Lego looks to China for growth, as sales sag in US, EU

By ZHANG RUINAN in New York | China Daily USA | Updated: 2017-09-07 23:26

The "brick'' has fallen on hard times — except in China.

Lego Group, the toymaker of colorful interlocking plastic building blocks, said it will cut 1,400 jobs globally after suffering its worst financial performance in 13 years as sales fell in the US and Europe.

The Danish company, however, said it remains fully committed to its growing market in China, where it said growth was in the double digits.

The privately owned company said on Tuesday that in the first six months of the year, revenue dropped 5 percent to $2.3 billion, and profit fell 3 percent to $544 million.

But Lego's sales grew by double digits in China during the first half, and "China remains a growth market for the LEGO Group," Rude Trangbaek, the company's press officer, told China Daily in an email on Wednesday.

"At the beginning of the year, approximately 1,200 employees were based in the factory in Jiaxing, and we remain fully committed to our factory in China," he said.

The company, which appointed a new chief executive in August, said growth in countries like China had not been enough to balance the decline in sales from more established markets like Europe and the US.

Lego entered the Chinese market in 1993. It built the 160,000-square-meter plant in Jiaxing, Zhejiang province in 2014, and increased staff at its office in Shanghai to 200 from 80 this year. Its revenue in China has registered annual growth of 25 to 30 percent since 2015, according to Reuters.

The employee reduction is about 8 percent of Lego's global workforce of 18,200.

The company sells its products in more than 130 countries and regions.

Lego Chairman Joergen Vig Knudstorp said the long-term aim is to get sales growing again in Europe and the United States. He noted that there were strong opportunities "in growing markets such as China".

He said the company needs to simplify its business model to reduce costs.

Vig Knudstorp said that while Lego will try to engage children and parents through online products, such as digital social platforms and coding sets, the plastic toy blocks remain key.

"The brick is the heart of our business," he said.

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