Tomy Company Ltd.

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Tomy Company Ltd.

7-9-10 Tateishi 7-chome, Katsush
Tokyo 124-8511
Japan
Telephone: +81 3 3693 9033
Fax: +81 3 3693 2472
Web site: http://www.tomy.co.jp

Public Company
Incorporated: 1953
Employees: 1,850
Sales: ¥73.78 billion ($688.4 million) (2003)
Stock Exchanges: Tokyo
Ticker Symbol:
NAIC: 339932 Game, Toy, and Children's Vehicle Manufacturing

Tomy Company Ltd. is Japan's second largest toy manufacturer and the fifth largest toy company in the world. The Tokyo-based company has been producing toys since 1924, including its long-running Tomica series of miniature cars and related fixtures. Tomy is also the producer of the hugely popular Pocket Monsters, the Microtecs toy line. The company holds the exclusive license for toys and other products based on Disney characters for the Japanese market. The company has a number of other licenses as well, including those for the Teletubbies, Star Wars, and Thomas the Tank Engine in the United Kingdom. Tomy also operates a distribution partnership with Hasbro in the United States and Japan. In addition to its Japanese production and development facilities, Tomy has built a global presence, with subsidiaries in the United Kingdom, France, the United States, Hong Kong, and Thailand. Tomy is listed on the Tokyo Stock Exchange and is led by Kantaro Tomiyama, grandson of the company's founder. In 2003, Tomy recorded revenues of ¥73.78 billion (US$668 million).

Pioneering the Modern Japanese Toy Industry in the 1920s

Eiichiro Tomiyama began producing toys in 1924. His original designs were tin-based toys, a material the company was to favor into the 1950s. At its start, Tomiyama's company was only one of many turning out cheap-to-manufacture products. Yet Tomiyama recognized early on that Japan had the opportunity of becoming a major player in the worldwide toy market. This would happen only if its toymakers ended the often cutthroat competition among them and instead banded together to produce higher-quality, and innovative products.

In 1929, Tomiyama brought together a group of small-scale toymakers into a common association, founding the so-called "Omocha no machi," or Toytown. This was to become the heart of the Japanese toy industry. Tomiyama took his vision a step further in 1935, establishing a dedicated research and development center to create new types of toys using new manufacturing techniques, materials, and technologies. From a staff of 20, Tomiyama's R&D team eventually grew to more than 200, located worldwide, a commitment that enabled the company to react quickly to consumer trends and preferences.

World War II cut short the company's toy development as key materials were shifted to support the Japanese war effort. The rapid growth of the Japanese economy in the postwar era, however, and the country's emergence onto the global market as an industrial and technological powerhouse, provided new opportunities for the toy company. Production of toys resumed, and in 1953 Tomiyama formally incorporated the company as Tomy Company.

The 1950s saw the launch of the Tomy brand, soon to become one of the world's major toy brands. An important component of the company's success was its early shift to a new and exciting toy material: plastic. The development of more supple forms of plastic—coupled with an overall consumer enthusiasm for the "modern" material—offered an entirely new range of toy possibilities. From simple tin models, Tomy's toys achieved an increasing complexity of shapes and forms.

One of the group's early toy hits was, paradoxically, a model of the B-29 bomber, released in 1951. The company followed that toy with a B-50 model in 1953. With these toys, Tomy discovered the lucrative export market, and became responsible in part for establishing Japan as one of the major centers of the global toy industry. Yet the company's first brand-name success came with a more whimsical creation. In 1957, the company launched a figure of an elephant capable of blowing soap bubbles. The marriage of cuteness with mechanical intricacy, a hallmark of Japanese design, not only captivated children and parents in Japan, but worldwide. The elephant broke all of the company's previous sales records, with more than 600,000 copies sold.

Defining Eras in the 1960s

As much as, and perhaps more than any other toy company, Tomy played a role in defining entire toy eras. Such was the case with its release in 1959 of its "sky ping pong" set. Riding on the wave of popularity for ping pong in Japan—which during the period dominated world table tennis championships—the set, which consisted of basket-like, spring-loaded cups for catching and launching the ping pong ball, became one of the world's most ubiquitous toys. That toy was also the first Tomy toy to be made almost entirely of plastic.

Throughout the 1960s, Tomy continued to marry its gift for whimsy with a dedication to exploring new technical possibilities. The company became one of the first to investigate uses of new electronic capabilities offered by the development of transistors. Tomy released a new electromotive train set in 1961, and, in 1964, a talking doll powered by electronics. By then, too, the company had begun developing its first robots, a class of toy that remained a central part of Tomy's business into the next century. Tomy's first "mecha-tronics"–based robot appeared in 1962. This led to the development of another huge international success for the company, a space expedition set launched in 1969, which sold more than two million units worldwide.

