Peng Hua, general manager of King Tree Handicrafts Company, says that the company has felt the chill of the economic crisis. [Alexis Hooi / China Daily]

"Toy chain stores, for example, are still a relatively new concept for Chinese consumers and we want to build on that through our own brands."

"Again, in terms of quality, Chinese toy products have benefited from the stringent standards of the West in the past few decades and we are now capitalizing on that to expand our reach and market at home," he says.

To that effect, Big Tree has invested in quality and safety testing facilities.

"These are just some of the avenues we must take to move away from being too reliant on exports," Lin says.

"Chinese buyers still consider June 1 (Children's Day) and the summer holidays as well as Spring Festival, as the significant periods for giving toys, not Christmas as it is celebrated in the West. Celebrating Christmas might be more pronounced in the large Chinese cities but it is comparatively absent in the smaller ones."

King Tree's Peng Hua is also spearheading efforts to grow the domestic market for Christmas trees and his company is using its production lull period to move into the furniture and other sectors to diversify its business interests. But he admits his industry will obviously continue to depend heavily on Western markets.

"We started targeting Chinese consumers seriously last year but that brought in only about 3 million yuan for us this year. Most of the trees we sell at home go to hotels and shopping malls that 'celebrate' Christmas, so we bulk up on the designs, lights and decorations for these clients," Peng says.

"Christmas is still very much a Western thing and our trees will depend on foreign consumers for a long time to come."

Chen Hong contributed to this story.