Over the past few years, the rapid growth of cross-border e-commerce has driven simultaneous expansion in manufacturing, logistics, and platforms. However, as traffic costs rise, compliance requirements tighten, and global consumption cools, the industry is shifting from "scale expansion" to "efficiency and compliance competition." On one hand, manufacturing companies are seeing their profits squeezed and order volatility increasing; on the other hand, the platform ecosystem is experiencing intensified competition, with frequent occurrences of unfair competition.

01

Guangxi Toy factory announces closure

Recently, a "Closure Notice" from Guangxi Huasheng Ying X Toy Manufacturing Company quickly circulated in the toy manufacturing and cross-border circles, attracting high attention within the industry. This toy factory, which settled in Guangxi in 2021, has officially ceased operations and entered bankruptcy liquidation procedures, becoming another landmark event in the toy OEM field in 2026.

Public information shows that Huasheng Ying X, backed by the Hong Kong veteran toy OEM giant Huasheng Toys, is one of the group's important production bases in Guangxi. Founded in 1976, Huasheng Toys was one of the first toy manufacturers in China to undertake OEM for European and American brands, and has long served international leading brands such as Hasbro, Mattel, and MGA, occupying an important position in the global toy OEM system. At its peak, it had more than 10 factories and about 20,000 employees, with annual revenue exceeding HKD 4 billion, representing a typical "super OEM factory."

In 2021, after the establishment of Huasheng Ying X toy factory in Guangxi, it quickly went into production, mainly engaged in foreign trade toy OEM, covering categories such as plush toys and plastic toys. Relying on Guangxi's lower production costs and complete supporting facilities, it became a key enterprise for local investment attraction, and at its peak, it implemented three-shift production, ranking among the top in Guangxi's toy enterprises. However, within a few years, signs of closure appeared in the newly built capacity, reflecting the intense changes in the industry environment.

From more information that has come to light, the core reason for the closure is more due to the intensification of Sino-US trade frictions, coupled with overseas customers defaulting on huge payments. Affected by tariff policies, customer decentralized procurement, and macro factors such as high global interest rates and geopolitical tensions, orders have significantly shrunk, and the company's capital chain has broken. It is reported that Dongguan's flagship factory, Changrong Toy factory, also closed at the end of 2025, and the group only has 6 subsidiaries left in China to maintain operations. The capacity continues to shift to low-cost areas such as Guangxi but still cannot withstand external shocks.

Actually, since this year, including Dongguan, several traditional toy manufacturing towns have seen several veteran factories exit the market one after another due to the impact of the pandemic, loss of orders, or capital chain problems.

On the one hand, the European and American toy markets began to enter the destocking cycle in 2024, Christmas orders were not as expected, the traditional large-order model decreased, directly impacting the operating rate of OEM factories centered on scale production. Coupled with the continuous rise in cost structure, including labor, environmental protection investment, and tax compliance costs, the already meager OEM model is further under pressure.

On the other hand, the trend of Southeast Asian capacity substitution continues, with Vietnam, Indonesia, and other places diverting some orders with lower labor costs and trade policy advantages, also forming long-term pressure on domestic factories. For companies like Huasheng, which are known for their scale and stable orders, order fragmentation and accelerated pace mean the dual challenges of declining capacity utilization and rising management costs.

In recent years, traditional toy OEM factories have encountered structural challenges, from "low-price large orders" to "small orders and quick response," from "OEM thinking" to "brand and design capabilities," and the industry is experiencing a deep restructuring. For sellers and factories still in the race, how to rebuild supply chain resilience and enhance product added value may become the key dividing line for the next stage of competition.

02

Best-selling products suffer from malicious registration and are severely judged

The helpless fall of veteran toy factories not only makes the entire cross-border industry feel sighs but also makes countless practitioners who stick to the industry and operate compliantly anxious. However, at a time when the industry is deeply mired in survival difficulties and competition continues to intensify, a recent judicial judgment has undoubtedly given all compliant sellers a real boost.

For a long time, in the cross-border e-commerce industry, there have been frequent occurrences of malicious registration of appearance patents and trademarks, and then using this as a chip to launch malicious complaints and malicious collisions against peers, especially in highly competitive categories such as toys and outdoor products, such unfair competition behaviors are still rampant.

Many compliant sellers who earnestly produce products and operate with heart, although they have no infringement behavior, have encountered forced removal of products, a sudden drop in store weight, and orders being directly halved due to malicious complaints from competitors. The operational costs and traffic costs invested in the early stage have been in vain, which is even more devastating in the already difficult market environment.

In response to this chronic industry problem, the Baiyun District Court of Guangzhou recently publicly heard and pronounced a cross-border e-commerce unfair competition dispute case on the spot, directly shining a sword at malicious complaint behavior.

In this case, the plaintiff, Xinkai Company, is a cross-border seller with tens of millions of sales mainly engaged in outdoor toys. Its self-developed inflatable dartboard product has been continuously hot-selling on platforms such as Amazon, and has formed a stable sales volume and evaluation accumulation. Unexpectedly, the defendant, Chen, although knowing that the product had been publicly sold on multiple platforms, still carried out a similar design for the appearance of the product and maliciously applied for registration with the United States Patent and Trademark Office (USPTO). After obtaining the relevant patent, he quickly launched an infringement complaint to the platform.

Since the platform usually uses patent documents as the basis for preliminary review, relevant links were forcibly removed within a short time, directly causing Xinkai Company's orders to be interrupted and sales to decline sharply, the company's employees' efforts were in vain, and the business operation fell into a passive situation.

The court finally recognized on the spot that the defendant's behavior constituted unfair competition, ordered it to immediately withdraw the complaint, eliminate the impact, and compensate the plaintiff for economic losses. This judgment is not just an ordinary civil dispute case, but also draws a clear compliance boundary for the entire cross-border industry.

Admittedly, for a long time in the past, some sellers obtained rights through registration, minor changes, and other methods, and then reacted on the platform mechanism, forming a "first make you remove the shelf and then talk" strike path. This case clearly sends a signal: if the basis for obtaining a patent is not correct or the purpose of use deviates, its legal effect will be re-examined.

In addition, this judgment also compensates for the limitations of platform governance to a certain extent. Platforms emphasize efficiency and process compliance when dealing with complaints, and it is difficult to deeply judge the true source behind patents, which also gives illegal elements a gray operating space. Judicial intervention provides a "post-correction" certain means, significantly increasing the cost of malicious operations.

For sellers, once they encounter malicious complaints, they no longer only have the "passive appeal" path. When encountering malicious complaints and other events, the first thing is to retain a complete evidence chain, including the product's design time, listing records, sales trajectory, promotional materials, etc., which can be used to prove "prior existence" and quickly form a complete evidence chain when disputes arise.

Second, in addition to appealing on the platform, it is also necessary to assess the nature of the other party's behavior. If there are obvious characteristics such as batch complaints, patents concentrated on a single hot-selling product, and application time highly coinciding with market performance, you can consider counteracting through legal means and dealing with the other party's behavior under the framework of unfair competition.

It can be said that the value of this judgment lies not only in delineating responsibility for a single case but also in correcting the competition logic of the entire cross-border e-commerce. As low prices and traffic dividends gradually fade, the space for obtaining advantages by relying on rule loopholes is narrowing, and compliant operation and long-term investment are becoming more certain paths.

(Source: Hugo Cross-border Editorial Department)

Source: Hugo Cross-border
Original link: https://www.cifnews.com/article/185425