For American parents, bargain prices for toys this holiday season qualify as good news: A Barbie fan who rose before dawn for Wal-Mart’s Black Friday sale could secure the "Barbie Diamond Castle Princess Liana Doll" for $5-royally marked down from its regular retail price. At Target, a radio- controlled helicopter cost a mere $15. The price wars were enough to draw consumers out of their bunkers (碉堡) for their first shopping outing in months.
But wrapped up with those cheap toys are ominous economic omens for both sides of the Pacific. The rock-bottom prices show how desperate US retailers are to plump up weak consumer demand—a symptom of the ailing US economy and a serious problem for China, which makes nine of every 10 toys sold in American stores.
The toy industry has played a major role in China’s economic surge (猛增) over the past 30 years. But Chinese toy makers began feeling the economic squeeze well before the US recession was made official in late November. The volume of Chinese toys passing through eight major US ports was down 5.9 percent in the first nine months in 2008, compared to the same period in 2007, according to economic: forecasters IHS Global Insight, which tracks the information for the National Federation of Retailers.
China’s new labor contract law which imposed stricter conditions and compensation for layoffs of temporary workers took effect in 2007, increasing costs for manufacturers that rely heavily on migrants on production lines, including toy makers and other labor- intensive manufacturers based mainly in southern Guangdong province. Toy makers also were hard hit by the rising price of oil, which surged to more than $140 a barrel in June, and in turn sharply increased the price of plastic.
Industry sources say the toy makers saw profits squeezed to the point where many tried to renegotiate contracts with buyers—especially major US players like Wal-Mart. When they discovered the buyers wouldn’t move even slightly on the purchase agreements, many simply decided to close their factories. "Over half (of the factories) that have closed had negotiated a price, then when they couldn’t get the retailer to move (on the price), they wouldn’t make it at a loss and closed down. " said Britt Beemer, a retail strategist and founder of America’s Research Group.
To be sure, some of the factories that were shut down were small shops that employed only a few dozen workers. And the contraction is to some degree a natural consolidation process in an industry, that is overbuilt.
Which of the following is TRUE about the toy industry in China