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Superman, Mickey take on China

China's growing population of consumers with excess cash to spend has attracted the likes of Walt Disney Co and Warner Bros.

india Updated: Mar 10, 2006 13:30 IST

Shanghai's Nanjing Road bustles with lunch-hour shoppers, but few pay much notice to the life-size Tweety Bird and Superman figures that welcome visitors at the entrance of the newly opened Warner Bros flagship store.

A quick look around the shop on this unseasonably warm day in March turns up a lone pair of shoppers inside: testament to the uphill battle that mid-range retailers of brand-name products face as they try to crack the China market that already has plenty of fakes and non-branded toys.

"I'm only here to look around. I'm not going to buy anything," says one of the pair, a young woman in her 20s who declined to give her name as she saunters past shelves filled with Tom and Jerry dolls.

"But these toys are better quality than the fake ones. I guess that's why people buy them."

China's growing population of consumers with excess cash to spend has attracted the likes of Walt Disney Co and Warner Bros, a unit of Time Warner Inc, to China, as they look to cash in on growing popularity of their trademark characters like Mickey Mouse and Bugs Bunny.

Makers of premium branded products, such as Mattel Inc with its Barbie dolls, and Sanrio with Hello Kitty, are also hoping to get a piece of the action, drawing on varying degrees of recognition for their characters in China.

"Getting products developed to the local price points, through local retailers, and to local sizes, colours and tastes is absolutely what we want to do," said Ken Chaplin, who heads Disney's consumer products business in emerging markets.

"We've got to... get a brand affinity with those new customers and new generations that are growing up with Disney for the first time."

He said Disney expects to sell its merchandise through some 6,000 retail spaces -- what his company calls "Disney corners" located in larger stores like Carrefour -- by 2009, compared with about 2,600 such stores in China at present.

Massive market for Mickey?

Disney, Warner and the others are all chasing a China market where consumers are expected to spend about 100 billion yuan ($12 billion) on toys by 2010, driven by the country's 300 million children below the age of 14, according to official forecasts.

But the big mark-ups for the famous-character products, along with the widespread availability of fakes, mean the sellers could face a long uphill battle in China, analysts said.

"It all comes down to branding, and to create a perception in the minds and the eyes of consumers that you must have the original product, that there is cashier value in owning the original product. It's much tougher in non-luxury products versus luxury products," said Paul McKenzie, retail analyst with CLSA.

At one authorised Disney dealer, a small Pluto the dog doll costs 30 yuan, or three times what Shanghai consumers would pay for a similar non-branded toy in a street-corner market.

Famous designer items from the likes of Gucci and Armani also sell for many times more than the knock-offs and similar-looking products available in China.

But such products have had less difficulty because they are designed to appeal to a very small segment of China's newly super-rich who are more interested in the snob factor than in simply owning an authentic product.

To succeed, Disney and the others may be pinning their hopes on a new generation of Little Emperors, the offspring born under China's one-child policy, who are used to getting everything they want no matter what the cost, analysts said.

"They're targeting that kids in China who are getting more pampered and that people will be willing to spend more money for their kids, basically," said a Hong Kong-based analyst.

First Published: Mar 10, 2006 13:30 IST