Building a new “dual circulation” development pattern is a major strategic shift in China’s economy. Based on the theories of industrial clusters and global value chains, this paper systematically sorts out the development status of Dongguan’s trendy toy industry. The research holds that “dual circulation” brings dual opportunities for the industry: empowering the internal circulation and reshaping the external circulation. However, opportunities are always accompanied by challenges, presenting a complex dynamic game relationship. The innovation of this paper lies in in-depth exploration of the dynamic mutual promotion mechanism between internal and external circulations, and proposing more operable and forward-looking countermeasures and suggestions from the three levels of government, industry and enterprises. It aims to promote Dongguan’s trendy toy industry to realize the core transformation from “manufacturing advantages” to “brand advantages”, and provide a regional practical model for the transformation of “Creation in China”.