Lego plans first factory in China to meet rising Asian demand for its plastic building blocks

HONG KONG – Lego is building its first factory in China as part of a plan to move production closer to Asia, its fastest growing market.

The Danish maker of colorful plastic building blocks for children said it’s investing at least 100 million euros ($130 million) in the new plant. Construction will start in 2014 and it will be fully operational by 2017.

The factory will be located in Jiaxing, 100 kilometres (67 miles) southwest of Shanghai, where Lego is planning an Asian distribution centre.

Lego said the new factory will be “a supply base for future growth in Asia.” The company said that in recent years sales in the region have grown by more than 50 per cent annually.

Chief Operating Officer Bali Padda said the company’s strategy is to cut down on time needed for shipping by basing production near its main markets.

Lego predicted the factory, which will have moulding, decoration and packaging facilities, will be able to supply 70 to 80 per cent of the toys it sells in Asia in 2017.

The plant will employ 2,000 workers by the time it’s fully operational. The company also has factories in Denmark, Hungary, the Czech Republic and Mexico.