DEVELOPMENT BANK OF ETHIOPIA

RESEARCH AND PROJECT DATA MANAGEMENT DIRECTORATE

COMMODITY STUDY ON TOY MANUFACTURING AND MARKETING

(NEW)

Prepared By:
Moges Tesfa Sr. RPDM Officer
Oliyad Admasu RPDM Officer
Henock Tsegaye Sr. Chemical Engineer
Mekonnen Fekadu Jr. RPDM Officer

Revised By:
Dawit Amare Team Manager
Million Jarso Technical Team Manager
APPROVED BY: RPDM APPROVAL TEAM MEMBERS

August, 2022

I
TABLE OF CONTENTS
TABLE OF CONTENTS .......................................................................................................................... II
LIST OF TABLES ....................................................................................................................................IV
LIST OF FIGURES ................................................................................................................................... V
1. INTRODUCTION .............................................................................................................................. 1
1.1. Background of the Study .................................................................................................. 1
1.2. Objectives of the Study .................................................................................................... 2
1.2.1. General objectives ..................................................................................................... 2
1.2.2. Specific Objectives ................................................................................................... 2
1.3. Methodology .................................................................................................................... 3
1.3.1. Data collection .......................................................................................................... 3
1.3.2. Data Analysis ............................................................................................................ 3
1.4. Scope and Limitation of the Study ................................................................................... 3
2. COMMODITY DESCRIPTION....................................................................................................... 4
2.1. Definition of the of the Commodity ................................................................................. 4
2.2. General classification of Toys .......................................................................................... 5
2.3. Benefits or Uses of Toys .................................................................................................. 6
2.4. Quality and Standard of the Commodity.......................................................................... 8
3. MATERIALS AND INPUTS .......................................................................................................... 10
3.1. Description of Raw Materials and Inputs ....................................................................... 10
3.2. Supply of Materials and Inputs ...................................................................................... 12
3.2.1. Import and Import Trend of Major Raw Materials ................................................. 12
3.2.2. Import Trend of Major Raw Materials.................................................................... 12
3.2.3. Projected Supply of Major Raw Materials and Inputs ............................................ 13
3.3. Demand of Raw materials and Inputs ............................................................................ 13
3.4. Supply Demand Gap of Raw Materials and Inputs ........................................................ 13
3.5. Availability of Raw Materials and Inputs ...................................................................... 14
3.6. Utilities ........................................................................................................................... 14
3.7. Market Arrangement of Materials and Inputs ................................................................ 15
3.8. Price of Raw Materials and Inputs ................................................................................. 15
3.9. Problems on materials and inputs .................................................................................. 15
4. PLASTIC TOYS MANUFACTURING PROCESS ...................................................................... 16
4.1. Production Process Flow ................................................................................................ 17

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 4.2. List of Machineries and Equipment Requirements ........................................................ 18
5. MARKET STUDY ........................................................................................................................... 19
5.1. Market Segmentation .............................................................................................. 19
5.2. World Toys Market ................................................................................................. 19
5.2.1. World Toys Production ........................................................................................... 20
5.2.2. Global Toys Trade .................................................................................................. 21
5.2.3. Global Toys Export ................................................................................................. 22
5.3. Ethiopian Toys Market ........................................................................................... 23
5.3.1. Demand for Toys .................................................................................................... 23
5.3.2. Supply Situation ...................................................................................................... 26
5.3.3. Demand and Supply Gap ........................................................................................ 28
5.4. Marketing Strategy.................................................................................................. 28
5.5. Market Channel ....................................................................................................... 30
5.6. Pricing and Price Trend .......................................................................................... 30
6. ORGANIZATIONAL STRUCTURE, MANAGEMENT ............................................................ 31
6.1. Organization Structure ................................................................................................... 31
6.2. Manpower Requirements ............................................................................................... 31
7. ENVIRONMENTAL AND SOCIO-ECONOMIC CONSIDERATIONS .................................. 35
7.1. Environmental Considerations ....................................................................................... 35
8. SOCIO-ECONOMIC BENEFITS .................................................................................................. 36
9. PULL, PUSH AND SUCCESS FACTORS .................................................................................... 37
9.1. Pull Factors ..................................................................................................................... 37
9.2. Push Factors ................................................................................................................... 37
9.3. Key Success Factors ....................................................................................................... 37
10. CONCLUSIONS AND RCOMMENDATIONS ............................................................................ 39
10.1. Conclusions .................................................................................................................... 39
10.2. Recommendation ............................................................................................................ 41
11. PARAMETERS, TECHNICAL COEFFICIENTS AND ASSUMPTIONS ............................... 42
11.1. Assumptions ................................................................................................................... 42
11.2. Revenue .......................................................................................................................... 42
11.3. Investment Requirement ................................................................................................ 43
11.4. Operational Expenses ..................................................................................................... 43
REFERENCES .......................................................................................................................................... 46

III
 LIST OF TABLES
Table 1: Summary of Quality Standard ..............................................................................................9
Table 2: Import trend of major raw materials (Ton) .........................................................................13
Table 3: Projected Supply of Raw materials and Inputs (Ton) .........................................................13
Table 4: - Source of Raw Materials Used for the production of plastic kids‟ toys.........................14
Table 5: The Top 10 of Toy brands in the World Market (2020) .....................................................21
Table 6: Global Toys Import Trend in Value („000USD) ................................................................22
Table 7: Global Toys Export Trend in Value (‟000USD) ................................................................22
Table 8: Trend of PCC of Toys Products..........................................................................................26
Table 9: Projected Domestic Demand for Toys Products .................................................................26
Table 10: Imports Trend of Toys to Ethiopia ...................................................................................27
Table 11: Total Projected Supply .....................................................................................................27
Table 12: Projected Demand-Supply Gap of Toys ..........................................................................28
Table 13: Current Selling Price of Toys ...........................................................................................30
Table 14: Minimum labor Required, qualification, and work experience ........................................32
Table 15: Current Average Factory Gate Price of plastic based kids Toys ......................................42
Table16: Minimum Vehicle requirement for plastic based kids Toys manufacturing .....................43
Table17: Current Average price of Raw materials ...........................................................................43
Table18: Truck fuel cost ...................................................................................................................44
Table19: Major Insurance Categories for plastic based kids Toys ...................................................44
Table20: Depreciation and Amortization..........................................................................................44
Table21: Working capital Requirement ............................................................................................45

IV
 LIST OF FIGURES
Figure 1:High Density Polyethylene (HDPE) resin ..........................................................................11
Figure 2: Polypropylene Resin..........................................................................................................11
Figure 3: Different colours of master batch ......................................................................................12
Figure 4: Figure: Production process flow diagram .........................................................................17
Figure 5: A typical firm organizational structure .............................................................................31

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1. INTRODUCTION
1.1. Background of the Study

Ethiopia is one of the fastest growing economies in Africa. According to National Bank of
Ethiopia (NBE)‟s Annual report, the Ethiopia‟s economy has registered 6.3 percent growth in
2020/21 which was, slightly higher than the 6.2 percent expansions year. This growth was broad
with industry growing at 7.3 percent‟, service 6.3 percent, and agriculture 56 percent.

As a result, the growth of real GDP was 3.7 percentage point lower than the average growth rate
target set in the Ten Years Development Plan, but significantly higher than the 3.4 percent
growth estimate of the Sub - Saharan African countries (IMF and WEO Update, June 2020).

Whereas, Nominal GDP per capita stood at USD 1,092, depicting a 1.1 percent marginal
improvement relative to the previous year.

Specifically, industrial sector showed a 7.3 percent annual growth and constituted a 29.3 percent
share in total GDP and it contributed 33.6 percent to the overall GDP growth. With 5.1 percent
growth, the manufacturing accounted for 23.4 percent of the industrial output. Construction
industry registered 6.6 percent expansion with 72.2 percent share in industrial output, with roads,
railways, dams and residential houses construction, playing a significant role.

Since recent years, the government of Ethiopia has given utmost emphasis to the manufacturing
industry with a belief of transforming the economy from agriculture to industry. As Toys
manufacturing industry is under the construction & manufacturing sub sectors, it has got priority
from the government and as well from the Bank for financing.

Though the toys manufacturing business is identified as „an evergreen business‟ in the
developing countries it is almost unknown in Ethiopia. In case of toys manufacturing industry,
attention is more given for importation while it is easier to produce it at local level. Moreover,
the import substitution value and foreign currency generating capacity of Toy manufacturing is
unfairly neglected both by government and private developers of the country

The main benefit of the toy play is the encouragement of positive play experiences of the
children. Toys play an integral part in this learning process; and a variety of well chosen toys
help towards each child‟s individual development.
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DBE is thus, one of the governmental financial institutions established to provide both financial
and technical support for viable projects. Regarding toys manufacturing, there is no DBE
experience on financing of the sub-sector at project level. This is a new commodity study that is
conducted for the first time up on lodged request.

