Extracts of the Report on McDonald’s Toy Contractors in China

The Hong Kong Christian Industrial Committee (CIC) has visited a total of 10 factories, all of which are toy contractors for McDonald's in main land China, from August to October 2000. Earlier on (27 Aug 2000), we published an in-depth report on the conditions in City Toys, another toy contractor for McDonald's in Shenzhen. The City Toys reports reveals gross violations of labor rights, the use of under aged labor, and the total failure of McDonald' factory monitoring in addressing and correcting these violations.

The aim of our conducting these factories visits of McDonald's toy contractors is to let the local as well as the international communities know what lies behind the fun and "Smiles" of McDonald's toys.

The spear of McDonald's marketing strategy in the last ten years is combining fast food and toys, using toys to boast both its public image and sales globally. Developing strategic business partnerships with other entertainment giants like Warner Brothers, Disney and Habro, McDonald's is selling billions of licensed toys all over the world. Plastic Barbies and plush teddy bears created big hits in the US. Youngsters in HK, Taiwan, Singapore queued overnight for plastic Snoopy and plush Hello Kitty. In 1997, the corporation spent RMB1 billion (USD120.9mn) in domestic procurement in China which included the purchase of 1.3 billion toys manufactured mainly in South China.

McDonald's is purchasing toys in China mainly through its marketing partner, Simon Marketing (a subsidiary of Cykr, a Nasdaq listed company). Contracting both sourcing and manufacturing to others gives the corporation ample room to dissociate itself from accusations of environmental and labor exploitation. All the wrongs done to the environment and the workers are "contractor's faults", McDonald's can still claim to have a whole set of labor codes and a clean conscience. Contracts with black sheep toy contractors like City Toys can be easily cut and have business shifted to other "cleaner" contractors.

The City Toys case (of using child labor and violating labor rights and finally have all contracts cut by McDonald's and many workers laid off) is a good illustration of how the corporation cares only for its good name but not the welfare of workers laboring for it. The case also demonstrates how the internal labor rights monitoring of the corporation, which the corporation claims to be credible and reliable, is nothing but a sham. Not only are the labor rights violations not corrected, they are not even revealed or addressed.

City Toys is not an isolated example. Of the ten McDonald's toy contractors we've visited, all of them violate Chinese Labor Law.

The most serious violations is the unacceptably long working hours. Many of them are found to have workers laboring after midnight (uptil 24:30 or 25:30) seven days a week for months during peak season.
Low wages. A number of them use various measures to deduct workers' wages, impose penalties or pay less than the legal over time pay rate. An average packaging worker gets only RMB400-600 a month laboring for 100-150 over time hours.
Forced labor is very serious for during peak season, over time work is almost compulsory and workers can't even get a single day leave. They don't have the right nor the resources to refuse to go to work.
Most of the workers in the 10 factories do not have contracts with the management.
Many of the toy contractors do not buy insurance nor do they have medical provisions for workers.
Poor living conditions. In all the 10 factories, overcrowding and bad sanitation is a common problem.
. Workers in all the ten factories complain of fatigue and stress especially during peak season. Workers in the coloring and knitting departments of Merton, Xin Fa and Guo Lung complain of strong chemical smell and cuttings at work.
Workers in almost all the factories do not have the right to keep their pay roll. They are deprived of the simple right to know how their wages are calculated.
None of the factories allow workers the right to organize. Merton have strike workers fired.
McDonald's company monitoring does not work. Workers in all the 10 factories have not heard of McDonald's code of conduct. Happy Crafts, Rong Lian, Merton and He Cun even have workers drilled and documents falsified to pass the corporation's monitoring.

We conduct this factory research only to communicate one message to the corporation and the public. The above violations are not violations of particular contractors only. McDonald's definitely has liability for the workers of its contractors.

To quote from the words of a coloring worker in one of the above factories, "The toys we make worth less than a penny. I've never got more than RMB0.1 from any piece of toy I made for McDonald's. Our boss came all the way to invest here because we are cheap. What we see as staged everyday in the factory is exactly the exploitation of the surplus labor of workers."

If McDonald's does not PAY to measure up to its claims for labor rights protection, the global community will understand from now on what lies behind the big smile is nothing but falsity and exploitation.

HKCIC releases the factories findings in the hope to improve the conditions of McDonald's toy workers in China. McDonald's should see to it that none of the toy workers in the above mentioned factories would be penalized, retaliated or arbitrarily dismissed because of this.