“Before we can fix the problem, we have to know its roots,” Park explains. Chinese manufacturers enjoy a big advantage because of low
20 labor costs. Although the cost of labor in China is rising slightly, Park believes Thailand’s labor costs are still acceptable. The problem is that workers here do not work to their full capacity, he says, especially during long holidays, when many are absent.
“Our labor problem is that we can use only 70 per cent of 25 work capacity. This has a major effect on the business because we are unable to manufacture in time to meet orders.” Low labor costs aside, China also has its own raw materials, while Thailand still needs to import them from Korea. Some Thai toy manufacturers recently tried to source their materials locally, 30 but found suppliers were incapable of meeting demand.
As a result, low labor costs and locally sourced materials are the two main factors enabling Chinese manufacturers to produce toys at half the price of their Thai outer parts. Parks Toy pondered what its advantages might be, and it 35 concluded that they were quality, design and after-sales service. And these things, it believes, should be enough to create business opportunities.