Hence, this new commodity study aims at rigorously evaluating the prospect of Toys
manufacturing and reaches at a plausible recommendation whether Development Bank of
Ethiopia has to intervene in financial and technical support or not based on concrete evidences
that were collected and analyzed from different spectrum.

1.2. Objectives of the Study

1.2.1. General objectives
The general objective of the study is to produce a document that will serve as a source of data
and information (reference) for appraisal of projects related to the sector and for making proper
decision in the process of delivering credit to prospective borrowers.

1.2.2. Specific Objectives

The specific objectives of the study are to provide pertinent data and/or information on:

 Definition of the commodity, its nature & character, classification, uses and quality &
standard requirements;
 Types of raw materials required for manufacturing of toys, their availability & sources,
quality requirements, market prices & trends, and marketing arrangements;
 The nature of the products & its production processes & techniques;
 The facilities and machineries & equipment required for production of the product;
 The availability of market, market prices & trends for the product, and marketing
arrangements;
 The organizational structure and manpower required for production, and the availability
of skilled & semi- skilled workforce;
 The environmental impacts of stated product and their respective mitigation
mechanisms;
 The socio-economic benefits of manufacturing and marketing of the commodity;
 Pull, push and success factors;

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  To set parameters for estimation of revenues, costs and others; and
 To assist the concerned organs of the bank to decide on financing of projects
originating from the assessment of the sector.

1.3. Methodology
1.3.1. Data collection

In this study, the data were collected both from primary and secondary sources. Primary data
were collected from exists few Toys Manufacturing firms. On the other side, secondary data
were gathered from internet in official websites such as ERCA, ITC Trade map, publication of
various governmental organizations, and soon. The study has applied simple descriptive statistics
for analyzing and organizing of the collected data and information.

1.3.2.Data Analysis

Descriptive statistics was used to analyze the collected data in different parts of the study. These
typical tools employed for exploring the descriptive summaries in this study were growth rates
such as AGR, CAGR, and Geo-mean. Geo-mean was employed for those data that have an
observable fluctuation during the period of analysis.

1.4. Scope and Limitation of the Study

The scope of the study covers the manufacturing of toys from imported polyolefin (polyethylene,
polypropylene, EVA, etc.), plasticized PVC & Master batch). The team in charge of the commodity
study encountered a problem of obtaining relevant data, though due efforts were made,
specifically on the price of major raw materials. Besides, there were no enough firms and
relevant literatures in Ethiopia context that could serve as benchmark and reference poses a
difficulty to give a clear picture about the sub-sector.

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2. COMMODITY DESCRIPTION
2.1. Definition of the of the Commodity
A toy is an item that's employed in play, particularly one designed for such use. Playing with
toys is a pleasant means that of training young kids always in society. Totally different materials
like wood, clay, paper, and plastic are used to create toys.

Several items are designed to functions toys, however merchandise produced for different
functions also can be used. For example, a tiny low child might fold an ordinary piece of paper
into an airplane form and "fly it". Newer kinds of toys include interactive digital entertainment.
Some toys are produced primarily as collectors' things and are intended for show solely.

Playing with toys is an important part of growing up and learning about the world around to
come. Younger children use toys to discover their identity, help with cognition, learn cause and
effect, explore relationships, become stronger physically, and practice skills needed in adulthood.
Adults on occasion use toys to form and strengthen social bonds, teach, help in therapy, and
remember and reinforce lessons from their youth. The act of children's play with toys embodies
the values set forth by the adults of their specific community but through the lens of the child's
perspective. Within cultural societies, toys are a medium to enhance a child's cognitive, social,
and linguistic learning.

In some cultures, toys are utilized as a way to enhance a child's skill set within the traditional
boundaries of their future roles in the community. In Saharan and North African cultures, play is
facilitated by children through the use of toys to enact scenes recognizable in their community
such as hunting and herding. The value is placed on a realistic version of development in
preparing a child for the future they are likely to grow up into. This allows the child to imagine
and create a personal interpretation of how they view the adult world.

Electrical and electronic toys provide hours of fun for children. From early learning to gaming
and computing, electrical and electronic toys (EE toys) help children develop their imagination,
language skills, dexterity and more, through fun, role-playing and education. Their use should be
simple and safe. A toy is an object used in play. Plastic toy plays a leading role in the toy market,
and their production use almost all plastic molding processes.

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2.2. General classification of Toys
Know the type of toy is very important, different toys have different functions, if parents can
effectively realize the different functions of different toys, then targeted to buy children toys
would get twice the result with half the effort.

The kinds of toys, can be classified from different angles, we mainly introduce several relatively
routine classifications below. Toys in general can be divided into five categories,

i. The first according to the raw materials can be divided into metal, plastic, cotton wool,
electronics, paper, clay and so on.
ii. The second category is divided into two types: static and dynamic toys. Static, for
example, plush toys, plastic toys to hold toys, toys such as some dynamic storage battery,
remote control cars, there are some kites and so on are dynamic toys.
iii. The third class according to the young age is divided into baby toys, children's toys,
youth and adult toys and old toys.
iv. The fourth class according to the classification can be divided into family toys, preschool
toys and some large and medium-sized toys, children's center.
v. The last category according to the function classification, according to the feature
classification is also the parents care about the most point‟s method, according to the
feature classification the toy is divided into six categories.
 The initiation toys: Mainly used in baby, let baby to know the object's shape or
color, can hang on the bed of the hanging toys or some plastic products of all
sorts of small animal toys.
 Theme toys: We can also call it social life toys, baby through these toys or to
imitate some social role, strengthen his understanding of the world around us, but
also can help the baby feel the world of adults realize social role, his rich
knowledge of society, for our baby's socialization process is very helpful, but
also can cultivate baby good personality and sociality. These social life toys such
as there are some dolls toys or animal image. Also can have some dolls + games
appliance, furniture, kitchen utensils, or small clothes and so on. Along with the
social role of sex toys, such as a doctor, parking lot, carpentry package kit and so
on.

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  Educational toys: the so-called cognitive toys. Such as puzzles, tower, set of
bowl, chess.
 Technology toys: technology toys mainly through some spring or inertia or
battery remote control toys.
 Music toys: toys can give them some beautiful music, such as a variety of
simulated keyboard or some dolls, dogs will beep or phosphorus children's park
and so on.
 fitness toys: we can also call it sports toys, such as all kinds of ball games, all
kinds of vehicles, tricycles, little scooter, battery car, bicycle, as well as some
traditional sports toys, such as shuttlecock, rope skipping, windmill kite is fitness
toys.
 Cognitive toys: many parents are most concerned about this kind of toy, because
this kind of toys for the child's mental development, promote children's thinking
development especially good.
Cognitive toys to a total of five categories
 One kind is jigsaw puzzle, jigsaw puzzle toys can be all kinds of animals, letter
jigsaw puzzle, and solid blocks.
 The second type are operating toys, this is also the children often play, such as
building blocks, hold toys, origami, handmade toys, beach toys.
 The third kind is the language education toys, such as the phosphor children‟s park,
electronic knowledge chart, and literacy, calculates the toys and children's computer
class, and so on are language education toys.
 The fourth class is intelligence development toy, go bang, checkers, recruits
checkers, flying chess, jigsaw puzzle, cardoon‟s rings, and so on are toys
intellectual development.
 The fifth class is scientific experiment toy, such toys such as small chemical test
chamber; some can put a seed plant germination of culture toys, along with a
variety of ever-changing electronic model and so on. Factory specializing in the
development and production of various kinds of paper three-dimensional puzzle, the
three-dimensional puzzle can not only cultivate their ability, and improve spatial
imagination, also can enhance creativity and logical thinking ability, has the very
strong attraction to the children, to get the recognition of the global market.
2.3. Benefits or Uses of Toys
It‟s amazing how many ways Childs grows, just through play‟ says health writer Bridget
Harrison from Next coursework and PhD Kingdom. „Every time they play, they‟re developing a
whole range of skills they need to develop.‟
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I. Improve Creative Thinking

When child is given a set of toys like building blocks, pretend food or dolls, they will use these
to create narratives as they play. The toy becomes more than what it actually is. The blocks
become a castle, the food is part of a pretend restaurant, and the dolls become a family just like
the one the child lives in.
When they‟re doing this, they‟re working to make sense of the world around them. It also helps
them see things more broadly. Being able to come up with scenarios like this is important, as
later in life they‟ll need to be able to imagine scenarios. Being able to think outside of that box is
vital.
Most children will play creatively with anything that‟s on hand, too. Have you ever given your
child an empty box to play with? That box could be anything, from a blank canvas for their
drawings to a rocket ship. Having items like this also helps them to develop their creativity.

II. Develop Motor Skills

Whenever a child is manipulating a toy, they‟re developing their motor skills. Let‟s take dolls as
an example. Children will be developing skills as soon as they are handed a doll, as they can be
easily held and carried. They‟re often designed to be moved into certain positions, so the child
will need to manipulate them to do so. They‟ll also develop their skills through playing with the
dolls‟ clothing. As they use velcro strip, buttons or zippers, they‟ll get practice with fine motor
skills.

