Asia Briefing: Lego building on sharp growth in Asia

The rising Asian market has inspired Danish toy company Lego to build and operate its own factory in Jiaxing, right in the heart of the Yangtze River Delta, with construction expected to begin in 2014.

Lego is investing €100 million in the new production site, which will include moulding, decoration and packaging facilities to give Lego a supply base for future growth in Asia.

When it is operational in 2017, the plant will be able to supply 70 to 80 per cent of the toys it sells in Asia, and will employ 2,000 workers.

Lego sales in the region have grown by more than 50 per cent annually in recent years.

Lego’s chief operating officer Bali Padda says it was the company’s strategy to keep production close to core markets to secure a short lead-time and service to customers.

"Asia, including China, is a future core market for the Lego Group," says Padda. "In addition, by placing a manufacturing site in the region, we reduce our environmental impact as we will reduce the need for transporting products from Europe to be sold in Asia."

Jiaxing, a city of five million people, is about 100km from Shanghai where the Lego Group is planning to locate a regional distribution centre for Asia.

Jiaxing has been in the news for less savoury reasons lately as it is the place where more than 16,000 dead pigs have been discovered floating in the river.