Foreign buyers at China's 103rd Import and Export Fair, or Canton Fair, are positive about the competitiveness of Chinese toys, although average prices have risen by 20 percent over the past year, participants interviewed at the event said.

Toy makers had been worried that orders might fall sharply this year. But "the situation is better than we expected," an exhibitor from toy maker Jiangsu Hongye said. "The toy market may get better after April, and we are expecting more orders."

Chinese toy exports slowed last year due to increased prices and the yuan's appreciation. Large-scale quality recalls also hurt the industry. Statistics from the Guangdong Toy Association showed that the province exported 14.7 billion yuan (2.1 billion U.S. dollars) of toys in 2007, up just one percent year-on-year.

However, the industry has seen initial signs of recovery. In the first two months of 2008, the province's toy exports rose 43.5 percent to 1.79 billion yuan.

"I have been to the Canton Fair every time since 1985. I am confident of Chinese products," said Peter Zollner, a buyer from Sweden's Allan Flink Souvenirer AB. "The quality of the products has been improving every year."

He said he would purchase more goods this time, and his business was "going better and better."

Quality issues gave China's toy industry some tough times during the second half of 2007. Western countries raised quality standards and issued several recalls on Chinese toys.

One company affected was giant Mattel, which recalled more than 18 million toys last August, which were later traced to its design flaws.

China conducted special campaigns to improve toy quality and banned many unqualified companies from exporting.

However, a buyer from the United States said the negative news about Chinese toys last year had only a limited impact on consumers. "Parents are smart shoppers. They know the best price," she said.

She said, "Our company has an independent testing center, and we've never found any quality problems with Chinese toys. We don't worry about the quality. The price is our main concern."

However, higher prices are inevitable. "Prices of raw materials are increased by more than 15 percent last year, and the yuan is going up too fast," said Wang Liyu, an exhibitor from Shanghai Toys Import & Export Co., Ltd.

The yuan has strengthened by more than 18 percent since the government de-pegged it from the U.S. dollar in 2005. So far this year, it is up more than 4.4 percent, and it broke the 7-yuan/dollar mark on April 10.

"Some customers didn't attend or reduced orders," Yan Lulu of Nanjing International Gifts Co., Ltd. said. "But fortunately, most buyers could understand the situation and accept new prices."

"We have no choice," John Magginnis, president of the U.S.-based J&L Toys Inc., said. "Chinese products are still the most competitive in the world. We considered shifting to other countries before, such as India and Indonesia, but the shipping costs were too high. The overall cost would be even higher."

He said he usually sent toy samples to customers in past years, but from this year on, he would only send e-mail descriptions and product photos to reduce costs. "That could save me up to 50,000 dollars a year," he said.

"The price has already reached our limit," a buyer from the United Kingdom said. "Customers definitely don't want to pay more for those toys, so we have to reduce our profit margin."

(Xinhua News Agency April 29, 2008)