There are plenty of toys that help children develop gross motor skills, too. You can give them a
pogo stick to jump on, or a ball to kick and throw around. When they‟re given the ability to
master these tasks, they‟ll be developing those skills.

III. Emotional Maturity

As well as physical skills, children need to be able to emotionally mature in a safe environment.
Toys are the perfect tool to help them does that. Think back to your own childhood. When you
had a favorite toy, did you sleep with it at night? Did you ever bring it with you to a scary
situation, like a doctor‟s appointment? You probably did so, as these toys were how you
interacted with your feelings.

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When a child has a favorite‟s toy, they are practicing bonding in a healthy way. When you play
with them, it in turn helps them bond with you. It helps them create great childhood memories,
and create great futures for them as they could fully experience childhood.

IV. Cognitive Development

When child goes to school, they‟ll start learning about important skills like math‟s and language.
Even before they get to school though, they‟ll be learning them through their toys. As mentioned
earlier, every time they play they‟re learning how the world works.

Different toys will teach your child different cognitive skills. For example, a board game helps
them develop concentration and memory, while building blocks help with problem solving.
Having access to these toys helps they develop these skills before they ever go to school.

V. Social Skill Building

As a parent, we want your child to be able to make friends and interact with others in a healthy
way. When they play with toys, they‟re learning to do just that. They help children interact with
you at first, and then with other children around them.

When they play with another child, they‟ll develop skills in sharing, respect, and cooperation.
These are all essential skills for later life, so you‟ll be setting them up for success in the future.

2.4. Quality and Standard of the Commodity

Toy quality and safety is the practice of ensuring that toys, especially those made for children,
are safe, usually through the application of set safety standards. As toys are intended for children,
safety is the biggest concern of consumers.
 Safety.
 Labeling: a toy shall comply with mandatory toy labeling standard
 Quality: the quality and performance requirements of toys are specified in related
mandatory standards and/or product standards. An appropriate standard shall be selected
based on multiple factors, such as material, age, intended use, style and more, and to be
declared as “Executive Standard” on the label.

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Quality standards are standards designed to ensure the safety of products, activities and
processes, etc. They may be advisory or compulsory and are normally laid down by
an advisory or regulatory body that may be either voluntary or statutory.
Table 1: Summary of Quality Standard
Standard(s) and Regulations
ISO 8124-1. Safety of toys. Part 1: Safety aspects related to mechanical and physical
properties.
ISO 8124-2. Safety of toys. Part 2: Flammability.
ISO 8124-3. Safety of toys. Part 3: Migration of certain elements.
ISO 8124-4. Safety of toys. Part 4: Swings, slides and similar activity toys for indoor
and outdoor family domestic use.
International
ISO 8124-5. Safety of toys. Part 5: Determination of total concentration of certain
elements in toys.
ISO 8124-6. Safety of toys. Part 6: Certain phthalate esters in toys and children's
products.
ISO 8124-7. Safety of toys. Part 7: Requirements and test methods for finger paints.
ISO/TR 8124-8. Safety of toys. Part 8: Age determination guidelines.
EN 71-1. Safety of toys - Part 1: Mechanical and physical properties.
EN 71-2. Safety of toys - Part 2: Flammability.
EN 71-3. Safety of toys - Part 3: Migration of certain elements.
European EN 71-4. Safety of toys - Part 4: Experimental sets for chemistry and related activities.
Union EN 71-5. Safety of toys - Part 5: Chemical toys (sets) other than experimental sets.
EN 71-8. Safety of toys - Part 8: Activity toys for domestic use.
EN 71-12. Safety of toys - Part 12: N-Nitrosamines and N-nitrosatable substances.
EN 62115. Safety of electric toys.
Source: Wikipedia
Regarding quality standards and safety measures of toys which manufactured in Ethiopia there
are no quality standard parameters released by Ethiopian quality standards agency.

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3. MATERIALS AND INPUTS
A toy is an item that is used in play, especially one designed for such use. Playing with toys can
be an enjoyable means of training young children for life in society. Different materials like
wood, clay, paper, and plastic are used to make toys. For this specific commodity plastic-based
toys are studied and detail raw materials and input type, source and availability are shown part
by part and also discussed briefly.

Major raw materials required for the manufacturing of plastic kids Toys are the following:
 High Density polyethylene (HDPE) /PP as optional
 Master batch
Packaging materials
PE bag/sheet
Label
Carton box
Utilities
Electricity and
Water

3.1. Description of Raw Materials and Inputs

I. High Density Polyethylene (HDPE) Resin

HDPE resin is a hydrocarbon polymer or a polyethylene thermoplastic prepared from

ethylene/petroleum by a catalytic process. HDPE has a comparatively high density compared to
other polymers, with a specific gravity of 0.95. It is relatively hard and resistant to impact and
can be subjected to temperatures of up to 120oC without being affected.

HDPE is accepted at most recycling centers in the world, as it is one of the easiest plastic
polymers to recycle. As compared to the other materials, HDPE resin has many advantageous
properties that make it important in the manufacturing of different products due to opaque or
translucent appearance. These durable properties make it perfect for heavy duty containers and
HDPE is primarily used for paint bucket, milk containers, as well as Tupperware, shampoo
bottles, bleach bottles and motor oil bottles.

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Figure 1:High Density Polyethylene (HDPE) resin

II.Polypropylene (PP) Resin

Polypropylene resin, also known as poly propane resin, is a thermoplastic polymer used in a
wide variety of applications such as packaging, and pipe like PP copolymer pipe (PP-C), PP
block copolymer pipe (PP-B) and PP Random pipe (PP-R).

It is produced from propylene gas with the help of titanium chloride as a catalyst. A
polypropylene resin is one kind of thermoplastic resin material used in the production of plastic
paint bucket. Polypropylene resin is an extremely versatile material and as such can be used for a
wide range of application in addition to plastic paint bucket manufacturing.

Figure 2: Polypropylene Resin

III.Colour Master Batch

Master batch is a solid or liquid additive for plastic used for coloring plastics (color master
batch) or imparting other properties to plastics (additive master batch). Master batch is composed
with excessive chemistry accessory ingredient, carrier resin and dispersants. Color master batch
is made of ultra quantity of pigments (dyestuffs) which carries evenly in the resin. Based on the
need and request master batch used in plastic manufacturing has different color, white, filler, red,
black, yellow and green. However, the most commons are Red, Green, Blue, Yellow and Black
master batch that most plastic producer are used.

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Figure 3: Different colours of master batch

3.2. Supply of Materials and Inputs

The supply of major raw materials required for the manufacturing of different plastic toys are
mainly foreign market except plastic package like PE sheet which are obtained from local plastic
packaging factories. This is because of, all major raw materials and additives used in the
manufacturing of plastic kids‟ toys are imported from abroad and therefore there are no locally
produced inputs. Therefore, the supply of major raw materials is totally international market.

3.2.1. Import and Import Trend of Major Raw Materials

The materials and inputs used by the domestic plastic industry are totally sourced from foreign
market. The materials and inputs to be used for the plastic product production are related with
the availability of crude petroleum, and natural gas and also extracted from sugar cane product
like bio ethanol and crops syrup with sophisticated technology.
3.2.2. Import Trend of Major Raw Materials
The major raw material used for the manufacturing of plastic kids‟ toys is totally imported from
foreign market. This refers that, there is no locally produced input used in the factory for the
manufacturing of the commodity under consideration. As we shown under the list of major raw
materials plastic kids‟ toys is produced either from HDPE resin is imported mainly from Saudi
Arabia, Thailand, Korea Rep, United Arab Emirates, India, and China for these purposes, where
as PP resin is the second option toy factories use in the manufacturing of kids‟ toys. Ethiopia
imported this material mainly from Saudi Arabia, India, Korea Rep, Oman, Thailand, United
Arab Emirates, Turkey, Egypt and china for these purposes. In general, there is no locally
produced raw material used for the manufacturing of plastic kids‟ toys except plastic packaging
like PE Sheet and label. As shown under the table 1 the imported trend of major raw materials
within the last five years shows up and down in figure. Based on this, the import trend of HDPE
resin and master batch shows negative growth trend as computed by cumulative average growth

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by 23 and 36% consecutively whereas the import trend of polypropylene resin shows the positive
growth by 4% as computed by cumulative average growth.
Table 2: Import trend of major raw materials (Ton)
Geo
Description HS Code 2017 2018 2019 2020 2021
mean
HDPE resin (Polyethylene, 390190 16,726 10,191 13,540 10,129 13,470
-5%
in primary forms
Polypropylene resin, in
3902100 51,317 52,257 61,971 80,882 60,764 4%
primary forms
Color Master batch 320620 3,446 4,808 7,062 5,556 6,819 19%
Source ITC Trade Map

3.2.3. Projected Supply of Major Raw Materials and Inputs

Table 3: Projected Supply of Raw materials and Inputs (Ton)
Description HS Code 2022 2023 2024 2025 2026
HDPE resin (Polyethylene, in primary forms 390190 12,760 12,122 11,516 10,940 10,393

Polypropylene resin, in primary forms 3902100 63,195 65,722 68,351 71,085 73,929
Color master batch 320620 8,115 9,656 11,491 13,674 16,273

3.3. Demand of Raw materials and Inputs

The demander of raw materials required for plastic based kids‟ toys are locally obtained plastic
product related manufacturing factory. Of those, Plastic foot ware, plastic paint bucket, plastic
packaging, plastic household, furniture and etc are among the factory using raw materials used
plastic toys while the exact figure consumed at each industry are not clearly known figuratively.

