Toys with a smarter purpose

Integration of AI in products is putting innovation outcomes into practice

This year’s Government Work Report introduced the goal of creating “new forms of the smart economy” for the first time, with artificial intelligence standing out as a key term.

As the world accelerates its digital and intelligent transformation, AI is a game-changer and an important driver of economic growth. The outline of the 15th Five-Year Plan (2026-30) for national economic and social development calls for full implementation of the “AI+” initiative, aiming to establish a leading position in industrial AI applications and drive transformation across all sectors of the economy and in all aspects of daily life.

Over the next five years, AI will move beyond technological breakthroughs and pilot applications toward large-scale deployment and systemic empowerment, reshaping production modes and lifestyles. In daily life, AI will evolve from serving as a “virtual assistant” to acting as a “physical helper”. Smarter terminals and applications will take off in education, healthcare and elderly care, making life more convenient, services more inclusive and experiences more personalized.

In recent years, AI-powered toys have emerged as a new consumer trend. Data from the Ministry of Industry and Information Technology indicate that the market in China is expected to reach around 29 billion yuan ($4.05 billion) by 2025.

As a key vehicle for AI implementation, smart toys not only propel the sector toward greater intelligence and higher added value but also address diverse needs — such as children’s education, adult companionship and elderly care — through personalized interaction, unlocking new consumption drivers and contributing to a better quality of life.

AI toys are designed to align with the habits of different age groups, integrating voice, vision and even emotion into their design. This turns algorithms into affordable, user-friendly companions, educational aids and everyday tools.

On the technology front, AI toys combine voice recognition, multimodal interaction and large language models to enable perception, reasoning and interaction. Functionally, unlike traditional toys focused solely on entertainment, they offer early learning, education, knowledge dissemination, creativity stimulation, emotional response and companionship.

In cross-sector integration, AI toys serve as key vehicles for “AI+education” and “AI+elderly care”, pushing industry boundaries and empowering other sectors. For instance, “AI+Chinese-chic brands” give toys dual added value — both technological and cultural.

AI’s empowerment of the toy industry exemplifies the deep integration of technological and industrial innovation, putting innovation outcomes into practice. Through the application of AI and large models, toys gain a “soul” — with their value elevated from physical companionship to genuine emotional connection. This dual upgrade in form and function makes the experience of companionship feel warmer.

AI toys form a full-age product matrix — educational interaction for the young, emotional companionship for adults, and care and memory support for seniors.

They also stimulate development across the upstream and downstream industry chain — upstream for iterative upgrades in computing power and chips; midstream for expansion of the digital content market; downstream for rapid growth of distribution channels. In this way, they are poised to become a new engine for the toy industry — and a powerful driver for related sectors.

Concurrently, the global AI toy market is taking off. Key segments — including educational programming, emotional companions, AI pets and virtual reality/augmented reality interactive products — are all expanding at considerable speed.

In China, AI toys stand out for their scenario adaptability, accessibility and full-age applicability. For instance, smart learning toys can integrate textbook content from various sources, support dialect recognition and deliver regular content updates and personalized progress reports. Meanwhile, they have also formed a full-age product matrix spanning children, adults and seniors, tailored to the needs of different demographics.

While the industry faces new opportunities, homogenization remains a critical challenge. Current products often suffer from similar designs and stiff interactions, fall short of genuine connections and have limited capabilities for continuous learning and personalization. In addition, stringent safeguards and better AI governance are required to address potential information security and data risks.

To ensure the healthy, sustainable growth of the AI toy industry, a dual focus on technological innovation and application expansion is essential.

For technology, innovation must be strengthened — by establishing industry-academia-research platforms and encouraging collaboration between enterprises and universities to tackle core technologies. This will help lower R&D costs and address persistent issues such as product homogenization and limited personalization.

For applications, expanding scenarios is essential. Toy companies should partner with educational institutions, senior care communities and tech companies to drive cross-sector integration and pilot scenario-based applications, diversifying product forms and use cases.

Collaboration between toy companies and AI companies — combining market insight with new technology integration — can embed traditional Chinese culture into toys, creating blockbuster products that set consumption trends and offer consumers an immersive experience of technology alongside Chinese culture.

In parallel, to address consumer concerns over data protection and cybersecurity, stronger risk assessments are needed. Toy companies should bolster technical safeguards, with standards developed and refined in a timely manner to define boundaries for data collection and privacy — ensuring product quality and data security.

The author is an associate research fellow at the Chinese Academy of Macroeconomic Research affiliated with the National Development and Reform Commission.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.