Lego System A/S announced lowering retail price level, by up to 40 per cent, of its toys in Thailand on November 24. Lego says the move is part of a strategy to bring the Thai price of the toys in line with other Asian markets like Singapore and Hong Kong.
The price cut is the result of an agreement between Lego System and its local distributor Diethelm Co., Ltd to reduce both their margins.
Lego is mainly manufactured in Denmark and Switzerland, so the import tax on toys to Thailand is as much as 20 per cent.
Simon Stansfield Bast, the regional distribution director for Lego, said the company also has a local partner in China.
Lego will slowly move our production facilities to China over the next five years. Since then the factories in Denmark and Switzerland will be finally closed down to lower manufacturing cost while maintaining quality. Some 80 per cent of all toys in the world are made in China.
With manufacturing operations in Europe, we are now not as competitive as we are stuck with the euro while our competitors are dealing in dollars. By moving our facilities to Asia, we can enjoy the benefit of Asian currency depreciation,” Bast says.
Asia now accounted for 20 per cent of Lego’s sales revenues. Japan is its largest market in Asia, while Singapore is the biggest market in Southeast Asia.
Chukiat Tokamoltham, department manager of Diethelm Co.,Ltd, said the company was enjoying sales growth of between 10 per cent and 20 per cent for Lego toys this year. It expects growth to exceed 20 per cent next year due to the price cut.
Under the new strategy, Lego was also introducing retro collections into the Thai market, including the popular City collection. The company also announced the launch of its latest collection, named “Knights’ Kingdom.”
