Lego is seeking new markets owing to decline in sales in its traditional markets and because of this the Danish toymaker is strengthening its position in China by promoting its place in the classrooms across the country.
Lego is working with a number of local organizations, schools and private education providers in the country to promote use of Lego as an education tool that boosts motor skills, creativity and attention spans. Lego is working to present itself as a tool that helps instill and nurture the much needed skills in children.
China is a market that is already aware of how block building toys help students learn specific skills. There are classes that combine Lego as an educational toy with computers and science thereby supplementing learning in a fun way. Learning is the focus with parents spending sizable chunk of their income on such classes.
Lego’s move is aimed towards expansion in new and potential markets considering it saw a sales decline in more than a decade. Last September it announced its plans of culling as many as 8 per cent of its workforce and revamp its business. United States and Europe have been strong markets for Lego, but that changed recently and now China with the highest population seems to be a fitting market to ramp up sales.
China’s toy market was estimated at about $9.6 billion last year, growing close to 10 percent against 2016, according to the China Toy and Juvenile Products Association. And the preschool segment of its for-profit education market alone is expected to reach 540 billion yuan ($85.20 billion) by 2020.
In China, Lego competes with the likes of Mattel Inc (MAT. O), Hasbro Inc (HAS. O) and local market leader Alpha Group (002292. SZ).
The building blocks are especially attractive to younger parents in major cities, who are more receptive to the Western idea of “free play” – especially if it comes with an educational sheen.
Lego, via its education arm – which it says is kept separate from its commercial toy business – and major shareholder Lego Foundation work with academic centers such as Beijing’s Tsinghua University and other education bodies.
China’s Ministry of Education and Lego also collaborated on an “innovative talents training program,” in which more than 10,000-grade school teachers take part annually. “We are engaging with the government,” Jacob Kragh, general manager of Lego in China, told Reuters in an interview in Beijing, adding this was mostly related to “curriculum development and teacher training.”
The education business aims to “generate a new and more progressive way of teaching science, technology, engineering, and math” – highly prized subjects in China often studied by the country’s political and business elite. That could be of interest to parents who are worried about their children falling behind in a highly competitive school system.