In 2013, the LEGO Group announces its decision to build a factory in China under its strategy of locating production close to its core markets. Asia is regarded as a future core market for the LEGO Group, partly in the light of rising LEGO Group sales in the region. Then Chief Operating Officer, Bali Padda, explains the background to the decision to build a factory in Jiaxing:
“It is our strategy to have production close to our core markets in order to secure short lead-time and world class service to our customers and consumers, and it has proven a successful strategy. Asia – including China – is a future core market for the LEGO Group and therefore I am excited to share our plans for the new factory. Having full control of the production process is essential to deliver products of a consistent high quality and safety and in harmony with our values. In addition, by placing a manufacturing site in the region we reduce our environmental impact as we will reduce the need for transporting products from Europe to be sold in Asia.”
Moreover, by owning the factory the LEGO Group retains full control of production in a market in which there are many copycat products. The factory, which will incorporate molding, decoration and packing facilities, will be located in Jiaxing approx. 100 km from Shanghai, where also a new Asian distribution centre opens in 2014.
In December 2014, The Queen of Denmark attends the groundbreaking ceremony for the new factory and in July 2015, the first test LEGO brick is molded in Jiaxing. It is the 2x2 cornerstone brick, which inaugurates the molding machines.
Open for business
In the fall of 2015 the new LEGO factory in Jiaxing is operating: Eight pre-packing lines and two full flex manual packing lines has come to life as new LEGO employees are packing the Police Station play set.
Finally, in December 2015 “real” LEGO elements are molded in Jiaxing. Production starts with 48 molding machines and the plan is to scale up production up to a total of 384 molding machines by end 2017. When the factory is fully equipped, it will employ about 2,000 people and be able to produce 70-80% of the LEGO products that will be sold in Asia in 2017. The plan is for the factory to supply LEGO sets only to the Asian market.
In November 2016 the official opening of the LEGO factory in Jiaxing is attended by among others Kjeld Kirk Kristiansen from the LEGO owner family and then CEO Jørgen Vig Knudstorp.
The Jiaxing factory is build according to the same modular system as the other LEGO factories in Denmark, Hungary, the Czech Republic and Mexico. A modular system, which was founded with the building of the Kornmarken factory in Billund, Denmark in the 1980s and used for the first time when building the LEGO Factory in Monterrey, Mexico, in 2009.