scalextric.jpgAn otherwise routine story in The Times entitled “No wall to keep small firms out of China” mentions the problems of enforcing intellectual property in China as seen through the eyes of one UK business.

Scientific
Generics of Cambridge produces the parts for Hornby's famous Scalextric
slot cars through a joint venture with a Hong Kong-based manufacturer.
SG is apparently so worried about protecting its IP that it splits
production across four sites in China to prevent the finished product
from being copied.

While IP is obviously a major concern for
foreign manufacturers in China, I think the journalist missed the real
story here, namely, how a western manufacturer has played the China
card to its advantage.

Hornby is one of the most respected
brands in the toy business but children's tastes in toys change and
Hornby realised it needed to shake up its product strategy to stay
relevant in today's toy market.

Hornby thus spent two years
working with SG designing an innovative range of slot cars that use
digital technology and can connect to the internet. As well as product
innovation, Hornby wanted a low bill-of-materials cost and flexible
manufacturing, which is where HK-based manufacturer AML comes in.

Once,
the “Made in Hong Kong” label would have been the kiss of death for any
toy with quality pretentions — many of Hornby's upmarket trainsets and
slot cars are bought by adult collectors. But times change and AML is a
high-quality electronics manufacturer with 25 years experience and
facilities certifed to ISO 9000 and other international standards.

The joint venture thus gives Hornby the best of both worlds: an innovative product delivered at the right price.

I
have been following the Hornby story for a few years now. While many
European toymakers now complain of the problems staying afloat in an
industry dominated by low-cost Chinese competitors, Hornby does not
compete on price. Neverthetheless, it had the foresight to begin
shifting all its manufacturing operations to China back in 1997.

Rival
toy makers did not make the move soon enough, and that left them no
choice but to sell out to the UK company. Hornby has since used the
acquired brands to expand into continental Europe.

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