Hi Sachz,
I like to talk toys, it's my trade so happy to discuss, I find BRT an interesting company in it's own niche. Relating to their HK re them setting up manufacturing, it's VERY hard in China to get in here without relationships on the mainland, most western corporations deal with trading houses though this really can hurt price points. We've over time been fortunate enough to have bought or deal direct with interest stakes taken in many factories on the mainland, this is really what's needed to have a good crack at the existing majors otherwise you can find your priced out of the market even if have a licence. The buyers have budgets, floor space and margin, you can have the best licence in the world but if the retailer can make more money off a generic item in the same space, they won't buy it. Manufacturing overhead is critical.
I was thinking myself we should float, though we're a bit different to our competitors, we have existing established retail channels (not just aust, but including UK and USA Kmart etc), professional graphic design house, the QA systems and the factories, offices in HK, Taiwan, China (head office) and Aust. there are no middlemen in our business at all, this allows us to stay cutting edge on every toy season including the regular toy cats and hammer the competition, it works well. We can go from a conceptual item with no mould etc to ship in 8 weeks, that's where being a private company has distinct advantages.
I see BRT has bought a small trading house in HK, this is a good step, but better if they could get an 'in' direct into China, HK trading houses are just overhead and should be bypassed IMO whenever possible, their value is as a third party handler is somewhat ambigious based on my experience and they have limited understanding of western requirements when it comes to even basics such as mandatory testing, dept of fair trading requirements by state, AQIS etc.
There's some things regarding toys that are impacting on the industry at present as a result of Mattel issue last year. For one the Chinese government has imposed certification on factories for export compliance and are fairly diligent to police exports with testing, it's however slowing the channel out somewhat, plus the additional costs associated (theres export duties in diff % depending on item classification) and on top of it things like EU regulatory requirements regarding pthathlates, total cadmium, phenol etc + testing (expensive) are driving up costs massively to supply to the EU.. US is so far not onto this though California is adopting pthalates I believe soon (would need to confirm). Companies like Sears (Kmart) and Toys R US etc are imposing testing per batch and passing back to the manufacturing as an overhead, this also is having a big impact on bottom line.
The industry over the next 12 months will see big shakeups, the smaller players or less diligent will be pushed from the market while those with the capital or know how will be in a great position. BRT holding licences is a very distinct and unique advantage as they'll be immunised by their limited exposure on the manufacturing side, they can capitalise on this though when the main shakout finishes. It's really a tough industry at the moment but for the good players it's all upside, that said I'm suprised BRT hasn't been taken over by FUN at this stage (just my opinion).