Product recalls, rising production costs and the global financial crisis caused almost 1,000 Chinese toy exporters in just one province to shut down last year.
According to data released Saturday by Huangpu Customs, 922 toy exporters in Guangdong Province closed operations in 2008.
That leaves the area with 2,167 toy exporters compared with the 3,089 that were operating in late 2007.
Dongguan, the province's leading toy base, had more than 4,000 factories and some 2,000 suppliers at its peak in 2001.
The numbers began to drop about two years ago.
Rising prices for raw material and labor, along with stronger Chinese currency raised production costs by 25 percent for most companies, according to Li Zhuoming, head of the Guangdong Toy Association.
Large quality recalls by international toy giants, including Mattel Inc., also hurt the industry as Western countries raised standards to ensure toy safety.
The financial crisis compounded the situation as consumption fell and fewer orders came in.
Just in Dongguan, about 20 percent of the small toy factories closed last year, according to Huangpu Customs.
China is the world's largest producer and exporter of toys, with Guangdong alone contributing about 70 percent of the overall output.
In 2008, Guangdong exported 6.1 billion U.S. dollars worth of toys, up 3.6 percent from 2007. The growth rate for 2008, however, was 19 percentage points smaller than that in the previous year.
(Source: Xinhua News Agency)