AI toys become the "top trend" for New Year goods! Trillion-yuan market explosion. This toy small city "captures" contemporary young people

"Watch China for global toys, watch Guangdong for toys in China, and watch Chenghai for toys in Guangdong." This Spring Festival, more visitors discovered the hidden side of Shantou Chenghai, the "Toy Capital."

During the Spring Festival holiday, at Baao International Toy City (referred to as "Baao City") and 1688 Chenghai Toy Selection Center (referred to as "1688"), vehicles with license plates from Guangdong, Zhejiang, and other provinces were seen everywhere.

A visitor from outside the region told Times Finance that they learned online about Baao City as a "toy paradise," where not only can kids be taken for walks, but there are also thousands of toys to choose from; some consumers even bought a whole carload of toys as gifts for children during the Spring Festival.

It's not just parents and children who are "planting the seed"—post-00s Xiaoting (pseudonym), with a mindset of "just browsing," came to Baao City and was also attracted by various IP co-branded toys, unable to move forward. "Little Liu Duck, Milk Dragon, and Crayon Shin-chan... there are so many toys, and the prices are very friendly," Xiaoting said. In the end, she bought her favorite blind box and also got a Milk Dragon stress-relief squishy toy, saying, "When work gets stressful, squeezing it is very soothing."

To accommodate this wave of consumer enthusiasm, during the Spring Festival, Chenghai Baao City launched the "Global Goods Go Worldwide, Toys Sell Globally" Carnival, showcasing over 200,000 toy varieties with discounts across the board, and collaborating with cinemas, hotels, and other partners to attract more consumers. 1688 also operated normally during the holiday, with staff noting that crowds usually started gathering around 10 a.m. each day, with daily foot traffic reaching full capacity.

Times Finance observed that Baao City and 1688 offer a wide range of toy categories, including infant and toddler toys, building blocks, electronic games, remote-controlled toys, and more. On the dazzling shelves, one emerging toy category stood out—AI toys.

2025 is dubbed the "Year of AI Toys," according to a report by market research firm Magic Mirror Insights. From January to October 2025, China's online sales of AI toys (mainstream e-commerce platforms) reached 520 million yuan, a 394.9% year-over-year increase, with sales volume surging by 960.5%.

This Spring Festival, AI toys also became the "top trend" for New Year shopping. Data released by Taobao Tmall's trendy toy industry showed that during the New Year shopping festival, transactions in the AI toy category skyrocketed by 500 times year-over-year, with six products exceeding one million in sales.

As the "Toy Capital," Chenghai leverages its complete industrial chain advantages and is transforming from "manufacturing" to "intelligent manufacturing." In this wave of smartization, AI toys, representing the "new broad goods," are accelerating their global reach.

Hundreds of Billions Market Explosion, AI Toys Moving Toward Universal Coverage

The explosive growth of the AI toy market is closely linked to the rapid development of multimodal AI interaction technology and decreasing hardware costs. "The implementation of emotional technology has driven interaction from simple command responses to multimodal emotional interactions. With capital and policy support, the AI toy sector continues to expand," said Zhang Yi, CEO and chief analyst of iiMedia Research, in an interview with Times Finance.

Market research firm Market Research Future reports that in 2024, the global AI toy market size reached $11 billion, and it is projected to grow to $58 billion by 2030 (approximately 400 billion yuan). According to China Business Industry Research Institute, China's AI toy market is expected to reach 85 billion yuan by 2030.

As toys upgrade from "passive response" to "active interaction," AI toys that can perceive, think, and interact are becoming new consumer choices for Generation Z and young adults living alone.

"Shifting AI toys from children's exclusive products to products for all has been the biggest change in the sector over the past year," said Zhang Yi. Currently, AI toys mainly target children aged 3 to 14, but since the second half of last year, they have rapidly expanded to Generation Z, young solo dwellers, and the elderly. Their core value is also diversifying, shifting from children's education and companionship to focusing on emotional value, emotional healing, and light socialization.

Zhang Zhenqiang, vice president and secretary-general of Chenghai Toy Association, also believes that the core value of AI toys lies in "intelligent interaction + emotional connection." Through voice recognition, multimodal interaction, and other technologies, they enable deep interaction between people and toys, enhancing user experience and meeting diverse, personalized consumption trends. "For example, Chenghai toy companies have launched AI companion dogs and singing and dancing robots that not only have educational and entertainment functions but also emphasize emotional companionship and personalized interaction, meeting the needs of young people and those living alone."

From niche novelty to mass consumer product, AI toys' vast market potential has attracted capital investment, accelerating funding and mergers. Leading institutions like Sequoia China, Lenovo Venture Capital, and GSR Ventures are actively involved.

According to China Business Industry Research Institute, in 2024, there were 14 investment and financing events in China's AI toy industry, totaling 249 million yuan. From January to August 2025, there were 17 such events with investments exceeding 20 billion yuan.

Supported by capital, the sector's player structure is becoming more diverse. Besides traditional toy companies, innovative startups like Haivivi and FoloToy, companies with IP reserves such as Pop Mart (300459.SZ) and Shanghai Film (601595.SH), and major tech giants like ByteDance, Baidu, JD.com, and Huawei are also entering the field.

In January, JD.com launched its second batch of self-developed AI toys, covering family scenarios such as children's enlightenment, emotional companionship, and elderly care. The first batch of self-developed AI plush toys, launched in 2025, sold out immediately and underwent multiple restocks.

ByteDance introduced the AI companion toy "Obvious Bag" in 2024, integrating multiple AI technologies from Volcano Engine, capable of understanding and actively responding to complex questions, engaging users with encouraging interactions.

