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"According to Gaole, the recent increase in import tariffs on toys in Brazil has minimal impact on the company’s performance. This is because the volume of exports to Brazil remains relatively small, and thus the company is not significantly affected by the tariff hike.
On the 28th, Brazil's Foreign Trade Commission (CAMEX) announced a rise in import duties on Chinese toys from 20% to 35%, aiming to protect domestic manufacturers that have been hit by currency appreciation. In response, several listed Chinese toy companies, including Gaole and Xinghui RC, stated that this policy change would not negatively affect their financial results.
Analysts suggest that although around 90% of Brazil’s toys come from China, local manufacturing capabilities are still limited, meaning that foreign exporters can still find space to operate in the short term. Moreover, the price increases are not widespread, and many of these companies rely more on markets in Europe and the United States for their main revenue streams.
Compared to the higher tariff barriers, the toy industry is more concerned about the pressure from currency appreciation, inflation, and rising production costs. According to data from the Ministry of Commerce’s Department of Foreign Trade, from January to November this year, China exported 13.874 billion toys with a transaction value of $9.335 billion—up 30.3% compared to the same period last year. However, insiders note that despite the high transaction volume, net profit margins have dropped to historic lows, currently below 4%.
The head of Gaole explained that while the company is using strategies such as hedging and adjusting pricing to reduce the impact of the renminbi’s appreciation, exchange losses still exist. Fortunately, most of the listed toy companies are industry leaders with strong brand presence, and their products typically maintain a net profit margin of over 10%.
However, industry experts warn that as the pressure from currency appreciation continues to grow, many small and medium-sized enterprises (SMEs) in the toy sector may struggle and face closure. Some analysts believe this could create market opportunities for larger, well-established listed companies."
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