HONG KONG- Hundreds of Hong Kong-owned toy factories in China  may be forced to close after huge global recalls hit the industry.

Lawrence Chan, chairman of the Hong Kong Toys Council, said the wave of massive recalls in the  United States andEurope had prompted the Chinese government and foreign buyers to impose stringent quality checks.

Costs for quality control had rocketed by at least 500 per cent since the high-profile recalls began in June last year, he said. This, coupled with the rising cost of labour and raw materials amid surging oil prices, is expected to push total production costs in 2008 up by 15 per cent year-on-year.

Chan said hundreds of toy factories in China would find it difficult to withstand such pressures and could be forced to shut, although most of the victims would be small and medium-sized companies.

"Buyers are worried about product quality now, so they prefer to go with bigger companies rather than the smaller firms to make their toys," he told reporters as he and industry bodies launched  Hong Kong's first toys festival.

The show, which opened last Sunday, aims to boost the tainted image of made-in-China toys.

The event, which coincides with a toy and games fair in Hong Kong, the largest of its kind in  Asia, will bring in hundreds of foreign buyers and will hold seminars to discuss international toy safety and quality standards.

"We hope to raise the industry's awareness on the safety issues," said CK Yeung, executive vice-president of the Toys Manufacturers' Association of Hong Kong, one of the organizers.

"We Hong Kong people have been in the toy business for more than 20 years and we want people to know that we do have very strict rules on the quality of our goods," he said.