FORTUNE -- While emerging markets tend to have big, young populations, American toy companies such as Mattel and Hasbro have yet to turn them into large profit centers.
They have, however, learned a few things. Barbie, for example, had a bit of a botched debut in China, but, according to a spring report from Euromonitor, "Mattel has been quietly enjoying the rewards of a strong performance by [Barbie] in India."
Why does she sell so well there? For one thing, in India, Mattel (MAT) released a Barbie modeled after popular Bollywood actress Katrina Kaif. The doll was part of a line called "I Can Be." In America, "I Can Be" Barbie occupations include nurses, music teachers, and the President. In India, the Katrina Kaif doll represents a role model that appeals to the local market.
Mattel had just come off a flub in China. In 2009, it opened the first Barbie store in Shanghai -- six floors worth of Barbie paraphernalia -- but the concept didn't take. Chinese parents were turned off by what they saw as the over-sexualization of the doll. Though Mattel's Barbie complex was a miss, the company should eventually have another shot at China, says Jaime Katz, an analyst at Morningstar. "Probably Barbie can make a very easy comeback with the right attire, maybe some different features or products."
Mattel certainly plans a comeback. "As the world's largest toy company, Mattel has a proven track record of adapting and thriving in the global marketplace," Mattel spokesperson Alan Hilowitz says. "In recent years our international business shifted from 35% of our total business to 50% of our business today, and we plan to grow that number."
Toy companies have struggled, so far, to crack the promising Chinese market. On May 15, Euromonitor toys and games analyst Robert Porter, published a report called "Toys in China -- Water, Water Everywhere but Not a Drop to Drink?" According to the report, the market is set to grow by nearly $4.7 billion over the next five years. No one company, Porter says, has more than 5% market share.
China has been tough for toy companies to penetrate, in part, because U.S. toys are expensive. American parents tend to have much more discretionary income to spend on their children. "There are a lot of people living in poverty in some of these countries," says Morningstar's Katz. "They're still going to need to pay for necessities rather than toys."
Mattel has actually used its products' high price point to its advantage in the past. "What's premium in the Western market and what's premium in emerging markets is very different," says Giedrius Daujotas, an industry analyst with Euromonitor. Mattel, for example, may be just another toy company in the U.S., but it positions itself as a premium brand in Latin America.
"They market to wealthy parents, and then everybody else wants to trade up to them," Katz says, "There, they're the Lululemon of toys." So far, the strategy has worked. According to the spring Euromonitor report, "For Mattel, Latin America is already a US$1 billion market and is becoming more important with every year."
Perhaps the premium strategy will work with Asia, but as Mattel learned from its troubles with Barbie in China, every market has its own quirks. For now, nice toys remain a niche buy. In emerging markets, "when people have more cash to spend, they're choosing to buy premium baby food brands," Daujotas observes. Compared to toys, "baby food may be a bit more of a necessity."
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