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Toys bringing big business for Zuru

From hot air balloons in small-town New Zealand to Ferraris in Shenzhen and Hong Kong, it’s been quite a journey for Nick Mowbray, whose family-owned Zuru Toys continues to go from strength to strength in Southern China.

It didn’t come easy, says Nick Mowbray, the Cambridge man at the helm of Zuru Toys, a rapidly growing New Zealand toy company he co-founded in 2004 with his brother, Matt and sister, Anna.

Zuru has come a long way in a very short amount of time. It now has over 120 staff across four offices and products in many countries in the world.

We’re one of the fastest growing and most innovative toy companies in the world, says Mowbray. Zuru is on target to reach revenues of $US55m for 2013. Our plan is to get to the $US100m mark within the next couple years.

It’s about constantly getting better. The Mattel’s and Hasbro’s of the world are generating over $5 billion in turnover. We’re pushing to get to their level and we’re almost there in terms of what we’re developing.

Zuru has resisted the temptation to seek outside investment, opting instead for an organic growth strategy that has seen the business financed completely internally. Whilst keeping growth levels in check, the strategy also puts an emphasis on constant profitability. Our number one priority is to remain profitable at all times. Every single month we sit down and asses our business and profitability.

The most well-known of Zuru’s toys is Robo Fish, an electromagnetic fish that swims in water.

The toy outsold Lego in the Christmas toy charts in New Zealand, the first time a domestic company had done so

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Our business is won through innovation. We have a constant pipeline of concepts and ideas which is crucial for maintaining our current revenue and generating growth,” says Mowbray.

One of the Zuru’s key business drivers is the push on talent acquisition and retention. Investment is being made in HR as increasing number of staff there target schools from the C9 League, ‘China’s Ivy league’ , as Zuru looks to increase talent across the board.

The development of a 21st century workplace culture also tops the agenda at Zuru, a concept Mowbray proudly admits is based on the Google model. ?We try to be a really different culture. We want to be a little less corporate and make a push away from the cubicle.

The culture is all about talent retention and improving the output quality from staff. You spend half your life working, so we made it somewhere that we’d like to come to.

Targeting the cost base advantage enjoyed by Chinese manufacturers, Nick, 18 and Matt, 22, moved to Guangzhou, China in 2005 with little more than the clothes on their back and a design for a model hot air balloon. Sister Anna later come on board as Chief Operations Officer and Chief Financial Officer making Zuru a truly family affair.

“I never wanted to be limited to New Zealand, I was always dreaming of working with big concepts, big people and big manufacturers,” says Mowbray. “It’s just as much work to do a deal with Walmart as it is with a small local retailer, but the scale changes everything.”

Matt won the New Zealand Science Fair in 1993 with his miniature hot air balloon, which the brothers quickly commercialised and sold door-to-door before they old were enough for secondary school. We used to get all of our friends together and manufacture them in the garage, says Mowbray.

The crudely constructed balloons, comprised of Coca-Cola cans and hand-bent wire, sold well and door-to-door quickly became store-to-store. Sales were strong enough that Matt left university to concentrate solely on the business.

Sales had reached 10,000 units per year in New Zealand as expansion became inevitable. Instead of taking the more commonly trod path of outsourcing their manufacturing to China, the two went all out on Zuru and made the move to China, by establishing operations in Huadu.

I remember when we first came over we didn’t have much money, says Mowbray, who proudly recounts tales of sleeping rough in the bushes of Guangzhou airport when the two first arrived.

With little knowledge of the Chinese market, it was ?completely trial & error and learning on our feet, says Mowbray. The pair found an apartment in Shantou, the lounge of the $30 a month flat doubling as an office. After hiring their first employee, a translator they met at the Canton Trade Fair, Zuru began work on their first product.

We bought our first injection mold, rented out some factor and set up a production line, says Mowbray. As production began, the Mowbray’s began the process of learning not only the Chinese business environment, but the intricacies of the massive global toy industry they were attempting to make their mark in.

Originally I was just phoning and emailing, anyone and everyone. I tried to find as many contacts as I could to get in with the major retail bidders, says Mowbray. Reckless enthusiasm only went so far however, as Zuru hit a wall when bidders asked to come to their showroom.

Because we had no knowledge of the industry, we didn’t realize that all deals took place in and revolved around showrooms in Hong Kong, said Mowbray. After unsuccessful attempts at borrowing space from other vendors, Zuru rented a tiny showroom in Hong Kong at significant expense.

I used to sleep under my conference table because it was the largest space in the showroom, says Mowbray. I remember my very first meeting I’d arranged, the buyer came early and I had slept in a little. I didn’t want him to see me sleeping there, so I stayed under the table perfectly still and missed the first meeting I’d actually managed to get.

Despite missing the first meeting, the next buyers would prove fruitful as Zuru signed deals with major retailers including Kmart and Walmart. At that time we got one major client after the next. We were really hungry and we just pushed and pushed.

The increase in clientele provided the capital injection necessary to expand operations and invest in R&D. Mowbray likens the toy industry to the fashion industry, saying it’s always what’s new, new, new, so the move towards in-house R&D was a significant development.

The increase in required capacity prompted expansion, with Zuru now operating offices in Guangzhou, Shenzhen, Hong Kong and New Jersey. Looking forward, the United States is set to see a big push from Zuru as they look to expand their presence in what is now their biggest market.

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