3.4. Supply Demand Gap of Raw Materials and Inputs

As it‟s discussed in different part of raw materials and input of the study the supply of major raw
materials required for the manufacturing of plastic based toys are totally sourced from foreign
market. As the same time the demanders of this raw materials is not only the toys factory rather
than all plastic product manufacturing uses the listed raw materials which creates difficulty to
show the exact figure of raw materials consumed annually at each factory to show the supply
demand gap of the raw materials in figurative.

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3.5. Availability of Raw Materials and Inputs
The materials and inputs required for manufacturing of plastic kids‟ toys can be made available
by importing from abroad. HDPE, / Polypropylene resin are imported from international market
mostly from Saudi Arabia, Thailand, Korea Rep, United Arab Emirates, India, China, Egypt, and
Oman. In general materials and input used in the manufacturing of plastic kids‟ toys are available
from foreign market as long as there is no problem of securing foreign currency in sufficient
amount from bank.
Moreover, the inputs/additive to be used for the same is sourced from foreign country. The
country imported different type of additives used for plastic kids‟ toys manufacturing from
Singapore, Turkey, India, Korea, Thailand, USA, China, Jordan, and South Africa. Therefore, as
far as the factories secured sufficient working capital and foreign currency source from Banks
the availability of additives is unquestionable.

Table 4: - Source of Raw Materials Used for the production of plastic kids‟ toys
Source country
Sr. No Description
Foreign Domestic
1 HDPE resin/granule /Polypropylene (pp) resin 
Additives
2 Master batch 
4 PE Sheet 
5 Label 
6 Carton box 
Source: Surveyed Factory

3.6. Utilities
The required utilities in plastic kids‟ toys manufacturing plant are electricity, and water.

 Electric power
The Manufacturing of plastic kids‟ toys demands using electricity as a source of energy. The
required consumption rate of electricity is determined, among others, by the plant production
capacity and the number of hours that the machines operate. Therefore, availability of electricity
is unquestionable to run the activity.

14
 Water
The requirement of water in manufacturing of plastic kids‟ toys is for cooling purpose and for
staff of the organization. Therefore, availability of water to run the activity is necessary, where
as the required consumption rate of water is computed as per the production capacity of the plant
and percentage of water used during the operation.

3.7. Market Arrangement of Materials and Inputs

Marketing arrangement of materials and inputs is an agreement made between the two parties,
the seller and purchaser about the means of transportation, ownership transfer and other relevant
agreement. It enables to specify which party (buyer or seller) pays for which shipment and
loading costs, and/or where responsibility for the goods is transferred.

Since all the materials and inputs for plastic kids‟ toys manufacturing are imported from abroad;
factories in Ethiopia have two options of purchasing raw materials. The first and foremost option
is a direct purchase of the raw material from the producer themselves through LC/CAD in line
with the international commercial terms. The other option is purchase of the raw material from
the brokers of foreign countries who buy from the main suppliers and sell it to the manufacturers.

3.8. Price of Raw Materials and Inputs

Even though it is crucial to show the price trend of the materials and inputs along the last
consecutive period of time, due to lack of organized data on the surveyed factories, we face
difficulty to show the price trend of the listed materials and inputs. So the current prices of the
materials are presented in the parameter part.

3.9. Problems on materials and inputs

During field survey different plastic kids toy factory respond that availability of required raw
materials are undeniable, rather the factory face the following problem like:
 Foreign currency reserve
Since all major materials and inputs are imported from abroad, the major
problems and challenges that the existing firm faces are shortage of foreign
currency.
 Shortage of working capital.

15
4. PLASTIC TOYS MANUFACTURING PROCESS
Plastic toys are made using injection molding machine. The process of making toys involves:
 Preparation of the raw plastic material
 Giving shape to the product using injection molding and
 Finishing work on the molded product
 Preparation of the raw plastic material
Pre-molding preparation requires addition of colorants, Plastic resins and scrap material. These
materials are generally blended into the fresh resin. After necessary preparation the molded
material is transferred into a hopper which feed the material to the heating cylinder of the
injection molding machine.

 Giving shape to the product using injection molding

Mixing action is provided by use of rotating screw mechanism within the cylinder. Melted
plastic is forced through a nozzle into the mold of the required shape. The mold accepts the
amount of melted plastic material and cools it quickly and uniformly. When the molding
compound has set, the mold is opened and the molded part is forced out of the mold cavity.

 Finishing work on the molded product

Some molded articles required some form of machining or finishing. The molded products come
out from the mold are then cleaned by removing the burr present on the part. After this sharp
corners are removed and finishing operations are done on it to make it shine.

16
4.1. Production Process Flow

 Resin
 Scrap material Raw material mixer
 Master batch

Melting and injection molding

Cold water
Cooling the mold

Molded product

Figure 4: Figure: Production process flow diagram

17
4.2. List of Machineries and Equipment Requirements

Machinery and equipment needed include:

Table: Lists of Machineries and Equipment
Sr.No Machineries and equipment’s Purpose
A. Major machineries and equipment’s
1 Raw material mixer To mix the raw materials
according to their mixing
2 Injection molding machine in different clamping tonnage To melt the plastic and
ratio
for different size of product inject in to the mold and
cool to give the required
3 Packaging machines For packaging the product
product
- Pedal
sealing machine
B. Auxiliary machineries and equipment’s
- Band
1 Molds and diesmachine
sealing To give the required shape
2 Chiller machine with cooling tower and volume
For cooling the process
4 Air Compressor water
To deliver compressed air
5 Generator To supply power when
electricity interruption
6 Scrap grinder For recycling the waste
occurs
7 Weighing scale material
For weighing the input
materials and the final
product

18
5. MARKET STUDY
5.1. Market Segmentation

This toy manufacturing market study has two parts. The first part of the study will focus on the
world toys market analysis while the second part of the study deeply goes in to the domestic
market analysis. The price and marketing arrangement of the products in the domestic market
will also be looked.

As long as the domestic target market for toys, it can be covered mainly in major segments of
individual customers which is focused on parents, who are willing to purchase the
toys for their specific kids. Most of these people always buy limited toys every time. The
demographics is family with low and middle income but have strong ambitions for their kids in
getting start learning and skill development in the early stage. The other segment are wholesale
purchasers that is a group identified into education organizations, such as daycare centers,
preschools, schools, etc., which can care for the children generally ranges from 2 to 9.

5.2. World Toys Market

The global plastic and other toys market size was valued at USD 70.96 billion in 2020 and is
expected to expand at a compound annual growth rate of 3.2% from 2021 to 2028. Plastic toys
are relatively economical as compared to toys made of other materials, which is one of the major
factors fueling the market growth.

The growing population and the emergence of advanced toys are propelling the market growth.
Parents highly rely on toys to entertain and educate their children. Parents‟ growing sentiment
towards buying kids toys and increased spending on the same are further drives the market.
Plastic toys are durable, which attracts a large number of consumers with different income levels
towards the product, thereby contributing to the market growth. The introduction of toys with
realistic details and functions attracts children, which leads to the high demand for plastic toys.

The growing number of working parents and their growing inclination towards spending more on
children are leading to the increasing demand for toys. Parents‟ desire to educate, develop, and
entertain kids through toys will further propel the market growth. The increased influence of

19
social media is positively impacting the demand for kid‟s toys, which will further boost the
market growth. Plastic toys with pictures of popular characters on them are attracting more kids,
thereby resulting in increased demand for plastic toys internationally.

The Corona virus pandemic positively impacted the market growth globally. As the result, the
sale of toys through retail stores was decreased while the product demand through online
channels witnessed a rise during the period. As things get normal post-pandemic, it is expected
that the demand for toys for kids will remain constant in the global market.

5.2.1. World Toys Production

In 2021, Lego was the top-ranked toy brand in the world with a brand value of approximately 5.4
billion U.S. dollars. The toy industry is an extremely large industry with high levels of gross
profits and revenue. Its global toy market is significant, having reached 94.7 billion U.S. dollars
in annual revenue in 2020.

Toys are not a way to pacify children. They should promote learning and STEM. STEM is an
approach to learning and development that integrates the areas of science, technology,
engineering, and mathematics. Through STEM, children develop key skills to include problem-
solving, creativity, critical thinking. Toys should be safe and free from toxins. They should be
produced in an eco-friendly process for the community and the environment. They should be
open-ended and something you would want to pass down to your grandchildren.

