The real toy story: Inside China's struggling toy factories

Updated 10:46 AM ET, Mon October 5, 2015
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Doll heads piled up at a toy factory in Xitang, Zhejiang Province, China, on September 17, 2015. Toy factories in the area are struggling after a fall in orders from Europe and Latin America. It's part of a broader decline in China's manufacturing activity, which hit a 78-month low in September. Kevin Frayer/Getty Images
Economic data out of China has been dismal in recent months, pointing to an overall economic slowdown. Kevin Frayer/Getty Images
Plastic doll heads are seen in a box at a toy factory on September 17 in Xitang, Zhejiang Province, China. As of January this year, the country still makes around 75% of the world's toys. Kevin Frayer/Getty Images
Sewing by hand, a Chinese worker prepares a stuffed toy for sale. On September 22, addressing America's top business executives in Seattle during his first state visit, President Xi Jinping sought to reassure investors, saying that China's economy is operating "within the proper range." Kevin Frayer/Getty Images
Investors will get more manufacturing data on October 1, with the release of the final Purchasing Managers' Index readings for the month of September. Kevin Frayer/Getty Images
A worker places eyes into plastic toy doll heads in Xitang, China. Over the past five years, toy manufacturers in China have started to sell to an entirely new target demographic: lower-income Chinese consumers. That's right -- China itself is becoming a major consumer of toys. Kevin Frayer/Getty Images
China expects its economy to grow 7% this year, despite falling manufacturing activity. Kevin Frayer/Getty Images
A Chinese worker organizes plastic doll heads after painting them at a toy factory on September 17 in Xitang, China. Market research firm Euromonitor International says retail sales of toys and games in China have been growing about 13% each year since 2008. In 2013, total sales were just shy of $20 billion. Kevin Frayer/Getty Images
A Chinese worker cools plastic doll heads in water after they were made in an oven at a toy factory on September 17 in Xitang. Euromonitor predicts that in the next five years, China will be the fastest growing market globally for traditional toys and games. They say the market will grow 57% by 2018. Kevin Frayer/Getty Images
A Chinese worker puts the finishing touches on a doll at a toy factory on September 17 in Xitang. Alice Tsang, an economist with the Hong Kong Trade Development Council, said the market is only going to grow as China loosens its one-child policy -- which means an extra 1-2 million babies born each year. Kevin Frayer/Getty Images