, that would be between 18 and 60 cents of the $6.
Why production stays in China despite rising costs
Samson Ko, president of the Toys Manufacturers’ Association of Hong Kong, said many of his members moved their factories across the border into mainland China in the 1980s, drawn by cheaper land and labour. He said the way toys are made has changed little since then. “Automation now takes place mostly in the moulding and the packaging process,” he said. “But for soft toys, or even some of the electronics nowadays, it’s still very labour intensive.”
Ko also said Chinese labour is no longer cheap after recent pay rises. One report cited at the start of this year put average pay in Vietnam at about half of that in China. Even so, Ko said fewer than 10% of his members have moved any production outside China, and in most of those cases the customer had asked them to do so.
He explained that a single toy can go through several manufacturing stages, from moulding parts to adding electronics, sewing materials and final assembly. That often means the product travels between different factories. Ko said these facilities in Guangdong sit close together and are used to “working in harmony”, which he said makes the process run more smoothly than in other countries.
Freight, tariffs and where the retail price goes
From the factory, the toy is trucked to a port, such as Shenzhen, the largest in Guangdong. Ivy Tse, co-founder of the Hong Kong logistics company FreightAmigo, said a cargo ship takes about 15 days to reach the US west coast from Shenzhen, and 25 to 30 days to reach the east coast. This year’s Christmas toys left China in August and September.
Tse said freight from factory to the US usually adds about 10% to a toy’s manufacturing cost. For a toy that retails at $30 and costs $6 to make, that means about 60 cents to ship it.
Once the toys arrive, importers must pay a tariff on Chinese goods to US Customs and Border Protection. After talks between President Trump and Chinese leader Xi Jinping last month, the two governments recommended lower tariffs for toys. However, no new rate or start date has been set, and the US must first hold a public consultation. For now, the basic rate is 12.5%, and some toys pay more. The tariff is calculated on the factory’s manufacturing price rather than the retail price, so on a $30 toy it comes to 75 cents.
The American company that imports the toys pays the tariff. Rick Woldenberg, chief executive of Learning Resources, a family business near Chicago that sells educational toys, said: “We pay 100% of the tariffs, let there be no doubt about that.” His firm imports half of its toys from China.
Adding the factory cost, freight and tariff brings the total for a $30 toy to $7.35. That leaves $22.65, or 75.5% of the retail price, which Foreman said mostly stays in the US. He said the money is kept by his company, the US transport company and the retailer. His firm, based in Florida, makes Tonka trucks and Care Bears toys.
The article’s calculation allows $2.65 for the US delivery firm and assumes the toy company and retailer split the rest equally, giving each $10. Profit margins are commercially sensitive and are not generally published, but industry studies cited in the report suggest the toy firm and retailer usually make a profit of up to 25%, or $2.50.
- Factory cost of materials, labour and profit: $6.00
- Freight to the US: $0.60
- US import tariff: $0.75
- Total cost before US distribution: $7.35
- Remaining retail revenue: $22.65 (75.5%)
Getting a toy onto a shop shelf in the US takes a great deal of work and a long journey, from the first sketch in a design studio to the final sale.