Some prominent players in global plastic and other toys market by 2021 include Lego, Bandai
Namco Holdings, Fisher-Price, Nerf, Barbie Hasbro & soon. On national based, China is the
world‟s leader in manufacturing toys, accounting for approximately 70% of the total toys on a
global level and 90% of global toy factories are based in China.

In fact, around 692,644 Chinese workers are employed in 1,655 businesses in China‟s toy
manufacturing industry.

20
Table 5: The Top 10 of Toy brands in the World Market (2020)
Rank Name of Top Companies Origin Country Market Value (USD)
1 Lego Denmark $6.8 billion
2 Bandai Namco Japan $1.6 billion
3 Fisher-Price USA $655 million
4 Nerf USA $411 million
5 Barbie USA $372 million
6 Hasbro USA $293 million
7 My Little Pony USA $251 million
8 Mobile Suit Gundam Japan $249 million
9 Hot Wheels USA $234 million
10 Mattel USA $198 million
Source: http://martinsplastics.net/en/toy-manufacturers/

5.2.2. Global Toys Trade

The global toy market was worth $104.2 billion in 2021, posting an 8.5% growth over 2020 and
and the global toy market size is expected to reach over $120 billion by 2023. The US is the
biggest importer of toys in the world. Whereas; China is the leading country of toys in the world

5.2.2.1. Global Toys Import

According to toy industry analysis for 2017-2021 the global toys it has registered a geo mean
growth rate of 29.79%.

The US is the biggest importer of toys in the world by $19.7 billion & accounting for 31.8% of
the global toy imports and nearly 97% of the national US toy demands will be met with imports,
Following the US, Germany‟s toy imports were worth $4.1 billion, United Kingdom imports
were worth $2.9 billion & Japan imported $2.7 billion worth of toys, as shown below in the
Table 6.

21
Table 6: Global Toys Import Trend in Value („000USD)
Import Value/‟000USD Growth
Rank Top Importer Countries
2017 2018 2019 2020 2021 Rate (%)
1 United States of America 14,969,707 14,744,931 15,288,252 14,352,993 19,680,481
2 Germany 3,106,506 3,370,358 3,345,220 3,439,434 4,068,071
3 United Kingdom 2,810,872 2,795,968 2,728,911 2,702,048 2,913,247
4 France 2,277,164 2,202,001 2,254,925 2,170,249 2,702,680
5 Japan 2,127,142 2,286,518 2,296,681 2,050,078 2,419,217
6 Netherlands 1,130,772 1,234,341 1,308,963 1,268,651 1,753,363
7 Poland 1,057,266 1,142,835 1,113,511 1,284,282 1,718,728
8 Canada 1,486,413 1,565,684 1,406,919 1,393,167 1,713,540
9 Hong Kong, China 1,972,185 1,670,141 1,529,598 1,246,365 1,641,508
10 Russian Federation 1,184,236 1,296,392 1,317,433 1,173,950 1,423,707
Subtotal 32,122,263 32,309,169 32,590,413 31,081,217 40,034,542
Others 16,848,857 17,913,868 18,018,505 16,539,793 21,774,841
Total Import Value 48,971,120 50,223,037 50,608,918 47,621,010 61,809,383
Change in % 0.03 0.01 (0.06) 0.30 29.79%
Source: ITC Trade Map
5.2.3. Global Toys Export
World export of toys indicates an average annual growth rate of 11.64% for period between year
2017 and 2021. The global toys export value had grown from $43.99 billion in 2017 to $67.62
billion in 2021.

China, Czech Republic & Germany were the top three large exporters of toys, each accounted for
62.13%, 5.04%, and 3.98%, of the total world export value in 2021, respectively.
Table 7: Global Toys Export Trend in Value (‟000USD)
Top Exporter Export Value/‟000USD Growth
Rank
Countries 2017 2018 2019 2020 2021 rate (%)
1 China 24,261,407 25,467,875 31,342,495 33,485,634 42,015,657
2 Czech Republic 2,378,734 2,591,759 2,691,957 2,901,702 3,405,831
3 Germany 2,149,134 2,268,642 2,270,005 2,424,245 2,691,496
4 Viet Nam 803,578 875,607 1,018,424 1,054,139 2,439,359
5 Hong Kong, China 2,965,854 2,681,245 2,384,344 1,856,854 2,432,883
6 Netherlands 1,168,004 1,174,228 1,255,934 1,335,126 1,709,150
7 USA 1,220,192 1,245,930 1,142,746 1,117,440 1,358,635
8 Poland 552,063 727,737 756,310 911,391 1,232,590
9 Belgium 808,182 784,378 783,922 737,847 952,583
10 France 740,674 723,635 705,466 689,798 905,131
Subtotal 37,047,822 38,541,036 44,351,603 46,514,176 59,143,315
Others 6,950,098 7,750,532 7,600,632 7,664,096 8,479,101
Total Export Value 43,997,920 46,291,568 51,952,235 54,178,272 67,622,416
Change in % 0.05 0.12 0.04 0.25 11.64%
Source: ITC Trade Map

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5.3. Ethiopian Toys Market
Though the toys manufacturing business is identified as „an evergreen business‟ in the
developing countries it is almost unknown in Ethiopia. In case of toys manufacturing industry,
attention is more given for importation while it is easier to produce it at local level. Moreover,
the import substitution value and foreign currency generating capacity of Toy manufacturing is
unfairly neglected both by government and private developers of the country

The main benefit of the toy play is the encouragement of positive play experiences of the
children. Toys play an integral part in this learning process; and a variety of well chosen toys
help towards each child‟s individual development.

As children grow and develop, their needs will change with their age and with their differing
abilities and interests. Toys and Games area include manipulative, puzzles, collectibles,
matching games and other games that children can play at a table, on the floor, or on top of a
divider shelf. These materials offer children a quiet activity that they can do alone, with a friend,
with a teacher or a parent volunteer, or with a small group. Children strengthen all areas of their
development as they play with toys and games.

The Ethiopian toys market was worth US$ 3.48 million in 2021 (considers only the import
value). In recent years, the advent of advanced technology and machinery has inspired
manufacturers to produce modern and innovative toys. As the country has one among the largest
young population within the world, because of that, the toy industry within the country has
witnessed a rapid growth in the future.

5.3.1. Demand for Toys

5.3.1.1. Determinant Factors of Demand for Toys
Selection of toys is a critical process. Parents always choose a toy for their child on basis of its
abilities like education, safety, age and gender and all these figures have special influence on
child development. Choosing a toy is not as simple as the majority of parents may think. A toy
should be chosen initially with respect to many child considerations such as abilities,
development, safety, age and gender. However, studies which are related directly to aspects
which affect the selecting and purchasing of toys related to educational or emotional aspects are
scarce.

23
 By reviewing many studies that relate to toys selection, it has been noted that there are a variety
of reasons for selections made. Thus, there are many factors which influence in development of
child and same there are some factors in parents mind when purchasing toys. Gender &
children‟s age, parent income and level of education, information and knowledge, advertisement,
requirement on new product, birth rate increase, and soon.

I. Gender & Children’s Age Factor

Children‟s age is one of the factors; older children make fewer direct attempts to influence the
decision of their parents, but they are also more successful with these attempts than the younger
children. Much of the research on parent toy choice was made on children's toy preferences,
which was related to the gender-typing of toys and gender differences in toy selection.

There was a significant gender difference in how much time children of different genders spend
with their toys and the ways toys were manipulated by young children. Additionally, the effects
of the gender of children have on their parents upon toy selection been investigation.

II. Parent Income and Level of Education:

Parental income and level of educations & knowing the reasons for buying are another factor
which affects parent toy-purchasing behavior.

III. Information and Knowledge Factor

Toys are also accompanied with some information and knowledge to consider. This is because
toys include information and learning material (for example, printed materials, catalogues, CDs,
brochures) to children, and such data helps to teach them self-awareness, language,
communication, knowledge, cognitive ability and social skills.

IV. Advertisement Factor

Some toy-selection criteria are related to the advertisement factor. Research has found that
children's toy advertising and pictures on toy packages were strongly affective on toy selection
especially gender-stereotype.

24
V. Requirement on New Product
Recently, the toy market has been changed by customer tastes, with children
choosing for more advanced electronic toys and video games. Children are also becoming used
to substituting their toys more frequently. This means toy manufacturers have to create new
products and concentrate on technological improvement and product innovation.

VI. Birth Rate Increase

The increasing birth rate and rising demand on the latest toys are also the other factor to
boost the toy demand.
In general terms, the most important segmentation in the toy market is by age and gender. Kids
play with different toys in different age groups, and there is a clear distinction between toys for
girls and toys for boys. However, from our country‟s perspectives, driven by the large young
population and by the country‟s robust economic growth and rising disposable incomes, the
future domestic demand for toys is promising. Hence, taking the above demand driving factors in
general, the demand part of the data shall be considered only about the demand will comes from the
children generally ranges from 2 to 14 live in urban areas.

According to the NPD survey, the usage of toys by the children of different age groups between
0-14 has been increasing steadily. They compare the population of the children of the age group
0-4 to other age groups like 5-9; and observe that the usage of toys in the age group of 0-4 years
will increase more than the other groups.