In the 1970s, Tomy developed a new specialty, that of hand-held skill-based toys. At first mechanically based—the company is responsible for such global standards as the so-called Waterfall games, which used water jets to provide game play—Tomy increasingly became interested in electronics and the use of newly developing microchips and liquid-crystal displays. Tomy now became a pioneer in the hand-held console market, at first wedding electronics to mechanical movement to produce such favorites as Hit and Missile, Blip, and Digital Derby. Before long, the company had begun to develop entirely electronic-based toys, winning licenses to produce handheld versions of such global arcade hits as Pacman in 1980.

That success led Tomy to make a foray into the home computer and console market, launching its own Pyuuta (literally "computer dude") in 1982. Known as the Tomy Tutor on the international markets, the device enjoyed some success, particularly through the winning of a license for Disney's hit film Tron. Unable to match the success of such video game greats as Atari and Commodore, Tomy returned to its core toy development. Yet the company's sense of innovation remained intact, leading to the launch of such hit toys as its "watch man golf," an electronic golf game housed in a wristwatch, and a robot, released in 1984, capable of speech recognition.

In the meantime, Tomy had been developing another hugely successful toy category. In 1970, the company released a new series of model cars that reproduced in detail popular automobile models of the day. Called Tomica, the first line sported just six models, based on Japanese cars. The enthusiastic reception of the cars, in Japan at least, encouraged the company to step up production of the Tomica line. By 1976, the Tomica line had expanded to include more than 180 models. In that year, the company turned to the worldwide market, launching a new series based on foreign (for the Japanese) car models. The U.S. and European vehicles enabled the Tomica name to build a strong following around the world, and particularly in Europe. By the beginning of the 1980s, the Tomica range had grown to more than 280 models. Although subsequently scaled back to a core of just 120 models, Tomica inspired the creation of a wide range of ancillary products, such as track, buildings, and other fixtures, all of which became known as Tomica World.

By the mid-1980s, Tomy had firmly established itself as a leader in the worldwide toy market. A large part of the company's success was its willingness to move closer to its core markets. Tomy's first international move came in 1970 with the establishment of a manufacturing base in Hong Kong, then at the very beginning of its own development into a major world manufacturing and financial center. The move helped Tomy lower its production costs. Three years later, the company entered the United States, the world's largest single toy market, establishing a sales subsidiary there.

From the United States, the company turned to Europe, where its Tomica line, as well as its electronics toys, were meeting with great success. The company opened a subsidiary in the United Kingdom in 1982, which took over its sales and marketing activities for all of Europe. The specificity of the French and Belgium markets, where Tomy rapidly became one of the top toy brands, encouraged the company to launch a dedicated sales and marketing subsidiary in France in 1985. Beyond supporting sales of existing Tomy products, the company's new international subsidiaries grew into full-fledged research and development centers. In this way, Tomy was able to respond quickly to shifting consumer trends and tastes, as well as tailor products for specific domestic markets.

Company Perspectives:

With a renewed belief in our own potential, we of the TOMY Group are resolutely venturing into new business domains in line with the trends of the times. We now start a new chapter in our history. Under this new corporate identity, with a new attitude, great ambition and strengthened resolve, we are steadily drawing closer to becoming a truly excellent global enterprise.

The mission of the TOMY Group is to create new values for play. Play is itself a form of culture that enriches lives through communication. Not content with the status quo, the TOMY Group creates new values for play that create and respond to the times. In doing so we believe we offer satisfaction to our customers, job fulfillment to our employees, opportunities for our shareholders and culture to society. Each employee of the TOMY Group shares this vision and seeks creativity and innovation at all times.

Global Toy Leader in the 21st Century

Tomy continued to expand its international network in the late 1980s and into the 1990s. In 1987, the company opened a manufacturing center in Thailand, which, together with the company's Hong Kong plant, took over much of the group's production capacity. Then, in 1992, Tomy entered the newly liberalized Chinese market, opening a manufacturing and engineering site in Shenzhen.

The 1990s marked a new era for the company, which played a formative role in the development of cross-media and cross-marketing tie-ins. The company's Tron franchise in the early 1980s had been a representative of this emerging toy industry trend. Where toys were once inspired by other media formats, such as book, film, and video game and cartoon characters, in the 1990s the toys themselves provided inspiration for media products. Ultimately the two currents merged in the late 1990s, inspiring a new breed of programming created specifically to support new toy launches, which themselves were created to sell more programming. At the same time, cross-marketing of toy characters—placing characters on a huge array of items, from food to clothing and even household goods and equipment—became an industry mainstay.

