Have a go at this teaching activity, which includes a downloadable worksheet and suggested answers

Most toys sold in the USA are made in China.

China supplied around 78% of the toys imported into the USA in 2024, with imports worth $9.8bn (£7.4bn) last year.

Factories such as Mihox in Guangdong make toys to designs supplied by US toy companies, which outsource their production. Finalising a design can take up to two years because customers can ask for changes.

Automation is used for moulding and packaging, while soft toys and electronics remain labour intensive.

Wages in China have risen and are now about double those in Vietnam, yet fewer than 10% of Hong Kong toy manufacturers have moved production out of China. Specialist factories are located close together, which helps production to run smoothly.

Toys then travel by sea for 15 to 30 days, so Christmas stock leaves in August and September.

For a toy with a retail price of $30, the factory receives about 20% as its manufacturing price. This has to cover materials, wages and a profit margin of 3% to 10%.

Freight adds a further 10% of the manufacturing price. The US importer must also pay a tariff of 12.5%, charged on the manufacturing price rather than the retail price, although the US and Chinese governments have recommended lower rates for toys.

The remaining revenue stays in the USA, split between the delivery firm, the toy company and the retailer. The toy company and retailer each receive roughly $10 and usually earn a profit margin of up to 25% on this amount.