5.3.1.2. Demand Projections

Household income level, as a basic determinant factor, is the best tool for forecasting the level of
toys demand in the future. However, in case of our country, there are no any update data shows
the income of the society on the household level. Hence, the case team determined trend of per
capita consumption of toys for the past five years to project future domestic demand. An annual
urban population growth rate of 4.6% was used to estimate future urban children population, i.e.
principal explanatory variable, by using ICPS- population projection 2007-2037 produced in
2012, as a base.

In the following Table 8, calculated PCC in the envisaged period (2017-2021) was summarized
to capture its trend. Accordingly, the PCC of toys was found to grow by smaller positive

25
percentage amount (0.45%). As urban children population increases by 4.6%, annual
consumption of kids per year anticipated to grow by 0.45% as a domino effect assuming that past
trend will sustain in the future too.

Table 8: Trend of PCC of Toys Products

Urban Children Domestic Import Export Apparent Per-capita
Year Population Production Amount Amount Consumption consumption
('Number) (‘kg) (‘kg) (‘kg) ('kg)* (‘kg)
2016 3,506,749 1,092,000 - 1,092,000 0.31
2017 3,675,838 1,009,000 - 1,009,000 0.27
2018 3,853,079 1,014,000 - 1,014,000 0.26
2019 4,038,867 1,202,000 - 1,202,000 0.30
2020 4,233,614 105,840 1,359,000 - 1,464,840 0.35
Growth rate (Geometric mean) 2.67%
Source: CSA & ICPS- population projection 2007-2037 produced in 2012 & ITC Trade Map (Hs
code 9503) & Team‟s field survey Result

It was derived from the supply side under the rationale that local production and imported
quantity after deduction of exported quantity assumed to be consumed at the prevailing
market price.
Hence, the projected demand parallels to the dynamics of urban children population and
consequently PCC was tabulated on beneath Table 9.

Table 9: Projected Domestic Demand for Toys Products

Urban population Projected PCC Estimated Demand
Year ('Number) (Kg) (Kg)
2022 4,437,750 0.365 1,618,548
2023 4,641,887 0.374 1,738,205
2024 4,855,413 0.384 1,866,707
2025 5,078,762 0.395 2,004,709
2026 5,312,385 0.405 2,152,914

As shown on the above table, the projected PCC will be almost at similar level in similar fashion
with the past trend. By the end of year 2022, it will reach at 1.62 million kgs and 2.15 million
kgs by 2026.

5.3.2. Supply Situation

The major supply source of toys in Ethiopia is mainly from import and insignificant volume of
domestic production.

26
5.3.2.1. Domestic Production of Toys
As per the data collected, there are only two firms engaged in production of toys in Ethiopia;
Blecho Toys Factory & Shumbro Plastic Company, aggregately have only 98 kg processing
capacity per hour. Due to various reasons like shortage of major raw materials and foreign
currency, the firms are operating using their half production capacity (near to 50%). Hence, the
team could not get the justifiable actual production capacity, these firms have currently.

5.3.2.2. Imports Trend of Toys

As shown on the Table 10 below, there was a fluctuation in import trend of toys during the
period of analysis (2016 to 2020). However, in general, the registered growth rate was an
incremental, i.e., 5.62%.
Table 10: Imports Trend of Toys to Ethiopia
Import Year Import Value ('USD) Import Quantity (Kg) Change
2016 2,360,000 1,092,000
2017 2,178,000 1,009,000 (0.08)
2018 2,616,000 1,014,000 0.00
2019 3,277,000 1,202,000 0.19
2020 3,593,000 1,359,000 0.13
Geo mean 5.62%
Source: ITC-HS Code 9503

5.3.2.3. New Entrant Firms & Expansion

The team has made its efforts to get information about the new entrants in the industry.
However, could not get any new entrant firms in the industry. But regarding to the expansion
part, Blecho Toys Factory, located in Addis Ababa, has started its expansion program to add
more its plastic toys production types through importing of additional six moulds will expect to
start operation by 2023.

5.3.2.4. Supply Projection

By taking in to account past trends in domestic production and import, the total supply in future
years was tabulated in beneath table.

27
Table 11: Total Projected Supply
Domestic Production Import Projections Total supply
Year
Projections (Kg) (Kg) projection (Kg)
2022 105,840 1,516,055 1,621,895
2023 105,840 1,601,257 1,707,097
2024 105,840 1,691,247 1,797,087
2025 105,840 1,786,296 1,892,136
2026 105,840 1,886,685 1,992,525

5.3.3. Demand and Supply Gap

Thus, the quantified demand on the above Table 11, there will be the gap that could be filled
either by domestic new entrant firms in the future or import. With population growth,
urbanization, rise of citizens‟ income, and enhancement of awareness of such type of products,
the demand for it is expected to rise in the future and further widens the demand-supply gap as
shown on beneath table.

However, the team has taken the projected import volume is taken as a gap. That is due to the
country‟s aim is to narrow the gap by producing domestically to substitute import and save foreign
currency.

Table 12: Projected Demand-Supply Gap of Toys

Total Demand Projection Domestic Production Demand- Supply
Year
(Kg) Projection(Kg) Gap („ton)(Kg)
2021 1,503,940 105,840 1,398,100
2022 1,618,548 105,840 1,512,708
2023 1,738,205 105,840 1,632,365
2024 1,866,707 105,840 1,760,867
2025 2,004,709 105,840 1,898,869
2026 2,152,914 105,840 2,047,074
5.4. Marketing Strategy
In today‟s competitive global marketplace, the importance of formulating an effective
marketing strategy has been receiving increased attention.

There is a large sort of toys currently on the market. The diverse product class ranges from,
construction and building toys, dolls, board games and puzzles to high-end electronic toys,
educational toys, ride-ones, etc, those who are produced from known international brands. There
are also plastic toys that are domestically created by few existing manufactures.
28
Increasing import duties could only make branded safe toys more expensive and turning
consumers to cheaper domestic made toys which aren‟t of as high quality as international
branded toys as of today.

Hence, product price and innovativeness are likely to remain intense in a dynamic market which
faces the domestic toys manufacturers to win the market share. As the potential customers are
mostly ranges under middle- and higher-income categories and who have enough financial
ability to afford, the high quality needs to be guaranteed.

The other marketing strategy that the manufacturers and wholesalers shall use is direct mailings
to individuals through social media and advertisements in the public, such as shopping centre,
high traffic-flow area and nearby education district, to propagandize the products. All the
advertisements and direct mailing shall be including attractive benefits for end users, which
emphasize truly learning devices for children in early stage. Practically, most of the toys are
labeled as “educational,” which is a marketing strategy that tends to attract parents to purchase
specific products as a way to develop a child‟s skills.

Although the toy manufacturing business is highly competitive and there will be a drastic
competition from importers, it is believed that there is a place for high-quality, attractive,
durable, and affordable toys. Hence, there is a place for high-quality, attractive, durable, and
affordable toys, especially, for educational toys.

Thus, any company plan to involve in toys manufacturing industry should clearly state its
marketing strategy to overcome the existing challenges prevailing in the industry like tackling
the tiff commotion from imported similar products, handling the fashionable and dramatic
changes of product models existing in the toys industry, due attention for product development
and design, managing the challenges of foreign currency shortage may face, and soon. Moreover,
it should make carefully define its target market yet fail to correctly understand the customers‟
needs as it is a complex process.

29
5.5. Market Channel

Implementing a good distribution network should consider as marketing strategy which helps for
timely and proper supply the products. The advanced market channel of a toys manufacturing
industry is mainly applying ecommerce platform system. However, in developing market like
our country, the marketing channel of the product manufacturing and supply should be aligning
with transport & warehouse facilities, and with the needs wholesalers, retailers, and the
customers themselves.

5.6. Pricing and Price Trend

Since the toys manufacturing industry is a new venture for Ethiopia, it was so difficult to track
price trend. However, for possible reference the current sales price obtained from existing
manufacturing firms, is summarized below in the Table 13.
Table 13: Current Selling Price of Toys
Unit of Average Current Factory
S. No Product Type
Measurement Gate Selling Price (in Birr)
1 Amharic letter with Number Pack 170.00
2 Arabic Number Pack 170.00
3 Geez puzzle 40pcs Pack 170.00
4 Gees puzzle 60pcs Pack 200.00
5 Geez puzzle 100pcs Pack 250.00
Source: Field Survey

30
 6. ORGANIZATIONAL STRUCTURE, MANAGEMENT &
MANPOWER REQUIREMENTS
6.1. Organization Structure
An organizational structure is a system that outlines how certain activities are directed in order to
achieve the goals of an organization. These activities can include rules, roles, and
responsibilities. The organizational structure also determines how information flows between
levels within the company. The tipical organizational tructure is illusterated in Figure 5 below.

