The inventor of the teddy bear, Margarete Steiff GmbH, has joined forces with China trading expert Melchers Group to enhance the marketing and distribution of Steiff products across mainland China. The joint venture, announced in February, marks the establishment of Steiff Asia Ltd and the inauguration of an Asia supply chain hub situated in the Shanghai free trade zone, functioning as a pivotal logistics center to cater not only to the Chinese market but also to other key markets across Asia and the US.Steiff’s rich legacy, spanning over 140 years, traces back to Margarete Steiff’s humble beginnings in 1877 when she founded a felt clothing shop and inadvertently birthed the world’s first child-friendly toy – the “Filzelefäntle.” Since then, Steiff has evolved into a symbol of unparalleled quality, safety, and design, captivating hearts worldwide with its meticulously crafted creations. Meanwhile, Melchers, established in Germany in 1806, boasts a storied history deeply intertwined with the evolution of global trade and a steadfast commitment to delivering tailored market approaches.An overviewAccording to Frank Rheinboldt, managing director of Margarete Steiff GmbH, the decision to form a strategic partnership with the Melchers Group to enter the Chinese market was motivated by several factors.“Steiff recognizes the enormous potential of the Chinese market, especially in high-quality toys and gift items. With a growing middle class and an increased interest in high quality and traditional products, we see China as a market with significant growth opportunities,” he told Inside Retail.Furthermore, he said that Melchers Group has extensive expertise and many years of experience in market entry and business development in China. “Its established presence, local networks and in-depth knowledge of Chinese business culture will be invaluable to Steiff as it enters this dynamic market. In addition, Steiff and the Melchers Group share similar values and quality standards, making this partnership a natural and promising alliance,” he added.Rheinboldt reiterated that Melchers knows the Chinese market very well, and will support Steiff in different ways to set up its operations in China.“We sell our products through wholesale channels, toy stores like Hamley or FAO Schwarz, and also through Steiff-certified stores together with partners. Our products also available through JD.com, Tmall and social media channels also play a role,” he noted.The Generation Z demographicInterestingly, Rheinboldt said that Steiff is strategically aligning its product offerings and marketing tactics to effectively capture the attention of the growing Chinese Gen Z demographic.“Recognising the significance of this demographic as a key target group across all markets, Steiff is focusing on further product innovations tailored for the so-called Kidults, individuals who appreciate products blending nostalgia with modernity,” he pointed out.An illustrative example of this approach is the recent launch of the Snoopy collection, catering directly to the preferences of Kidult consumers.Moreover, Steiff is prioritizing its marketing efforts by investing in digital platforms, ensuring a strong presence on popular channels such as WeChat, Red, Kidsland and Tmall. By leveraging digital marketing strategies, Steiff aims to enhance brand visibility and accessibility to Chinese consumers, thereby fostering increased brand awareness. “The overarching goal is to captivate the attention of the Chinese Generation Z market with compelling products and engaging content, ultimately establishing Steiff as a leading brand synonymous with innovation and cultural relevance,” he stressed.Long term objectivesAccording to Rheinboldt, Steiff’s long-term objectives for growth and brand development in China are centered on increasing brand awareness and achieving substantial revenue growth in this key market. “China represents a primary focus for Steiff, and establishing a strong presence in this market is crucial for our global expansion strategy,” he said.He went on to say that Melchers’ extensive experience and longstanding presence in China provide invaluable insights and understanding of the local market dynamics, consumer preferences, and business practices.“By leveraging Melchers’ deep knowledge and established network in China, we gain access to a wealth of resources and opportunities that can accelerate our market penetration and brand visibility,” he added.Dr Mike Hofmann, managing director of Melchers’ consumer business unit, chimed in by saying that the company shared Steiff’s values and long-term oriented partnership to develop the Chinese market.“Our market research indicated significant potential for Steiff in China, and we see enormous business opportunities. We are thrilled to partner with such a prestigious brand as Steiff and have the opportunity to be part of the growth story in China,” he told Inside Retail.The bigger pictureHofmann said that by 2030, China’s middle-class and affluent population will increase by 80 million people, and Chinese luxury consumption is expected to reach 35 to 40 per cent of the world’s total.“Consumers are today looking for authentic brands with a unique history and positioning. Value and quality are prioritized over low prices, and sustainability is becoming more important to consumers,” he opined.He believes all these factors create a favorable environment for Steiff, whose range of high-quality toys and collectibles serve different market segments, including the so-called Kidult market, a major growth driver for the brand.Hofmann reiterated that Melchers has over 155 years of experience in China, and through its knowledge of local business practices, it can help Steiff expand its distribution network in China.“For example, our group e-commerce company, Genuine, supports the e-commerce side of the new partnership, bringing highly valuable digital competencies to the partnership,” he noted.Ultimately, Hofmann believes the recently formed consumer business unit in China will increase operational efficiencies, ensure the utilization of synergies between its consumer businesses across China, and create new service offerings for consumer and luxury brands.