Fan Jimei, a master toymaker, teaches children how to make a traditional toy in Tancheng, Shandong province. ZHANG CHUNLEI / XINHUA

Industry sources estimated that the size of the domestic market for intelligent toys will reach 100 billion yuan by 2020.

However, the hardware technologies have to be improved. The current technologies are still in their infancy and no enterprise owns a dominant position, industry insiders said. Furthermore, some cutting-edge technologies might not be suitable for intelligent toys.

The barrier for AR technology is relatively low. AR technology could be easily applied to toys, but VR technology, which often needs a heavy helmet, is still not mature.

"The technical barriers to hardware are not high, but we should pay attention to applications and development of software in the future," said Tony Li, director of Shenzhen-based Maison Capital.

Li expects more intelligent products in the areas of nursery and primary education as technologies get advanced.

The scope for progress comes from the fact that domestic standards still lag those in Europe and the United States. For instance, Lego boasts a complete range of toy systems and high brand visibility.

Sheng said: "We will make efforts to improve our offerings in the intelligent robot field. However, at present, the robot lacks application sceneries and content.

"We should strengthen the research and development of software and build up rich content. We hope children could obtain more knowledge by communicating with the robots."

Sheng said the company will also focus on children's health.

Contact the writer at fanfeifei@chinadaily.com.cn