Lego Teams Up With Chinese Internet Giant Tencent

Danish toymaker Lego is teaming up with Chinese Internet giant Tencent Holdings to jointly develop online games and potentially a social network aimed at Chinese children.

Privately-owned Lego has seen a slowdown in sales growth in recent years, but the Chinese market has been a bright spot with sales growing 25-30 percent in 2016.

It is competing with Barbie maker Mattel and Hasbro, the firm behind My Little Pony, for a slice of the $31 billion toys and games market in China.

Lego said on Monday the partnership with Tencent, China's biggest social network and gaming company, aimed to create a safe online environment covering content, platforms, and experiences tailored for Chinese children.

"We've seen more and more Chinese children engage with the world digitally, and the partnership will bring them safe and imaginative digital LEGO content that also supports their needs of learning, development and entertainment," Jacob Kragh, head of LEGO in China, said in a statement.

The partnership includes developing a Lego video zone for children on the Tencent video platform, as well as developing and operating Lego branded licensed games, the toymaker said.

It also includes LEGO BOOST - a building and coding set that lets children turn their brick creations into moving objects - and will explore developing a joint social network for children in China.

Tencent is Asia's most valuable company with a market capitalisation of $537 billion.

Last year, Mattel struck deals with Chinese e-commerce giant Alibaba Group Holding Ltd and online content developer BabyTree to sell interactive learning products based on its Fisher-Price toys.

Lego has about a 3 percent market share in China, followed by Mattel and Hasbro with around 2 percent and 1 percent, respectively, according to Euromonitor International.

In November 2016, Lego opened a factory in Jiaxing, China, which it expects to produce 70-80 percent of all Lego products sold in Asia.

© Thomson Reuters 2018