Hong Kong Manufacturing SMEs: Preparing for the Future

94Silverlit is determined to operate mostly as anOBM company. In addition to its pioneering newtechnologies and segments, Silverlit has alsolinked its toys to entertainment products. In 2007,Silverlit entered into a partnership with ShanghaiCharacter License Administrative Company Limited(SCLA), an established Mainland publisher of titlesthat include popular comics, and the owner ofa television production house to produce a 52-part series called “Golden Hero.” Billed as thefirst original Chinese hero-themed children’stelevision show, it was screened on some 45Mainland television stations from 2008 to 2009,with a second series in production in 2010. It hasalso been broadcast in Taiwan. SCLA comes upwith the storylines while Silverlit develops relatedtoy concepts. The ultimate goal is to launch a toybrand that is developed and tested in China intothe US and European markets.Silverlit is increasingly manufacturing selfbrandedtoys, but also produces under licenceand co-brands some of its products. The idea for“Golden Hero” came from the relationship thatSilverlit has with Marvel to produce toys underlicense in support of the Spiderman, Ironman,and Cars movie franchises. By signing with Marveland producing licensed products, Silverlit hopesto improve the firm’s image and thus lead toincreased orders for products that carry the Silverlitbrand. In North America Silverlit co-brands itsplanes with Spin Master because in that marketSpin Master is a more recognised brand andoffers very professional after-sales service. Silverlittherefore puts two brands, its and Spin Master’s,on the products. Silverlit uses its own brand inother countries where there isn’t a dominantbrand already.In response to the changing order patterns fromcustomers due to the global economic crisis of2008/09, Silverlit is attempting to build closercontact with its customers through its offices inthe US and in Europe. Staff in those offices makefrequent personal contact with customers to getorders confirmed, to try and increase orders, andto find out what customers are thinking and howtheir needs are changing. Most competing firmsdo not have offices in the US or Europe and donot have such tight contact with their customers.Silverlit has found a face to face strategy to bemore effective in securing orders even as customerbudgets tighten, the firm still manages to securecustomer orders.Silverlit’s China strategy draws on more than 10years of retail experience in that market. The firmstruggled to make significant sales in the ChineseMainland when there was little intellectual propertyprotection, incomes were low even in the majorcities, and the regulatory environment favouredMainland China-owned manufacturers. Now thatthe Chinese Government is addressing these issues,Silverlit is finding greater opportunity in China andis opening more sales channels. Presently, the firmhas approximately 400 sales stands in China, mostlyin large department stores in Beijing, Shanghai,Guangzhou, Chengdu, and Wuhan. Silverlit doesnot expect to expand Chinese sales very quickly,but it does expect sales to grow steadily andbelieves that China represents an important futuremarket. Silverlit plans to enter second-tier and thirdtiercities as intellectual property protection andeconomic conditions improve in those cities.Future PlansHaving conquered the skies, Silverlit is now set onbuilding a global brand originating in China. Thepioneering branding strategy that Silverlit enteredinto with SCLA could help transform Silverlit into amedia-focused and content-driven global toy brand,like Bandai in Japan. Although the focus with SCLAis currently on the market in the Chinese Mainland,there is a plan ultimately to expand the strategy intoother markets such as the US and Europe.The Chinese market, which now accounts for lessthan 10 per cent of Silverlit’s business, is a majorfocus for the future. The firm sees enormousopportunity as the market matures, as income levelsrise, and as intellectual property rights are betterenforced.