In Yunhe, a mountainous county in Zhejiang province, wooden toys are more than just playthings — they are the lifeblood of the community. Among Yunhe's 126,300 residents, about one in four works in the wooden toy industry or related fields.

Wooden toys, which include blocks, puzzles, trains and educational tools, only account for 5.6 percent of China's toy market in 2023, according to Zhiyan Consulting, a Chinese market research company.

Yet, Yunhe's wooden toy industry had an impressive output value of 6.69 billion yuan ($915 million) in 2023. The county produces 40 percent of the world's wooden toy supply, with over 70 percent of its products exported to 82 countries and regions.

How did an industry with a primarily overseas market demand establish itself in a remote small town in southwestern Zhejiang?

The roots of Yunhe's wooden toy industry trace back to the Song (960-1279) and Yuan (1271-1368) dynasties when carpenters crafted traditional wooden toys like the Luban lock and tangram puzzles. This artisanal legacy laid the foundation for a booming industry.

The modern era of Yunhe's wooden toy production began in the early 1970s. In 1972, Yunhe received its first wooden toy sample. By 1973, He Shouzhen, head of the Chishi Toy Factory, created a prototype wooden toy, securing the first export order for Yunhe.

"The local wooden toy industry burgeoned after the reform and opening-up, and in 2013, Yunhe was awarded the title of China's Wooden Toy City by the China National Light Industry Council," said Mao Changcai, vice-chairman of Yunhe's council for the promotion of international trade.

Today, Yunhe is home to over 1,100 wooden toy manufacturing companies, employing more than 30,000 people. "However, due to global economic slowdowns and geopolitical challenges, the output value of Yunhe's wooden toy industry declined from 7.81 billion yuan in 2022 to 6.69 billion yuan in 2023," Mao said.

"In response, we are promoting the transition from 'traditional manufacturing to smart manufacturing' in the wooden toy industry, encouraging companies to invest in R&D activities and brand building."