Chennai: Even as cheap Chinese toys are flooding the domestic market, the Rs 45-crore-turnover Funskool India is planning to convert concepts to games for the UK market.

Says Funskool India chief executive Raphael Kuriyan: "We will soon sign an agreement with a British marketing company to design and manufacture toys based on concepts given by the foreign company." Funskool has already designed a couple of games for the UK company and a formal announcement to this effect will soon be made.

But the task is not simple. The company''s design team has to understand the British ethos to convert the concept into a final product. "The offshoot is that our design team will gain valuable experience and the same will be applied for the domestic market," adds Kuriyan.

The company during the last year increased its export basket to Hasbro International, USA. Hasbro holds a 40-per cent stake in Funskool''s Rs 4-crore equity while tyre major MRF holds the balance. In addition to action hero figures and some generic games, Funskool has started exporting wooden building blocks for Hasbro''s global markets. The company exports around 10 products to Hasbro.

Like many other industries, the China factor is a major issue for the domestic toy manufacturers, which has resulted in a chaotic market condition. Not long ago the Indian and the Chinese toy industries were at par. Last year the Chinese exported around $8-billion worth of toys. Kuriyan says the Indian imports will be around Rs.150 crore, which is nearly half of the domestic toy market.

The issue is not only cheap toys but also counterfeits, which impact the legal licencee of a toy, says Kuriyan. "I am not against imports. But what is needed is the laying down of standards — toxicity and safety — and strict implementation of laws to tackle the counterfeits."

On the issue of standards, the toy manufacturers'' association has submitted to the Indian government to apply any one of the following standards — British, American, German or Japanese — since all are similar in nature.

Kuriyan is of the view that the Chinese toys will be an issue for the domestic organised players for another three more years before customers will turn away from the poor quality products. "This happened in batteries and is happening in other products. But will take some more time in the toys segment as the product life cycle is longer," he says.

That doesn''t mean imports will stop. But the import basket will consist of high-priced products that will compete on the equal footing with that of domestic organised players. "In a way the cheap Chinese toys are a blessing in disguise as it is helping in growing the market and developing new product segments," says Kuriyan.

Already there is a change in people''s perception of toys. Educated parents are viewing toys as a child development tool apart from its entertainment value. "It is the literacy level that shapes the perception and not the family income," he adds.

Broadly the toys segment could be classified into board games, building blocks and dolls. While Funskool leads in the board games, Lego and Mattel are the leaders in the building blocks and dolls segments. "Our strength is in board games and action hero figures. We also have a presence in segments where Lego and Mattel are present," says Funskool marketing manager David Daniel Selvaraj.

According to him, Funskool is now promoting its toys heavily in schools. Thanks to the poor penetration of personal computers, the toy industry is not greatly affected by the computer games though today many small kids are adept in playing the same.

For the adults the company recently launched a family quiz game, Trivial Pursuits and Jenga, a game with small wooden blocks.