Most of the toy businesses in Shenzhen of Guangdong Province have seen 20-30 percent drops in overseas orders this year due to the economic downturns in Europe and the United States.

"Some businesses' orders have even plunged by half," said Liu Yanfang, Secretary General of the Shenzhen Toy Industry Association.

Many toy businesses in Shenzhen have given holidays to their employees ahead of schedule because of the sharp decline in orders, Liu said.

China exported $21 billion worth of toys in 2010, and sales in Shenzhen alone accounted for almost one fifth of this total.

"The economic downturn and the upgrading of toy safety standards in Europe and the United States, as well as the sharp rise in costs of labor and raw materials, have all led to the shrinking toy market in Shenzhen," Liu said.