Yunhe is located in the mountainous area of southwestern Zhejiang Province, in the central part of Lishui City, covering a total area of 984 square kilometers. The people of Yunhe are dexterous, hospitable, and endowed with rich imagination and creativity. Since the reform and opening-up, Yunhe's toy makers have fully exerted their creativity, driving the vigorous development of the wooden toy industry. By 2003, this small county with a population of only 110,000 had nearly 500 wooden toy enterprises, employing 20,000 people, accounting for one-fifth of the county's total population; the annual output value soared from 1 million yuan in the early 1980s to 1.5 billion yuan at present. Its products are exported to more than 30 countries and regions including Europe, America, and Southeast Asia, with the annual export volume accounting for 50% of similar products nationwide, making it the largest wooden toy production cluster in China and even the entire Asia-Pacific region. In May 2004, the CHINA NATIONAL LIGHT INDUSTRY COUNCIL officially awarded Yunhe the honorary title of "China Wooden Toy City".

Yunhe's wooden toy industry started in the early 1970s. After the reform and opening-up, especially after Deng Xiaoping's southern tour, the industry entered a period of rapid development. A large number of wooden toy enterprises emerged, and the number of people engaged in the toy industry surged to one-fifth of the county's population, presenting a scene where "every household runs a toy business".

In 1992, Yunhe began planning and constructing Zhejiang Yunhe Industrial Park, making the local wooden toy industry more clustered, standardized, and distinctive. As an important part of Yunhe's urbanization drive, the park is planned and built as a high-start, high-standard, ecological, and garden-style industrial area, covering a planned area of 9.7 square kilometers. Divided into three phases (short-term, medium-term, and long-term), it is gradually developed into a new platform for Yunhe to connect with the Yangtze River Delta, conduct technological cooperation, improve service management, and open up to the outside world. In 1994, at the first National Evaluation of Special Product Hometowns, Yunhe was named "Hometown of Chinese Wooden Toys". 

In August 1995, the Yunhe County Toy Industry Association was officially established, marking the start of the standardized development of Yunhe's wooden toy industry. After 30 years of continuous efforts, Yunhe's wooden toy industry has finally grown into a flagship of China's wooden toy industry, attracting widespread attention from the industry. The holding of three sessions of the "China Wooden Toy Festival" has greatly attracted industry merchants from Europe, America, Southeast Asia and other regions, further propelling this flagship to ride the waves into the tide of the world economy.