Danish Lego builds first factory in China

Danish toy maker Lego said on Monday it plans to build its first factory in China next year to support its sales in fast-growing Asian markets.

Lego, the world’s third-largest manufacturer of play materials, said in a statement that construction will begin in  early 2014 in the city of Jiaxing.

Lego did not specify exactly how much it would invest, but said it would be a “3 digit million euro figure.” The plant would have about 2,000 employees once it is fully operational in 2017. Last month the company announced that they were laying off 380 employees in Denmark.

“Asia – including China – is a future core market for the Lego Group and therefore I am excited to share our plans for the new factory,” Chief Operations Officer Bali Padda said in the statement.

The Lego Group does not operate its own manufacturing facility in China currently but expects the new factory to supply approximately 70 percent to 80 percent of all Lego products sold in the region in 2017.

Lego Group sales in Asia have grown by more than 50 percent annually in recent years.

Lego currently has factories in Denmark, Hungary, Czech Republic and Mexico.

Lego Group reported last month that sales rose to DKK 23.4 billion last year from DKK 18.7 billion in 2011 despite an economic slowdown that has hurt rivals Mattel (MAT.O) and Hasbro (HAS.O).

Last year, Lego extended its deal with American filmmaker George Lucas to manufacture models related to the Star Wars saga, including space ships and miniature figures.

The Lego group was founded in 1932 by Ole Kirk Kristiansen and has passed from father to son. It is now owned by Kjeld Kirk Kristiansen, a grandchild of the founder.



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