EU's recent directive challenges China's toy manufacturing industry

14-Jul-06

EU's RoHS (Restriction of Hazardous Substances) directive bans the use of 6 dangerous substances such as lead, cadmium and mercury in toys as well as in electronics goods. As per the directive, toys containing these substances will be banned from the EU market. This recent directive by the EU is different as it encompasses materials that are deemed harmful to the environment. In the past, mainly those materials that were a threat to health were banned. As this new environment-sensitive directive on the EU's electronic and electrical goods took effect at the start of the month, toy makers in China are being compelled to be more careful about the materials used. Last year, China exported US$15.18 billion worth of toys, 23.6% of which were for the markets of Europe. A serious quality blunder in a single shipment of toys to an EU buyer last year had resulted in a financial disaster of a thriving 10-year toy manufacturing business in East China's Jiangsu Province. Experts estimate that compliance with the new environment requirements is likely to push manufacturing costs up by at least 20% in a two fold way - increased cost of raw materials that comply with stricter requirements, and certification to prove product compliance. Producers are being affected by mounting costs and reduced profits. Certification of a single type of a toy could cost up to 180,000 to 200,000 yuan (US$22,500 to 25,000). Raw materials as per the new directive, are in short supply.