Figure 5: A typical firm organizational structure

6.2. Manpower Requirements

Manpower required for toy manufacturing for accomplishing various activities consists of
production workers, supervisor, machine operators, electricians, mechanics and administrative
workers like plant manager, secretary, accountant, Driver, cashier, clerks, and general service
workers (guards and messengers) etc. It is clear that the sub sector absorbs both skilled and
unskilled laborers. There are no problems concerned the availability of workers except cost of

31
labor and unskilled laborers should have to have short term training in order to make them
familiar with the working environment. Moreover, there are various incentives scheme that the
company can give for the workers to reduce employee turnover and to gain employee dedication
in the work that can also plays significant role in profitability and sustainability of the company.
Those are Transport allowance, yearly promotion, bonus and insurance on job.

A. Incentive and Benefit Package

There are various incentives scheme that the company can give for the workers to reduce
employee turnover and to gain employee dedication in the work that can also plays significant
role in profitability and sustainability of the company. Allowance, promotion, bonus and training
are some of the incentives. In addition, there should be a first aid giving health officers to help
workers if their occurred a problem while operating machineries and it is better to provide a
financial means for employees to pay for medical expenses.

B. Manpower Requirement

Table 14: Minimum labor required, qualification, and work experience y for Toy Manufacturing
Factory

Work
Position Education level
Experience

A. Management
General manager BA/MA or BSC/MSC in Management/Economics/ Engineering 10
senior accountant BA in accounting 8
Finance advisor BA in accounting 6
Procurement officer B.Sc biology 3
Cor-Marketing
BA in economics 8
manager
Management
BA in management 3
representative
Senior secretary BA or Diploma in secretarial science and office management
B. Production and Technique Department
Production and
technique service BSC in Mechanical Engineering 6
head
Workshop section BSC or advanced Diploma or Mechanical or industrial
head Engineering

32
 Work
Position Education level
Experience

Production clerk Advanced diploma 0

Shift production
BSC or Advanced Diploma Engineering 0/2
supervisor
Production counter 10th/12th grade 0
General production
10th/12th grade 0
workers
Technique section
Advanced diploma Electricity/ Mechanics 4
head
Product counter 10 the 0
Senior mechanic Advanced diploma in Mechanics 4
Technical supervisor Advanced diploma Mechanics/ Electricity 4
Mechanic 10+3 4
Electrician 10+3 4
General Worker 10th/12th grade 1

Operator 10th/12th grade 0

Quality control
BSC/ diploma 3
section head

Quality inspector 10+3/10+2

C. Finance Department
Finance head BA in accounting, management, marketing
Accountant BA in Accounting
Junior accountant Diploma in Accounting 2
Cashier Diploma in Accounting 4
D. Material Handling
Department head BA/Diploma in purchasing/ marketing/management/economics
Store keeper Diploma in purchasing and related 4
Loading and
8th grade 0
unloading workers
Procurement officer Diploma in purchasing 4
E. Marketing and Sales Department
Department head BA/Diploma in management and related
Senior sales expert BA/Diploma in marketing
Sales expert BA/Diploma in marketing
Junior sales expert Diploma in salesmanship 0
F. HR and General Service Department
Department head BA/diploma in management and related

33
 Work
Position Education level
Experience

HR Officer BSc or Diploma management/human resource management 1

Telephone Operator Certificate 0
Driver 10th /12th grade with 3rd grade driving license 4
Motor cycle driver 10th /12th grade with 1st grade driving license 2
Messenger 10th /12th grade 0
Security guard 10th grade 2
Cleaner 8 the grade 0

34
7. ENVIRONMENTAL AND SOCIO-ECONOMIC CONSIDERATIONS
7.1. Environmental Considerations
The majority of plastic toys produced worldwide are made from just a few plastic materials
including high- and low-density polyethylene (LDPE, HDPE), polypropylene (PP),
polyvinylchloride (PVC), polystyrene (PS, ABS), polycarbonate (PC), and polyester (PET). All
are unbelievably useful and versatile and are very attractive materials for toys, because plastic is
almost indestructible, can be easily cleaned, and can last for many years.

In the process of converting this material to final product, there is no any polluting material
which can be released to the environment due to the fact that all wastes are recycling. The loss in
the production process also doesn‟t have any harm and are not disposed to the environment
rather used as input for its own process and also for other recycling industries.

Environmental impacts can occur at every stage of plastic manufacturing (in extracting raw
materials, production, distribution and the disposal. In Ethiopia, energy consumption for
transportation of plastic products and emission during the production process may not be a big
problem concerning the environmental issue but most plastic products are not biodegradable and
will persist in the environment for hundreds of years which cause a range of health problems,
water and air pollution. So to reduce impacts on environment the following mitigation measures
have to be considered
 Reducing the amount of plastics waste disposal,
 Recycling plastic can have several other advantages

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8. SOCIO-ECONOMIC BENEFITS
Toy positive impact mainly starts from playing and child development
 Play benefits can be grouped into two categories:
child development: Child development entails physical development, cognitive
development, emotional well-being, etc
Entertainment value. Entertainment value entails sensory stimulation, excitement
and amusement.
 Contribution to economic development such as Education Illiteracy Youth illiteracy
 Contribution to GDP: the establishment of such kind of factories increases the share of
the industrial sector to the GDP.
 Technology transfer: The establishments of toy manufacturing factory have a significant
contribution in transferring technology, skill, knowledge and methods of manufacturing
which ensures that scientific and technological developments are accessible.
 Import substitution: majority of toy products imported from abroad. Importing any
product can take the country‟s large sum of foreign currency. The establishment of these
industries therefore saves high amount of foreign currency remunerated to foreigners and
have the potential substitute the import of product
 Revenue generation to government: the establishment of such kind of factories increases
government‟s gain through taxation which enables to distribute the country‟s wealth
fairly.
 Employment creation: the establishment of toy manufacturing factory creates job
opportunity for a number of skilled and unskilled employees. Mechanics, electricians,
machine operators and other administrative workers can get job opportunity from the
establishment of such kind of factories.

36
9. PULL, PUSH AND SUCCESS FACTORS
9.1. Pull Factors
Pull factors are those opportunities and driving forces, which play a great role for the successful
operation and implementation of the project. These include:
 High demand for the products,
 Parents are increasingly relying on toys to provide alternatives to "device obsession" –
the tendency of children to spend inordinate amounts of time on their phones and tablets.
 The rapid miniaturization and reduced costs of electronics allows manufacturers to
introduce many new features into toys.
 Consideration of the toys manufacturing sector as priority area in the country‟s
economic policy,

9.2. Push Factors

Push Factors whereas are those factors of major problems, risks and constraints which affects
industry performance negatively. These includes

 Children devoting more time to computers/ internet/ studies, leaving less time for games
and toys
 Price fluctuation of raw materials and inputs
 Technology obsolescence is creating road blocks to rapid changes in product design and
also for adjusting to consumer preferences.
 Imported toys are cheaper in cost, versatile in features, attractive and handy in packaging
and better in quality.
 Absence of strong & professionally managed Toy Industry Associations
 Fragmented Technical knowledge.
 Fluctuation and Shortage OF FORIGEN Currency while imported raw materials from
abroad

9.3. Key Success Factors

 Professional Management: In order for a project to be successful, it need good

management and business analysis skills to successfully determine business

37
 requirements. Professional management and business analyst can reduce rework on
projects, manage the project better from the start, control change, improve
communications between IT, the Business Team, and the Project Team and increases
job security within the Organization.
 Producing market focused products (Product diversification): The Market price and
demand of toy is depends on creativity and design , attractiveness and educational
contents of toys. In order to fully extract the market and to increase market share the
manufacturer should deliver this diversified product.
 Technical (professional) manpower: All the manufacturing process operate and
machinery performance managed directly by the technical manpower. So that to
increase the productivity of the company i.e. increasing marginal productivity and
decrease raw material wastage and to maintain product quality as well as to solve
manufacturing problem and to create hospitable working environment professionals
play vital role.
 Advertisement: Advertisement used to reach and attracting huge number of potential
customers and to make positive impact about the products quality and price and to get
direct feedback from customers and used to improve product quality. It provides
information about the new designs of the commodities to consumers.
 Quality Product Quality is also a key success factor it includes, Place ability, Strength,
Drying Shrinkage, Permeability, Resistance to sulfate, Alkali Silica Reactivity
 Selection of modern Technology: Applying of Latest technology plays a very important
role in cement manufacturing process, it will help in introducing innovative product
according to the demand of the consumer, and it will lower down manufacturing cost
and improve quality of the product.
 Develop creative, educational, engaging toys

38
10. CONCLUSIONS AND RCOMMENDATIONS
10.1. Conclusions

According to National Bank of Ethiopia (NBE)‟s Annual report, the Ethiopia‟s economy has
registered 6.3 percent growth in 2020/21 which was, slightly higher than the 6.2 percent
expansions year. This growth was broad with industry growing at 7.3 percent‟, service 6.3
percent, and agriculture 56 percent. Within the industry sector, with 5.1 percent growth, the
manufacturing accounted for 23.4 percent of the industrial output. This sub sector, a crucial sub
sector in transforming an economy, is a concern for the Ethiopian government and plastic
products are one the constituent.

