It is not very clear who or what the first designer toys were. However most common is the Michael Lau story. In 1998 Lau made a series of 12-inch puppets based on the bodies of G.I. Joe. That became such a success that he made his own Gardener series. Furthermore he did numberous of special exhibitions with a lot of public interest. Toy-companies discovered his talent and let him design his own custom toys.
A few years later artists starting to experiment with vinyl. Especially in Hong Kong the scene grew enormously. A name was given to this new art. Because 99% of the artist are residents of large cities they called it 'Urban Vinyl'.
Internet has been essential for this new art. It made it possible to introduce people all over the world with 'Urban Vinyl'. After a short while a lot of trade was taking place on eBay. A true subculture has been born.