China licensing market is raising more and more attention from the foreign properties. “We started to enter the Chinese market since 2013, and up to now we have achieved very rewarding results with partnering with many key retailers.” said Danny Cheung, CEO & Head of Licensing at Smiley Asia Pacific. The European brand is now a popular property among the young Chinese consumers.
More mature market
“China is huge and attractive market for every IP holders in the world. Due to the impression of heavy infringement, many IP holders in Japan were negative to walk into the market. However, we are so impressed to find how the situation is changing.” said Andy Y. Toyama, Managing Director of Character Brand Licensing Association (CBLA) of Japan.
In October of 2016, Toyama organized a 15-people Japanese delegation to visit Shanghai China, where the 10th session of China Licensing Expo was on. It was the ever first time for a Japanese licensor delegation to observe the licensing market from their own eyes.
“During the visit, we had over 10 meetings with different licensing agents in China, and were very surprised to discover how mature the licensing industry had developed in China.” Toyama remarked. The result of the on-site visit included a Japanese licensor found a local partner, as well as CBLA decided to organize a Japan Pavilion on the 11th session of China Licensing Expo, to make its debut in China mainland on this October in Shanghai.
Toyama’s story was echoed by Kim Rak Kyun, General Director of Global Business Division of Korea Creative Content Agency (KOCCA). The national organization has been organizing Korea Pavilion at China Licensing Pavilion for continuous four years, to introduce Korean properties to China market.
“In the past, the licensing industry was faced with difficulties in entering the Chinese market because of frequent intellectual property infringement in the country. However, Chinese government has come up with various policies to promote the industry, providing foundation for the copyrights system, and thus, contributing to expansion of the industry.” Kyun expressed.
“Furthermore, I believe that the rapid economic growth, the end to one-child policy, city development plans including establishment of theme parks in China, strategic investment, and new policies will make China a more attractive market for the character licensing industry.” he added.
“Licensing business in China is expanding rapidly with huge potential. In 2015 China ranked the fifth largest licensing market in the world, with the market size of USD7.61 billion and a year-on-year increase of 24 percent. In the comparison, the world market as a whole in 2015, which was USD251.7 billion in size, was only 4.2 percent in growth.” said Charles Riotto, President of LIMA, on the Sixth Session of China Licensing Summit in Shanghai last October, during the China Licensing Expo.
Not only the licensing business and environment is growing more mature, the same as Chinese consumers. “China is the fastest growing licensing market in the world, and we believe that it will become the key driver for industry growth in the coming decades. In terms of changing consumer mentality and behaviors, we are seeing growing consumer maturity in the country – what parents and particularly moms are looking for – safety, high-quality, inspiration, educational benefits.” emphasized by Claire Gilchrist, Vice President Asia Pacific of Hasbro.
More foreign brands
“Undoubtedly China is huge market not only from a population perspective but also from its cultural diversity from different provinces and the mobility of new residents from foreign countries.” Cheung mentioned. Many foreign licensors, old and new, already set up China market as target to explore and expand.
According to a recent investigation by China Toy and Juvenile Products Association, the organizer of China Licensing Expo, 70 percent of the brands and properties in China market are from foreign countries, among which, the US, Japan, Korea, and UK contribute the biggest share.
Chart: Country origins of brands and properties in China licensing market
Source: China Toy and Juvenile Products Association (TJPA)
Also the TJPA investigation found 85 percent of world largest licensor companies, whose licensing size was over USD1 billion, already have their licensing business in China.
According to Kermid Rahman, Vice President & General Manager of Consumer Products & Interactive of the Walt Disney Company (China), the business of Disney consumer products takes over half of the animation licensing market share in China. Thanks to the Disneyland Park opened last June in Shanghai, the consumer products business is expected to grow by 40 percent this year, Rahman added.
However, the competition is rising too. “The licensing industry has been evolving a lot of changes and competitions locally in China, both with foreign brands entering into the market as well as original brand creations from within China. With the e-commerce and now m-commerce, the competitions have become very obvious.” remarked by Cheung from Smiley.