8 Feb 2012
The Science of Toymaking
|Eastcolight founders Salley Sze and Andy Sze hold two of their latest products: the ball-shaped Planetarium, which projects star charts as it plays music; and the Dr Mike HD Digital Microscope, which displays tiny objects on a TV screen|
In his showroom packed with gadgets designed to turn youngsters into budding scientists, Andy Sze disagrees with those who speak of toymaking as a “sunset industry.”
“In the end, the ones who will survive are those with their own brands and innovative, creative ideas, which make them financially substantial enterprises,” says the CEO of Eastcolight (Hong Kong) Ltd.
Mr Sze founded Eastcolight in 1991 with his wife, Salley, who is company Vice President and General Manager. They are mindful of lessons learned in their early days of operation.
“We started from zero, and we had to do everything on our own,” says Ms Sze, recalling how Eastcolight began with a line of toy “slot-car” racing sets. She says it wasn’t long before they found themselves struggling amid fierce competition.
“Our margin was very low and getting lower, so we switched our focus to educational toys such as telescopes and microscopes,” she says.
Reaching for the Stars
Eastcolight's LCD Digital Telescope, featuring high-quality optics and electronic components, has helped build the company's reputation for value-for-money educational toys
“Twenty years ago, it was easier to start a business in toys. If you simply had a product, you could sell it. But nowadays, it’s totally different,” says Mr Sze, adding that research and development talent in Hong Kong is a key to success.
“The thing you must have is good R&D capabilities, and then you must incorporate that with high technology,” he says, noting that Hong Kong also serves as Eastcolight’s marketing nerve centre for a branch office in Macau and showroom in the mainland city of Guangzhou.
Their current distribution network, which covers more than 100 countries, has generated double-digit sales growth in recent years, with the company striking deals to make science-themed toys for such global brands as Discovery Channel and National Geographic.
Hong Kong R&D
Like others in the toy industry, Eastcolight faces a number of challenges, including rising wages, keeping up with safety standards and the multi-language packaging required by their various markets. Protecting intellectual property is also a concern. But Ms Sze says Hong Kong helps keep those problems from spinning out of control.
“Hong Kong has a relatively stable economy, as well as advanced legal and political systems,” says Ms Sze. “Most importantly, the quality of employees is the reason for our success. We have our R&D department here, so Hong Kong is the heart of the whole corporation.”
She also credited the Hong Kong Trade Development Council for helping Eastcolight and other small and medium-sized enterprises. “Product magazines, exhibitions and mission tours to help understand emerging markets are among the services it offers,” she says, adding that Eastcolight is focused on such emerging markets as Russia, South America, Turkey and across Asia, including the mainland.
“We have just started selling our products on the mainland, with 10 self-owned sales counters in Beijing, Shanghai and Chengdu, as well as more than 60 retail points around China,” says Ms Sze. “So this is also a new opportunity.”
Fun and Function
Eastcolight’s Master of Spy toy
“I think nowadays parents are looking for some educational value as well as good play value with high technology. Innovation that’s fun is what is most important for kids,” says Ms Sze. “Another challenge is that people expect to spend less, but want more value. The life cycle of products is getting shorter and shorter because people constantly want something new.”
Quality and high technology are also critical in competing with the digital world. “Kids nowadays get to use computers or smartphones much earlier than ever before. Our toys target the eight-plus age range, and more high-tech products can suit 14-year-olds or even adults,” she says, noting that some Eastcolight telescopes have earned praise from professional astronomers. “I think toys are really something of a necessity for kids. No matter how bad the economy, parents will still spend on their children.”
Eastcolight’s founders also advise aspiring entrepreneurs to focus on their strengths and find specialty sectors in which they can excel – even if that means taking chances.
“It’s never been easy to start a toy business. I think, most importantly, you must love this industry, and you need to understand the market because it changes so quickly,” Ms Sze advises. “If you are doing business, you must also take some affordable risks. Don’t be too conservative.”
Eastcolight (Hong Kong) Ltd