Chenghai Toy Companies Rush into the AI Toy Market

As one of China's largest and most complete production and trade bases for toys, Chenghai accounts for about one-third of the global plastic toy capacity. With the explosive growth of the AI toy market, this "Toy Capital" is leveraging its industrial foundation to accelerate its transformation from "manufacturing" to "intelligent manufacturing."

Zhang Zhenqiang pointed out that Chenghai toy companies' advantages include a complete industrial chain—from mold manufacturing to assembly—allowing quick response and strong cost control; mature manufacturing processes and quality control systems capable of large-scale production; and government-enterprise collaboration along with industrial clustering, such as the implementation of the "Five Major Projects," which accelerate the formation of an industrial ecosystem.

Based on local industrial chain advantages, leading Chenghai companies like Alpha Group (002292.SZ) and Shifen Culture (002862.SZ) are leveraging their strong manufacturing capabilities and IP resources to accelerate their AI toy strategies. Zhang Zhenqiang noted that dozens of companies in Chenghai are now producing AI toys.

On February 1, Shifen Culture launched the AI plush toy "Pig Little P," transforming the popular IP with over 20 million fans into a "parenting assistant" with functions like companionship, learning aid, and sleep aid. Additionally, Shifen Culture partnered with Baidu Smart Cloud to launch the Year of the Horse AI Xiao Du Bear, combining festive elements with year-round companionship needs.

In the second half of 2023, Alpha Group established an intelligent toy division to officially enter the AI toy sector. Since 2025, Alpha has launched plush smart products like Pleasant Goat and Lazy Goat. During an investor relations event in January, the company announced plans to develop interactive digital versions of core IPs like Pleasant Goat and Super Wings, currently connecting with large model platforms and AI hardware clients to build an interactive IP database.

Lü Jiani, director of intelligent products at Alpha Group, told Times Finance that their AI product development focuses on integrating the latest technologies into IP characters. The current market response to their AI toys is positive, and future efforts will focus on enhancing functions and scenarios, combining education and entertainment with IP.

Xinghui Entertainment (300043.SZ) also stated in its 2025 semi-annual report that after divesting its football club business, it will further focus resources on toys and games, including branding and AI technology applications.

"Regarding AI toys, the company has already developed technologies like voice interfacing and Bluetooth control, and can incorporate these into products. We are continuously monitoring market demand and developing new products," a staff member from Xinghui's secretariat told Times Finance. The company has also launched products aimed at young consumers and plans to expand AI toys to cover younger demographics in the future.

The path from "manufacturing" to "intelligent manufacturing" is not without challenges. Lü Jiani noted that the biggest challenge in R&D and commercialization of AI toys is managing user expectations—consumers often expect a 2-point experience but receive only 0.5 points.

Compared to traditional toys, AI toys generally carry higher premiums and have lower repurchase rates. Lü Jiani believes that consumers eager to try new technology are willing to pay for AI toys. While current retail prices do impact adoption speed, other factors such as Wi-Fi connectivity and product experience are also influential.

How to further reduce costs? Zhang Zhenqiang said that in Chenghai, companies can lower costs and improve efficiency through industrial cluster collaboration, shared manufacturing platforms, and digital supply chain management. The association also promotes AI empowerment training, technical forums, industry-university-research cooperation, digital transformation consulting, and financial services to lower barriers for upgrading.

Overseas Demand Booming, AI Toys Becoming Key Export Growth

Currently, Chenghai's toy exports exceed 10 billion yuan annually, accounting for about 60% of the global toy market share. According to Times Finance, overseas demand for AI toys is also very strong. Amid reshaping the toy market landscape, Chenghai AI toys are gradually becoming a core driver of exports.

It is understood that local large-scale toy companies have increased their AI toy exports from less than 10% to about 30% by 2025. Some Chenghai toy companies report that their AI smart pets, coding robots, and other products have seen export growth of over 200% since 2025.

Lü Jiani believes that Chenghai's AI toys' main international advantage lies in competitive pricing and efficient customization. However, challenges remain, such as obtaining product certifications in different countries and high costs of overseas servers and large models.

Zhang Zhenqiang told Times Finance that the association is actively assisting Chenghai toy companies in overcoming export challenges, including helping them complete safety, environmental, and electromagnetic compatibility certifications before export; participating in drafting export technical guidelines for toys (EU); and organizing companies to learn about target market regulations to better localize products.

Looking ahead, Zhang Zhenqiang emphasized, "Technology is the foundation, IP is the key to differentiation, and channels are the guarantee of implementation." Over the next three years, the industry's most critical reshuffling factors will be: first, technological iteration—whether companies can continuously improve AI interaction and reduce costs; second, IP and content ecosystem development—whether companies can create original IP or engage in cross-industry collaborations; third, multi-channel integration—whether companies can connect online and offline, domestic and international markets.

The annual Shantou Chenghai International Toy & Gift Fair (referred to as "Toy Expo") is an important platform connecting Chenghai toys to the world. Zhang Zhenqiang said that after the Spring Festival, the association will fully launch the 25th Toy Expo's domestic and international recruitment and procurement efforts.

It is reported that the 24th Toy Expo in 2025 attracted over 150,000 professional visitors, with total intended contract value reaching 15.8 billion yuan, and on-site procurement exceeding 5 billion yuan, setting a new record. The upcoming 25th Toy Expo is expected to feature 950 companies and over 2,500 brands, with more than 180,000 professional visitors, continuing to boost Chenghai toys' global journey.

(Article source: Times Finance)