Mattel has signed a strategic alliance with e-commerce giant Alibaba to help the toy maker sell stronger brands like Fisher-Price and Barbie to intelligent Chinese parents with mobility.
Mattel in ChinaOn Tuesday, the companies announced a pact that would combine Mattel's toy brands (MAT, -0.93%) with data from Alibaba (BABA, -1.67%) and Chinese consumer perceptions. The goal is for Mattel to face the $ 7 billion category of Chinese toys, which has registered strong growth, although average spending per child in toys is low compared to Japan and Western markets. The toy industry in the United States, for example, generates $ 20.4 billion in retail and that market is much smaller in terms of population.
Margo Georgiadis, who became CEO of Mattel last week, in a statement touted the combination of Mattel's "unmatched experience in learning and child development with Alibaba's immense reach and unique consumer ideas." He added that because the Chinese toy market is very fragmented, there is great potential for growth. "Working with Alibaba, we see a great opportunity to develop and lead the category," said Georgiadis.
Distribution is the Key in China
Under the partnership of online distribution , Mattel will market and sell brands such as Barbie, Hot Wheels and Fisher-Price through the Alibaba market, targeting an audience of about 443 million active buyers. Mattel will also work with Alibaba to develop new toy products that would be made specifically for the Chinese consumer. Mattel has made some first inroads into the market with the Fisher-Price brand, but says it can do more to make the company's brands relevant to Chinese children and their parents.
Mattel and AlibabaA cultural barrier that Mattel and Alibaba will need to overcome is that when parents have extra money to spend on their children, they prefer to put it into educational activities. Mattel says he wants to develop educational content that can persuade parents in China that buying toys can also have a benefit. "Toys and play are an important part of a child's early development, helping to conduct IQ and the development of emotional intelligence," said Patty Wu, Mattel vice president of China's growth, in a blog entry. Parents in other countries because they worried that the game would harm academic performance. That mentality explains why China's market for baby formula is three times higher than the US, but the toy industry is only 30 % of the size. Mattel's Alibaba pact is the next phase in the company's push for China, which has been a continuing effort through deals with physical distributors and an online push, including Alibaba's Tmall.com shopping website From 2011.