Hong Kong idea: a fairy tale castle.

According to Werner Lenzner of market research company NPD Group, electronic toys will show lower growth rates in the near future, with video games absorbing part of their market share. Lenzner anticipated higher costs due to EU and US safety measures, which "will be difficult to shoulder for innovative, small- and medium-sized companies."

This didn't stop 164 exhibitors from Hong Kong from presenting some intriguing ideas, several displayed at the innovation centre mounted by Nuremberg's giant International Toy Fair. The territory's exhibitors were up for a clutch of awards.

KY Model Company Limited showed both the new radio-controlled Black Angel CX450 3D Helicopter and another new model, the CX 180/180F. The Black Angel is constructed from carbon fibre with high grade machined aluminium alloy parts and has a plus or minus 15 degree pitch range.

Exhibitors from Hong Kong.

SilverLit and Dynamic Model Design Limited showed products in the same electronic grouping, with accessories.

The Toy Company displayed an innovative wooden fairy tale castle in the dolls' parlors and houses sector (retailing at Euros69.9). The castle includes furniture, pawns in the game and a fairy tale storybook with The Frog King, Rapunzel and the Princess and the Pea.

Unexpected Elephant, a newcomer to the Toy Fair, showed three new board games for the entire family. In Paparazzi Pursuit, the celebrity travels invisibly to different locations. The camera-toting paparazzi can work individually or as a team and use every means at their disposal to find and photograph a celebrity.

2008 a year of regulation, 2009 a year of compliance

With the revised EU Toy Safety Directive adopted by the European Parliament and entering into force this month, exhibitors at the fair were frequently asked for testing and compliance of their products by buyers.

Last year's product recalls have raised alarm among retailers and are likely to pile a heavy workload on certifying and testing organisations.

"Big retailers, such as Metro, Aldi and Lidl, are exacting in their safety demands and require even stricter tests than called for by national and international law," said Robert Ziegler of TÜV SÜD.

Retailers expect extra care.

"They prefer certified products. Germany has been quick to implement those regulations of the EU Toy Safety Directive that refer to substances that might be carcinogenic. For France, regulations are similar and UK, Spain and Italy will follow suit," Ziegler added.

Such considerations were underlined with the display of a cute little black duck, which was not only the big attraction in a quiz, but was also an example of not meeting European regulatory requirements.

Markus Binkowski, Managing Director of Everts - The Balloon Company was looking for balloons, novelties and party articles at the fair, but was dubious about manufacturers' ability to provide balloons compliant with the EU directive.

Chris Byrne, also known as The Toy Guy, foresees good possibilities in the markets for videogames and construction toys. He said if technology is used to drive creativity in board games they are always good sales prospects in a recession.

Byrne said sports toys are good sellers to guard against weight problems in children, while role play and dress-up action figures are popular. He expected a decline in traditional toys to be offset by electronic and technically-advanced toys.

Families go for education and ecology

Ecology backed: Bamboo Racer.

Educational toys remain popular in Germany and the rest of the EU, with a focus on social learning. But buyers also looked for ecological themes, one of them being bamboo, rediscovered by HaPe, manufacturer of wooden toys with customers like the Swedish furniture chain IKEA and US chain Toys"R"Us.

There is also strong focus in Europe on family play. An aging population in the EU constitutes a market that toy makers will want to access.

However, buyers are bargaining hard for lower prices.

Purchasing firms are also joining forces. For example, EK service group's unit SPIEL & SPASS in Germany, Holland's toy retailer Top1Toys, and leading French toy buyers co-operative JouéClub are planning to bring together their purchasing, marketing and logistics for imports from Asia.

Such international co-operation follows a "best price" strategy, which will permit the partners to harmonise buying conditions and minimise their logistics costs.

Binkowski said: "Everts will continue to source approximately 10% of its product range on [the Chinese mainland] and Hong Kong if prices don't rise. However, due to the long delivery times, recent termination of subsidies and rising prices for raw materials (such as Latex), all combine to increase prices by 10% to 20%."

Bamboo games a hit.

Everts has already returned part of its production to Europe, mostly to Germany. Energy and material costs are important factors for the firm, to retain margins of perhaps Euros1 to Euros2 for most items.

"Kidults" a coming group to attract

With The Walt Disney Company still strong in licensing, Germany's long time favourite is Hello Kitty, attracting adults and children alike.

