Lego is building its first factory in China, the company announced Monday.
This isn’t a story about making manufacturing cheaper. Lego wants to be closer to its Asian customers -- sales there have grown by more than 50 percent annually in recent years.
But the truth is that Lego is having all kinds of success in all kinds of places – even through a recession where other toy companies suffered. This makes company is an unlikely star. After all, they sell plastic bricks in the age of the iPad.
But Lego products fly off the shelves, says Alexis Smith, a manager at Kidding Around, an independent toy store in New York.
She says the store tries to stay away from products that are too mainstream, “but Lego is just one of those things that you can’t not have. It’s something that sells itself.”
Lego is also starting to sell itself to a growing Asian middle class, says Sean McGowan, an analyst with Needham & Company.
“As they have more spending power, alongside of that they’re also developing the inclination to spend that money on toys,” he says. “In a sense they want to emulate the success of the West.”
Licenses with movies, like Star Wars, and other entertainment brands have also been big for the company. Plus Friends, Lego’s new product marketed to girls, has been a recent hit.
“They were successful at capturing what it was that girls were interested in,” say McGowan. “And the name says it all. They’re really interested in the relationships between the characters.”
For an adult, it’s easy to dismiss Lego as just some pieces of plastic. But the company is actually quite innovative, says Dave Robertson, a professor at The University of Pennsylvania and the author of a forthcoming book on Lego, "Brick by Brick."
After almost going bankrupt in 2003 with lots of distracting side products, Lego decided to get back to the brick.
“What really keeps Lego going is their ability to tell stories that play out around the bricks and construct richly detailed toys,” says Robertson, citing the example of Ninjago, a top-selling product focused on Ninjas that fight skeletons.
Those stories are important because Lego’s patent has expired. Anyone can make and sell a Lego-style brick, which perhaps makes the company’s success all the more impressive.
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