Guests interact with artificial intelligence companion toys on Nov 16 at the 2025 Global AI+ Conference in Beijing. [Photo for China Daily]

Eager to tap into a huge potential customer base, industry players are accelerating their push into the artificial intelligence-driven toys market, hoping to unlock new growth as supportive policies inject fresh momentum into the sector.

Experts and business leaders noted that AI toys, created to provide emotional support and companionship, are well-positioned to spark the next wave of consumer trends by using advanced technologies to foster emotional connections with consumers.

"Young consumers are increasingly paying for emotional value, and AI companionship is emerging as a key early-use case," said Sun Zhaozhi, founder and CEO of Shanghai-based AI-driven toy startup Robopoet.

"This is attracting more companies, including major firms, into the field," Sun said.

According to data from the Ministry of Industry and Information Technology, China's AI toy market was valued at 24.6 billion yuan ($3.49 billion) in 2024, and is expected to be worth 29 billion yuan this year.

The growth momentum is backed by an action plan released by the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Commerce, the Ministry of Culture and Tourism, the People's Bank of China and the State Administration for Market Regulation last month, where collectible toys were listed as a priority support consumption category for the first time, making it one of 10 consumer segments targeted to exceed the 100 billion yuan mark by 2027.

"The deep integration of AI with traditional toy manufacturing is reshaping product forms and value chains, making AI toys a new engine for high-quality industrial development," said He Yaqiong, head of the consumer products industry department at the Ministry of Industry and Information Technology.

Priced at 399 yuan, Robopoet's flagship AI plush toy Fuzozo, which talks to and makes eye contact with users, sold over 1,000 units in the first 10 minutes of the "618" shopping festival presale and ranked No 1 in AI toy sales on both JD and Tmall during this year's Double 11 shopping festival, Sun said.

The senior executive added that the product has sold about 100,000 units so far this year and targets 1 million next year, aiming for 400-500 million yuan in gross merchandise value.

As consumer demand grows more diverse, more companies are shifting their focus toward AI-powered pet companions.

"Unlike typical robots designed to serve humans, our product simulates a live pet that needs care. The process of caring offers users a sense of healing, helping them to cope with anxiety and loneliness," said He Jiabin, co-founder and CEO of AI robot pet manufacturer Ropet.

He added that AI-powered robot pets better suit the lifestyles of young people today, as challenges such as allergies, time constraints and a training process are not present.

Supported by an emotional large language model and behavioral learning, Ropet can continuously adapt to users' habits and gradually develop distinctive traits, allowing it to interact more like a personalized pet, the executive said.

Following its domestic debut on JD in late October, the AI pet product quickly made its way into the platform's top three ranking in the robot category by sales volume during the Double 11 shopping festival.

"Our business logic is straightforward: first create an appealing hardware product, then use high usage rates to accumulate behavioral data, and finally leverage this data to deliver true intelligence," He said.

As domestic momentum builds, Chinese AI toys are also finding strong traction abroad.

In 2024, China's domestic toy retail market was worth 97.85 billion yuan, up 25.5 percent from 2020, while toy exports totaled $39.87 billion, rising 19.1 percent from 2020, Ministry of Industry and Information Technology said.

"Consumers in the United States and Europe have shown high acceptance of AI robots with visual understanding and personalized interaction. Many describe our products as 'little desktop creatures', 'AI pets' or an 'emotional charging station'," said Yi Qi, marketing manager at Shenzhen-based AI hardware company TangibleFuture.

The company's LOOI Robot, priced at around $150, differs from typical companion robots with its phone-dock form factor. Once a smartphone is placed on it, the device activates intelligent interaction and obstacle detection functions.

Since mass production began in November 2024, more than 10,000 units have been shipped, with 90 percent sold overseas. The product even received a social media endorsement from Tesla CEO Elon Musk.

"Boasting the world's most complete toy industry chain, strong manufacturing capabilities and a highly skilled labor force, China is now able to offer more high-quality and well-priced toys to global consumers," said He Yaqiong, from the Ministry of Industry and Information Technology.