"'Kidults' will be the target group in the coming years. Their goal is to self-confidently stay immature." said Peter Wippermann of Trendbüro. He identified two trends as strategies for adapting to a changing environment, namely networking and demographics.

Already, 50% of Disneyland's visitors are grownups with no accompanying kids and in 2050 the elderly will outnumber the young not only in Europe, but also in the US and China, Wippermann predicted.

Dancing flamingo.

Adults love toys because "you are never too old for cuddling," Wippermann observed. "In the beginning there's a website, and the communities and self designers originate licensed products."

Wippermann also warned of a trend to violate privacy due to increased use of Radio Frequency Identification (RFID) in toys and more mobile phones in younger hands.

Byrne emphasised licensing, since parents look for toys relevant to their children's lives. He predicted a contraction of the toy market in the US with vast sums in credit card debt but believed the toys and games market would still survive.

However, as shelf space is shrinking customers will spend less, Byrne believed. His advice was for toy makers to undertake aggressive marketing and promotion and understand customers. Byrne also emphasised the importance of the Internet: "more than 70% of toy purchases are researched online, and social networking is done by ever younger kids."

Social networks and user-generated content

The importance of branding is growing and should be leveraged for diverse play experiences, said Byrne. As social networking changes market and promotion, he recommended building social networks and promoting user-generated content. He emphasised retail relationships.

Managing retail relationships the key.

This is what COG Limited does, according to Christine Tai, Export Executive of the Hong Kong firm. "We support our customers at the point of sale with promotional material, and we offer a wide range of products in different price categories, from small to big. Last year we raised our prices, this year we had to reduce."

COG is strong in branding, since its own brand is easier to bring to market, said Tai. "We offer new products all the time and hope for stable growth. Eastern Europe is still expanding, and as to Latin America, we are also hopeful." However, currency volatility is an ongoing problem.

COG does not worry about China as a place to manufacture, even though almost half of the toy factories have gone out of business there, said Tai. In COG's case, the company has its own factory and doesn't need to outsource.

Innovation remains dominant

The search for innovation remains the most important reason to visit the fair. New products were nominated in seven categories: Fun + Sport, Games + Action, Knowledge + Learning, Electronics + Technical, Emotion + Experience, Trend + Lifestyle and Creativity + Design.

The Light Pen Writer.

Heli Mission pack.

In the final category, Hong Kong's W A Jacobs was the winner with The Light Pen Writer (retailing at Euros30). This is ideal for travelling because, instead of drawing on a piece of paper, children paint on a light-sensitive board with a light pen.

Kids can use either the templates supplied or allow their own creativity to run free. The drawing disappears from the board after a few minutes, with no mess to clean up.

Hong Kong's SilverLit's Heli Mission (retailing at Euros79.9) was nominated for a Toy Award as well.

Green power toys.

The product consists of a housing truck with remote-controlled opening flap and elevation platform for stowing a remote controlled helicopter.

Kevin Choi, CEO of SilverLit, gave his outlook for the coming year: "people will buy less, and they will buy less expensive items." Choi does not expect the same sales as in the previous year, but "we are launching many new items, even in the face of a pessimistic outlook."

The company will then have plenty of products for when the situation improves and hopes to gain market share. SilverLit is being approached by new buyers, for example from Russia, Ukraine and other East European countries.

Hong Kong's Amazing Toys Ltd' Eco Power Station Series (retailing at Euros24.9) was also nominated for an award. The new products were aimed at the education market. Green power moves the toys instead of batteries, helping kids to understand energy. The little robot is powered by a crank, the racing car by wind, and the space mobile by solar energy.

Fair's birthday celebration.

Samuel Sy, General Manager of Amazing Toys, hopes for stable markets, in the EU, followed by the US and Asia. Due to Russia's 30% devaluation, he does not expect that market to be positive. "Our toys have passed the SGS lab tests and the packages are recyclable."

Amazing Toys has its products manufactured by SMEs on the Mainland and hopes to reduce its dependency on an undependable manufacturing base.

This year, the Nuremberg fair celebrated its 60th anniversary, with 2,689 exhibitors compared with slightly fewer last year. There were 76,000 visitors compared to 79,800 in 2008.

from special correspondent Dagmar Boedicker, Nuremburg