In addition, the robust and sustained economic growth record over the last 15 years has led to
improvement in income inequality and poverty reduction. Accordingly, per capita income has
continuously increased and reached USD 1,092 in 2020/21.

A toy is an item that's employed in play, particularly one designed for such use. Playing with
toys is a pleasant means that of training young kids always in society. Totally different materials
like wood, clay, paper, and plastic are used to create toys.

Plastic raw materials (HDPE, LDPE, and PP) are the prominent raw materials that are being
consumed by the plastic toys manufacturing industry. But from the raw material part of the
study, one can understand that the only source for virgin raw material is from abroad even
though scrap plastic products are available domestically.

Though the global toy market was worth $104.2 billion in 2021, posting an 8.5% growth over
2020 and the global toy market size is expected to reach over $120 billion by 2023. Moreover,
the toys manufacturing business is identified as „an evergreen business‟ globally. However, it is
almost unknown in Ethiopia.

The production process and technology of manufacturing those products are not as such
complicated.

39
Though the global toy market was worth $104.2 billion in 2021, posting an 8.5% growth over
2020 and the global toy market size is expected to reach over $120 billion by 2023. Moreover,
the toys manufacturing business is identified as „an evergreen business‟ globally. However, it is
almost unknown in Ethiopia.

According to many surveys conducted by organizations like by NPD, kids‟ age and gender are
the most prominent determinate factors for segmentation of the toy market. However, from our
countries perspectives, driven by the large young population and by the country‟s robust
economic growth and rising disposable incomes, the future domestic demand for toys is
promising. Hence, the market part of the study revealed there is a promising demand for the
product in domestic market.

Domestically currently the existing toys manufacturers face shortage of major raw materials and
foreign currency are major problems and challenges that the firms faced and operate under
production capacity.

Thus, one can conclude that the major supply source of toys to Ethiopian market is mainly from
import and insignificant volume of domestic production.

Regarding to the availability of trained manpower, due to the industry is new to our country, In
order to enhance the availability of trained skilled manpower for the country‟s toys industry that
is in short supply in fields including conceptualization & toys designing; operation of automatic
& semi-automatic molding machines and cutting & stitching machines etc.

Finally, manufacturing of plastic toys products, create opportunities in use of waste plastics,
critical raw materials, it will have positive impact in absorbing wastes, reducing raw material
shortage and generating income for the society as a whole. Moreover, the industry has significant
effect on employment creation, import substitution as well as revenue generation to the
government.

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10.2. Recommendation

It is evident from the above conclusion and findings originated from the study, projects that
originate from the industry shall receive financial assistance of Development Bank of Ethiopia.

The Bank, however, should consider that any company plan to involve in toys manufacturing
industry should clearly state its marketing strategy to overcome the existing challenges
prevailing in the industry like tackling the tiff commotion from imported similar products,
handling the fashionable and dramatic changes of product models existing in the toys industry,
due attention for product development and design, managing the challenges of foreign currency
shortage may face, and soon. Moreover, it should make carefully define its target market yet fail
to correctly understand the customers‟ needs as it is a complex process.

Moreover, the bank should also give attention to the technology alternative identified by the
promoter that improves competitive position through the advantage of updating the continues
technology changing held on the industry and by applying economies of scale to be competent
both in price and quality with the imported products.

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11. PARAMETERS, TECHNICAL COEFFICIENTS AND ASSUMPTIONS

This part is devoted on the assessment of the coefficients and parameters which are to be used on
the determination of costs and revenue in the manufacturing of plastic based kid‟s Toys. The
very important caution which has to be taken by the users of this document is that the parameters
and prices determined are just indicatives, which help to understand where the real parameter
lays.

11.1. Assumptions
 Annual working days……………………………………………...270
 Number of shifts per day…………….…………………………...1 shift
 Working day per Weak………………………………………….. 6 days
 Working hours/shift……………………………………………… 8 hours

11.2. Revenue
A. Price of Final Products
Table 15: Current Average Factory Gate Price of plastic based kids Toys with VAT (Birr / pairs)
Unit of Average Current Factory gate
S. No Product type
measurement selling price (in Birr)
1 Amharic letter with Number Pack 170
2 Arabic Number Pack 170
3 Geez puzzle 40pcs Pack 170
4 Gees puzzle 60pcs Pack 200
5 Geez puzzle 100pcs Pack 250
Source: Field Survey

B. Conversion Factor
1 kg plastic resin raw material would produce 5 set of Amharic letters with number or 7set of Geez puzzle
40 pcs, or 5 set of Arabic number
 Loss percentage: 2% which are recycled and reused
 The raw material mix is 97% virgin and 3% master batch

42
11.3. Investment Requirement
A. Machinery and Equipment:
List of required Machinery and Equipment are presented on technical part of this document.
B. Vehicles
Table16: Minimum Vehicle requirement for plastic based kids Toys manufacturing
Sr. No Type of vehicle Purpose
Service vehicles For serving employees
1.
Automobile for the manager
2.
Truck For raw material transportation
3.
NB: Vehicle requirement is varied based on the size of the factory

11.4. Operational Expenses

A. Raw material Requirement and Cost
Table17: Current Average price of Raw materials used for the manufacturing plastic based kids Toys
S/N List of Raw Materials Unit of Measurement Unit Cost (In Birr)
1 HDPE raw material KG 170
2 Master batch (high quality) Kg 356.5
Packing Materials Holding capacity
1 PE bag 27x55 40 pcs 10 birr/pcs
2 PE bag 27x80 100pcs 15birr/pcs
3 PE bag 27x70 60pcs 15birr/pcs
4 Printed label paper 150gm Needs 1pcs/pack 4 birr/packs
5 Printable product note Needs 1pcs/pack 5.5/pcs
6 Carton box holding 15 package pcs 45 birr
Source: Surveyed factories

B. Utilities
 Electric consumption…………………………………………. As per the machinery specification
 Chilled and treated water consumption………………………. As per the machinery specification
C. Overhead Expenses
 Telephone, post & internet……………….on average 0.12% of annual sales
 Travel and Perdiem .............…………….1.27 % of Annual salary
 Office supplies……………………………0.01% of annual sales
Uniform and Clothing
 Overall Tuta-------------------------------1000birr/person
 Safety shoes ------------------------------890 birr/person

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D. Fuel and lubricants
Their fuel consumption cost is dependent on production area and purpose of the vehicles intended for.
 For Automobile: 13-15 Km per litre
 For Service Vehicle : 0.013559 lit/seat/km
 The cost of oil and grease: 2% of fuel cost
 For Truck:
Table18: Truck fuel cost
Gross Distance Fuel Fuel Consumption
AVERAGE
Vehicle Pay Load travelled in one Consumption per Km for each ton
lit/km/ton
Weight litre per Km of load
7.5 TON 3.124 Ton 5.840 km/lit 0.171 lit/km 0.055 lit/km/ton
12 TON 6.311 Ton 5.500 km/lit 0.182 lit/km 0.029 lit/km/ton 0.035
18 TON 10.198 Ton 4.540 km/lit 0.220 lit/km 0.022 lit/km/ton
Source: Cross cutting, 2021

E. Insurance
Table19: Major Insurance Categories for plastic based kids Toys
Description Types of Insurance
Buildings Earthquake and fire
Machinery &equipment and Fire and lightning
Furniture
Vehicles Accidents( life and property damage, and third party insurance)
Life insurance Working hours and work man composition for employee and 24
hours personal and work team for managers
NB: For the rate of premium refer to the “Cross Cutting Project Supporting Data, 2021‟‟

F. Depreciation & amortization

Table20: Depreciation and Amortization

Sr. No. Description Percentage of original value
1 Building and construction 5
2 Machineries and equipment 10
3 Furniture and fixture 10
4 vehicles 20
5 Generator 10

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G. Repair and Maintenance:

 Building and Construction……………………….… 2%of original cost

 Machinery & Equipment: ………………………… 5%of original cost
 Furniture and Fixture: ………………………............5% of original cost
 Vehicles: …………………….......................................10% of original cost
 Generator………………………………………………5% of original cost

H. Land Lease Cost

It is according to land lease agreement between the project and concerned office from where the land
would be availed.

7.5. Working capital Requirement

Determination of working capital requirement is one of the major short-term planning which plays very
vital role for operating the business successfully. The determination of working capital is to be done very
effectively otherwise there may be over or under estimation of working capital. The amount of working
capital should be sufficient.

Table21: Working capital Requirement

Description Period (Months)

Import 4
Raw material
Local 1
Insurance 12
Salary and Wages 1
Fuel and lubricant 1
Stationary and office supply 1
Travel and per diem 1
Uniform and cloth 12
Working in progress -
Finished products -

45
REFERENCES
 Central Statistics Authority
 Shumburo Plastic Factory
 Han Plast factory
 Bilecho Kids Toys Factory
 Ethiopian Custom and Revenue Authority
 Ethiopian Investment Agency
 International Trade Centre
 http://martinsplastics.net/en/toy-manufacturers/

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