Tomy quickly gained a number of prominent licenses. One of the group's most lucrative licenses was for the Pocket Monster series created by Nintendo in the late 1990s. Known as Pokemon on the international market, the series enjoyed enormous success worldwide. In 1999, the company snared another important license, for the production of toys based on the hugely popular Teletubbies series. That license also encouraged Tomy to step up the design and production of toys for the infant segment, which became one of Tomy's core product lines in the 2000s. Another strong selling license gained during this period was that for the Thomas the Tank Engine series, also developed in the United Kingdom.

Tomy went public in 1999, listing its stock on the Tokyo main board. The Tomiyama family, now headed by Chairman and CEO Kantaro Tomiyama, grandson of the founder, remained the company's largest shareholder. By then, the company had begun a shift toward a new trend in the toy world, that of international partnerships.

As part of this move, Tomy disbanded its former U.S. sales subsidiary and instead founded a new U.S. subsidiary, Tomy Direct Company, which, as its name suggested, began operating directly in the U.S. market—rather than receiving direction from its Japanese parent—in 1998. At first, Tomy Direct provided direct sales support to the country's largest retailers, such as Wal-Mart and Toys 'R' Us. Then the subsidiary emerged as a toy developer in its own right. This became especially true with the signing of a strategic partnership with Hasbro Inc. in 1999.

In 2002, the Hasbro partnership resulted in Tomy taking over development and production of toys and other products based on the popular Star Wars films. At the same time, Tomy Direct became focused on supporting the Tomy-Hasbro partnership. By then the company had also won another extremely important license, that for the Disney characters and brands. These licenses permitted the company to step up development of new product segments, and especially candy bonus toys and capsule toys. In 2002, the two companies set up the Tomy Link joint venture, which began preparing new products related to the Disney brand, and its resorts and retail stores.

Despite the successful launch of its new Micropets series in 2002, Tomy faced a slump leading to losses. In 2003, the company responded by developing a strategy to add a new lifestyle component to its operations. In support of that effort, the company formed a joint venture called Glow-Tec International Company Ltd., beginning development of electric luminescence-based lifestyle products—such as youth-oriented telephones and cameras, as well as stationery and related products—and toys. After more than 75 years in business, Tomy had emerged as Japan's number two toy company, and held a solid position among the world's top ten.

Key Dates:

1924:: Eiichiro Tomiyama begins producing tin toys.
1929:: Tomiyama leads founding of Japanese toy makers association, improving quality and design and helping establish the country as a worldwide toy center.
1935:: Tomiyama establishes research and development center.
1953:: Company incorporates as Tomy Company Ltd. and begins producing toys using plastic.
1970:: Tomy establishes first foreign manufacturing facility in Hong Kong.
1973:: Company enters United States with launch of sales subsidiary.
1982:: Tomy forms first dedicated European sales and design subsidiary in the United Kingdom.
1985:: Company creates dedicated sales and design facility in France, which takes over operations in France and Belgium.
1987:: Company constructs new manufacturing plant in Thailand.
1992:: Company opens manufacturing and engineering plant in Shenzhen, China.
1998:: New sales, marketing, and development subsidiary opens in the United States.
1999:: Tomy Company goes public with listing on Tokyo main board; signs partnership agreement with Hasbro Inc.
2002:: Company wins license for Disney characters in Japan and forms Tomy Link joint venture with Disney.
2003:: Glow-Tec International joint venture is formed as part of a shift toward the development of lifestyle products.

Principal Subsidiaries

Creston Investments Ltd.; P&P Company, Ltd.; Play Kingdom Company, Ltd.; TOMNIC Company, Ltd.; TOMY (Hong Kong) Ltd.; TOMY (Thailand) Ltd.; TOMY Corporation; TOMY Creative Company, Ltd.; TOMY Direct Company, Ltd.; TOMY Do Brasil Ltda. (Brazil); TOMY Engineering Service Company, Ltd.; TOMY France S.A.R.L.; TOMY Kasei Company, Ltd.; TOMY Kohsan Company, Ltd.; TOMY Ryutu Service Company, Ltd.; TOMY System Design Company, Ltd.; TOMY Tec Company, Ltd.; TOMY UK Ltd.; TOMY Yujin Corporation; U-Ace Company, Ltd.; U-Mate Company, Ltd.; Yujin Company, Ltd.

Principal Competitors

Mattel Inc.; Hasbro Inc.; Lego A/S; Little Tikes; Smoby International SA.; Giochi Preziosi SpA; Simba Toys GmbH und Co.; Top-Toy A/S; Milton Bradley Co.; Berchet SA.