LEGO, a privately held Danish toy company, signed a Memorandum of Understanding with Vietnam Singapore Industrial Park Joint Venture Company Limited (VSIP) on Wednesday to construct a new plant in Vietnam. The facility will be built to keep up with the rapidly increasing demand for the company’s colorful plastic blocks among Asian children.

The company plans to invest over $1 billion on the 44-hectare property in Binh Duong Province – about 50 kilometres from Ho Chi Minh City – and create up to 4,000 jobs in the next decade and a half. The facility will be LEGO’s second in Asia (following its first in China in 2016) and sixth in the world.

The new facility adds to the LEGO Group’s global supply chain network, which places factories close to its major markets. This gives the company the ability to react swiftly to changes in local customer demand, shortens the supply chain, and decreases the environmental effect of long-distance shipping.

Construction will be afoot in the second half of next year, with production beginning in 2024.

The facility will be the firm’s first carbon-neutral facility. Solar panels will be fixed on the roof of the new facility, while VSIP will construct a neighboring solar project on behalf of the LEGO Group. These solar parks will create enough renewable energy to meet the factory’s yearly energy needs 100 percent of the time. It will be built to a LEED Gold minimum standard, encompassing all aspects of sustainability, including energy, water, and waste. In addition, the plant will be built to accommodate electric cars and will have energy-efficient manufacturing equipment.

The LEGO Group and VSIP will plant 50,000 trees in Vietnam to compensate for vegetation damaged during construction.

Since 2019, Lego has experienced double-digit growth in Asia, with dozens of new stores opening around China in recent years. According to Euromonitor, the toy industry in Asia-Pacific, excluding video games, is expected to increase at 28 percent through 2025, compared to 24 percent globally.

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