Yet, without products designed and produced by themselves, Chinese toy makers have to pay huge patent fees when selling OEM toy products in the domestic market. Toy companies abroad also have an eye on the Chinese market.

The association's Secretary General Liang Mei said that toy brands from Japan, the United States and the EU have gotten a foothold in the Chinese market by either establishing representative offices or branches or picking their dealers in China.

Overseas brands now hold the majority of the market share. Cartoon characters with foreign origins, such as Mickey Mouse, Donald Duck, Transformers and Ultraman, have dominated China's toy market for decades.

Safety blame game

Toy recalls are the last thing China's toy makers want to see. In the past half year, many toys exported overseas have been recalled because their quality failed to meet new standards.

"The quality problem of toys made in China is not merely a fault of Chinese companies," said Zhan.

Zhan stated that processing either with supplied materials or foreign designs, China Original Equipment Manufacturers have been working in line with the requirements of overseas toy dealers. Usually, the dealers require production to meet the standards and regulations of importers, and for those without specific requirements, Chinese toy makers will follow domestic standards. In general, when the convention is strictly observed, there won't be any quality problems or product recalls, said Zhan, citing that products of Daily-Play Toy sold to the United Kingdom have never been returned since they have strictly observed UK standards.

"In many cases, the dealer is to blame for the recall," said Zhan. According to him, the quality and safety problems of exported toys are usually the result of two factors: the dealer is not clear about the standards and requirements of importers or the dealer wants to save money and doesn't test the sample before handing it over to Chinese toy makers. With a disqualified sample, it's impossible to produce qualified products.

Shi said that a majority of materials for toys from China are imported and meet high environmental standards. It seldom happened in the past that toys were recalled because their quality failed to meet environmental standards. As developed countries enact higher environmental standards for toys, trade disputes may frequently occur before Chinese companies adjust themselves to the new standards.

In the case of Cheung Shu-hung, executives at Lee Der told the Southern Metropolis Daily that Cheung may have been cheated by his best friend, the paint supplier who sold Lee Der fake paint containing lead that was later used in the toys.

Chinese companies often have long supply chains, making it difficult to trace the exact origin of components, chemicals or additives.

Shi reminds domestic toy makers that they need to strengthen their product safety control system, adopt new environmentally friendly materials, and make the production process conform to the rules and regulations of importers as well as to China's national safety code. At the same time, they should learn more about the U.S. and EU standards on toy safety.

The United States is one step ahead of the EU in solving the toy safety disputes caused by the new standards. The China-U.S. Toy and Factory Safety Seminar was held in the southern city of Guangzhou on July 17, in hopes of better communications regarding the U.S. new standards. Government officials, industry associations and company managers from the two nations agreed to work together to communicate about technology updates and safe production. They have also decided to beef up communication on related industry rules and regulations, so that trade barriers will not trap either side.

Independent innovation stressed

Liang believes the best way out of the toy troubles would be for Chinese toy makers to develop products with their own labels and update the technological level of their products.

Liang said that though traditional toy products have taken a substantial share of overseas markets, the design of many toys today is intelligently oriented to cater to customers at varied ages. Made-in-China toys are mainly plush, plastic, stuffed or electronic toys with low added value, while many toy-importing countries have increased their demand for high-tech toys including electronic games and educational toys. However, most Chinese toy makers have failed to catch up with this trend. Among the toys China exported to the EU last year, more than 80 percent were traditional toys, and hi-tech toys accounted for less than 5 percent.

On June 9, China's first early childhood music education doll "Weiwei" was unveiled in Shenzhen. With its music doll, Shenzhen Sinovoice Digital Technology Co. Ltd. is transforming from an electronic product producer to a toy developer with an independent brand.

The Qizhi Digital Technology, a company based in Shunde, Guangdong Province, with an R&D team of 20 engineers, has established cooperation mechanisms with institutions and colleges and recently introduced a series of cartoon characters.