A LEGO 2021 Lunar New Year Set | Source: The LEGO Group

The toy industry is booming in China, particularly on the digital front.

E-commerce sales in the first quarter of 2021 spiked 16% to $1.2 billion, according to The NPD Group. The increase was due in large part to the Feb. 12 Chinese New Year celebration, with sales in January growing 34%. The market was dominated by Chinese manufacturers, with just four of the top 10 toymakers representing international companies.

“China is the world’s second-largest toy market and the world’s largest toy production base,” says Frédérique Tutt, global toys industry analyst, The NPD Group. “It’s a country that is primed for savvy international brands seeking opportunities in new markets. Even if the rate of growth slowed in 2020 due to the global pandemic, China over-performed other countries in the region and is already bouncing back. With the latest relaxation of the two-child policy and an ever-increasing middle-class population, we expect the Chinese toy market’s healthy growth to continue.”

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The NPD Group says that all supercategories grew in Q1, lead by outdoor and sports toys with an 18% gain over the January-March period last year.

Licensed toys experienced a 45% boost in sales driven by Ultraman, Lamborghini, Mercedes-Benz, Ferrari, and Disney Frozen.

The U.S. toy industry’s Q1 sales report— usually issued publicly in April — is expected to surface in the coming days.