Global toy maker Mattel has formed an alliance with Alibaba, China's e-commerce giant, in a bid to gain entry into the country's toy market, estimated to be worth $7 billion, according to an article by Fortune.
The move came as toy spending in China show signs of growth, although it is lower than in the U.S. and in Japan.
Alibaba's partnership would allow Mattel to leverage on Alibaba's familiarity with Chinese consumers to present its popular brands that include Hot Wheels, Barbie and Fisher-Price.
Margo Georgiadis, Mattel's new CEO, that both companies will benefit by combining Mattel's "unmatched expertise in childhood learning and development with Alibaba's immense reach and unique consumer insights."
Georgiadis said that because of the fragmented Chinese toy market, the company sees potential growth, adding that in "working with Alibaba, we see a terrific opportunity to develop and lead the category."
According to research, parents with more disposable income tend to buy their children educational products. Mattel said they want to create toys that are not only enjoyable but can also become learning tools for children.
"Toys and play are an important part of a child's early development, helping to drive IQ and EQ (emotional intelligence) development," Patty Wu, Mattel's Vice President of China Growth, said.
In her blog, she also said that Chinese parents bought fewer toys than parents in other countries because they are concerned that playing would hurt their children's academic performance.
Wu said this explains why baby formula has a Chinese market three times larger than the U.S. while the toy industry is only 30 percent of the size.
Under the deal, Mattel and Alibaba will work together to develop toy products specifically for Chinese consumers, although Mattel has already the Fisher-Price brand in the market.
The deal with Alibaba pact is the next phase in Madel's push into China. It is continuing its efforts through deals with physical distributors, including an online push through a partnership with Alibaba's Tmall.com shopping website since 2011.