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Mexico Competes With Asian Contraband for Toy Manufacturing Market - 2001-12-14

In Mexico, Christmas shoppers looking for bargains are finding a good selection of cheap toys in some local markets, but many of these items are from Asia, and not Mexico.

The Mexican toy industry is complaining about what is seen as an "invasion" of contraband from across the Pacific.

Shoppers looking for bargains in Puebla often come to the Jorge Murad market, a large open market under a galvanized steel roof where hundreds of vendors offer cheap goods. Much of the merchandise is imported from China and other Asian nations and some of it is smuggled into Mexico illegally.

Patricia, a merchant who sells toys from a stall in the market, says it is difficult for a legitimate businessperson to compete with those who deal in contraband.

She says it is not fair because some of the vendors, especially those who display their goods out on the street, can offer toys at very low prices. She says she pays the import taxes on the foreign goods she sells and also pays rent for her market space as well as sales tax for each item sold.

Most merchants in the Puebla market say they do play by the rules, but some of them objected having their voice recorded or having their picture taken. In one stall a man was offering recent motion pictures in Video Disc format. The product information was photocopied and the discs were clearly pirated.

These informal markets have become even more of an annoyance this year as Mexican manufacturers face deep losses resulting from the worldwide recession. This week, the Mexican Treasury Secretariat released figures showing a nearly five percent drop in manufacturing in October, compared to the same period last year.

The nation has lost more than 300,000 factory jobs over the past year, representing a 5.6 percent drop in employment.

Given this situation, Mexican toy producers are especially vexed by the competition from Asia that they say is contributing to the job losses. Helios Eguiluz, president of the Mexican Toy Industry Association, says the government should take action.

He says toy producers cannot wait longer for something to be done. He says if the government does not do something, the only thing to be expected is the loss of more jobs to Asia.

Mr. Eguiluz says the Mexican toy industry is not simply seeking protection. He says the industry can be competitive and that it is preparing to take on the Asian producers in some areas.

He says his industry is looking at which areas it is capable of being competitive with them and how to produce better goods for the Mexican market rather than allow the continued invasion from Asia.

This year, Mexican toy producers are trying to maintain their market share by holding prices steady or cutting them by as much as 10 percent. But competition for the billion dollar a year Mexican toy market is tough.

Currently, around 70 percent of the world's toys are manufactured in Asia, where labor costs are so low that even relatively cheap labor markets like Mexico have a hard time competing.