Toy Story: Chinese Manufacturers Hit By Unexpected Demand, Labor Issues

Toy shortage appears likley this holiday season, The Wall Street Journal reports.

NEW YORK (AP) - Underestimated demand have coupled with production problems in Chinese factories to cause a toy shortage this holiday season that extends beyond limited supplies of Sony Corp.'s hot PlayStation 3, according to a Wall Street Journal report Monday.

Chinese toy factories have experienced labor shortages as workers abandon their jobs for high-paying positions at higher-tech manufacturing companies, the article said. In addition, power blackouts in southern China, where many of the factories are located, have led to decreased production, according to the Journal.

The production issues come on top of already underestimated holiday demand. Retailers and manufacturers looked at last year's slow sales and placed conservative orders this year, only to be met with higher-than-expected demand, marked by earlier holiday shopping trends, the article said.

Mattel Inc.'s giggling TMX Elmo is already selling for $65 on online auction site eBay, while it sells for $40 at its regular retail price. Likewise, Walt Disney Co. has been pressed to get its latest Mickey Mouse, Goofy and other toys in stores faster than anticipated, the article said.

Both companies are eating the cost of air-shipping the finished toys over cheaper but slower ocean shipping, the article said.

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