updated 1/7/2008 9:45:56 AM ET 2008-01-07T14:45:56

Tougher safety measures implemented in the wake of high-profile toy recalls last year will drive up the cost of China-made toys by at least 10 percent this year, one industry executive said Monday.

Hong Kong toymakers, most of which have production lines in mainland China, have been struggling to repair reputations damaged by last year's recalls of millions of potentially hazardous toys.

Added checks along the supply chain are driving up costs and production time, however, said Michelle Chong, assistant to the director of The Toy Company (Hong Kong) Ltd., the buyer for a toy wholesaler in Germany.

Chong said her company expected to spend $1 million this year on quality control _ up from $300,000 in previous years _ to test each of the painted toys they buy before they are shipped to the wholesaler.

Overall, the safety precautions could push up prices by an extra 10 percent this year and dent their competitiveness, she said.

"I'm not particularly worried about (the quality of) our export," Chong said. "I'm more concerned about the production period, which now takes longer as we have to comply with the more stringent safety requirement."

Chong's company was one of 2,000 exhibitors from 36 countries at the annual Hong Kong Toys and Games Fair, which runs through Sunday.

It was organized by Hong Kong Trade Development Council, a semi-government agency that promotes Hong Kong goods.

The fair was running alongside a second, similar one this week. Both were trying to rebuild trust in the Hong Kong and China brand.

Jeffrey Lam, chairman of the trade development council's toy advisory committee, said the recalls of China-made toys were having a limited impact on Hong Kong, the world's second-largest toy exporter after mainland China.

Hong Kong toy exports grew 25 percent to $11.4 billion in the first 11 months of 2007 versus the previous year, he said.

Noting rising labor costs, commodity prices and the strength of the Chinese currency, Lam said the council was looking for "a comfortable growth" this year but told reporters "it will not be as big as previous years."

Mattel Inc. _ the world's largest toymaker _ issued a recall for millions of Chinese-made toys last year because of concerns about lead paint or tiny magnets that could be swallowed.

Beads in another China-made toy, called Bindeez in Australia and Aqua Dots in the United States, were found to contain a chemical that can convert into a powerful "date-rape drug" when ingested. At least nine children in the U.S. and three in Australia became sick after swallowing the beads.

The toy was distributed through a Hong Kong company.

Israeli businessman Ram Peer said he trusted the quality of toys he gets from China because he had built up long-term relationships with his suppliers and made frequent trips to the Chinese factories.

"I'm worried, but I know everybody is taking care of what needs to be done. If not, the Chinese government will. The whole market is so closely watched that people cannot do whatever they want," Peer said.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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