The coronavirus is one of the main topics of conversation at the 117th edition of Toy Fair New York, which began on Saturday and runs through Tuesday. Two weeks before this year’s event, show producer The Toy Association, in consultation with the China Toy & Juvenile Product Association, canceled the China Pavilion, the section of the show where Chinese manufacturers have traditionally exhibited their wares.

Attendee traffic, which generally numbers about 25,000, was also expected to be down somewhat, since the U.S. is denying entry to anyone who has been in China during the previous 14 days. Despite the lack of Chinese visitors, however, the show floor does not seem significantly lighter than in a typical year.

Many toy companies source 60% to 90% of the products they sell in the U.S. from China, and several of the 30-plus children’s book publishers exhibiting at Toy Fair New York (out of about 1,000 total exhibitors) say they also use Chinese factories to produce a significant percentage of their books. The virus, therefore, has the potential to significantly disrupt the supply chain.

Several publishers have experienced at least some slowdowns. “Quarto, like many other toy and book manufacturers, is experiencing production delays in China,” says Ken Fund, chief operating officer of Quarto, which was showing books as well as science kits from its SmartLab division. “We are actively looking at alternative solutions outside of China for production during this difficult time.”

“So far [the coronavirus situation] hasn’t affected us,” says Marisa Littlefield, national sales manager, publishing, at Educational Development Corp., whose Usborne imprint was showing sticker books, jigsaw-and-book sets, and its bestselling “That’s Not My… series, among other products. “But we have some new titles coming up in June, and we’re concerned those might be late.”

Several toy makers tell PW they brought extra product into the U.S. at the end of 2019. Their goal was to keep prices down in the face of an expected 10% increase in tariffs on toys coming from China. The industry was relieved when the tariffs were taken off the table as part of the first phase of a trade deal between the two countries, signed in mid-December, just as they were scheduled to go into effect. In addition to stocking up on inventory, some toy companies began the process of moving at least some of their manufacturing away from China—to Vietnam, Indonesia, and Malaysia, for example—due to the tariff concerns.

Both of these moves, in addition to the fact that publishers and toy companies always bring in extra product to prepare for normal factory shutdowns for the Chinese New Year, helped alleviate some of the potential issues in the early days of the coronavirus outbreak.

Publishers and toy companies note that factories are just starting to get back to work. “The factories aren’t at full capacity yet, and once they’re up and running fully, we don’t know if there will be containers available or what will be happening at the ports,” says Jenny Hastings, executive v-p at Bendon, which was back exhibiting at Toy Fair, in an off-the-floor meeting room, after a year’s hiatus.

In addition, commercial flights, which carry cargo from China along with passengers, are still being canceled. These and other concerns mean the uncertainty continues.

Publishers and toy companies say key customers are placing larger orders than usual in anticipation of potential delays. “Customers like Amazon are buying a lot, because they think there might be shortages,” says Clair Frederick, president of Merrymakers, which was showing its book-based plush as well as holding meetings with potential licensees for Pete the Cat and Dog Man. “We don’t really know how bad it will be.”

Publishers and toy companies alike also look to China as an increasingly significant consumer market. Sales of toys in China reached $13.4 billion in 2018, according to a 2019 report published by Research and Markets, which predicts a compound annual growth rate of 10.8% from 2019 to 2024. The virus has impacted the industry on that front as well, as Chinese consumers have been staying away from public shopping areas. China’s 70,000 private bookstores have seen significant drops in sales—as much as 90% in some cases—as many have been forced to close temporarily and others have seen significant reductions in visitors, according to The South China Post.

Olivia Wilson, sales manager, specialty retail and international, at Houghton Mifflin Harcourt, which was highlighting key brands such as The Little Blue Truck and Curious George among its Toy Fair offerings, says that in addition to having some reprintings delayed, “we’re hearing from our buyers that no one is going to work or to public shopping areas, which keeps sales down. We’re hoping it turns the corner soon. It’s nothing you foresee or can do much about.”

Overall, the toy industry experienced a challenging year in 2019, with all of the uncertainty around tariffs, a continuing retail upheaval after the closing of Toys ‘R’ Us in 2018, and a Thanksgiving-to-Christmas sales period that was six days shorter than the previous year. All of this contributed to a year-over-year decline in U.S. toy sales of 4%, to $20.9 billion, according to the NPD Group. Despite the current challenges, toy companies and publishers alike say they are having a positive Toy Fair, with a steady flow of traffic, productive meetings, interest from new sales channels, orders being written, and other business being accomplished, despite the uncertainty ahead.