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M C S P O T L I G H T
P R E S S . R E L E A S E . 19/02/02
How Hasbro, McDonald's, Mattel and Disney Manufacture Their Toys
Report on the Labor Rights and Occupational Safety and Health Conditions of Toy Workers in Foreign Investment Enterprises In Southern Mainland China
Hong Kong Christian Industrial Committee
From August to October 2001, the Hong Kong Christian Industrial Committee (HKCIC) conducted a research on the occupational safety and health (OSH) conditions and consciousness of workers employed in the manufacture of toys for export in Guangdong province of mainland China. 93 workers were interviewed with a questionnaire that focussed on the OSH and related issues. The research covered more than 20 toy plants of varying sizes out of which 8 major supplying toy companies/corporations were identified for detailed research. 7 of them belonged to Hong Kong based corporations and one belonged to South Korean capital. The largest manufacturing company and its subsidiaries employed about 25,000 workers, while the smallest one had about 300 workers. All of them were operating in the major industrial cities in Guangdong province, namely Shenzhen, Dongguan, Guangzhou and Nan Hoi. They were all suppliers to prominent toy companies, retailers and brand names in the world, namely Hasbro, McDonald's, Mattel and Disney. A rough estimation shows that the above trans-national toy giants share more than 50% of the global toy market.
It should also be noted that the above brand name toy companies have been contracting the manufacture of toys all over the world and all of them have developed comprehensive company codes of conduct or ethical business principles to regulate their global suppliers. All of them have been relying on either an internal monitoring system or commercial social auditors in conducting factory audits or inspection on the labor and OSH standards of their global suppliers. Yet, aside from violations of the Chinese Labor Law regarding wages and working hours, the research found that the OSH conditions at the 20 supplier plants were far from satisfactory. Not only was the Chinese Labor Law and the industry's social code (ie the International Council of the Toy Industry or ICTI's Code of Business Practice) violated, each individual company's code of conduct was poorly observed. There was a general lack of OSH provision and consciousness amongst both the workers and the management personnel at the factory level. In some cases, the working conditions as well as the OSH problems were so serious that grave concern was called for.
The HKCIC has studied and compared the company codes of conduct or ethical business principles of Mattel, Hasbro, McDonald's, Disney, as well as the ICTI Code of Business Practice. It is found that all these giant toy companies propagated their commitment to work with their suppliers all over the world in implementing the company codes of conduct or ethical business principles. The question is what goes wrong here? Interviews with toy workers provide evidence of the failure of a lot of code monitoring or ethical standards auditing, both internal and external. The bitter irony is that about 90% of the interviewed workers report that they do not know what company code of conduct or ethical business principles are.
Since 1996, the HKCIC, in collaboration with the Asia Monitor Resource Center (AMRC) and the Coalition for the Charter on the Safe Production of Toys, have released a number of reports on the working conditions of mainland toy factories that contracted manufacturing for the world's top toy labels, including Mattel, Hasbro, McDonald's and Disney1. Violations of the Chinese Labor Law, the ILO (International Labor Organization) core labor standards as well as the ICTI Code of Business Practice, are persistent in the export toy industry in mainland China. Nor is the failure of toy companies' voluntary codes and the monitoring system a newly discovered thing. On top of wages and working-hours violations, the safety and health of millions of workers employed in the export toy industry in this country remains an important but long forgotten issue. Of the million-strong workforce employed in the toy industry, an absolute majority of them are migrant workers coming from inland provinces and most of them are women workers. Incidences of industrial accidents or the acquiring of chronic occupational diseases could mean deaths, loss of working ability or equally terribly, the carrying of chronic diseases back to the home provinces as these migrant workers finished their short service term in the foreign owned toy plants. Compensation for industrial injury or accidents is usually below the labor law standards. Treatment for injuries or occupational diseases is, in most cases, improper or limited. On top of them, the OSH problems are, very often than not, neglected by the workers themselves, the plant management and the trans-national toy companies that place orders. The result is repetition of human tragedies, many of which are not made known to the general public.
While the giant trans-national companies in the toy industry have been propagating their social responsibility to the international community, the responsibility of actually implementing the ethical business standards, including paying the costs and building infrastructure for observing such standards, are largely shifted to their global suppliers along the production chain. On the ground level, we witness rather the persistence of social irresponsibility.
The HKCIC believes that the toy retailers and brand name companies should be held responsible for the labor rights abuses and OSH problems of the toy workers employed by their supplier plants in mainland China. These mainland workers may not have a contract with Mattel, Hasbro, McDonald's or Disney, but every day they are manufacturing semi-finished or finished products that bear the labels of these trans-national toy giants. The order placing practices of these trans-national companies (including the bid to the bottom pricing practice, zero inventory and just-in-time production) should be held largely responsible for the long working hours, low wages as well as safety and health hazards that are found at the supplying factory level. The practice of trans-national companies in contracting out social responsibility and industrial accidents via the global sub-contracting system will not be accepted by the international community that is increasingly concerned with labor and social standards.
The HKCIC believes that both the trans-national toy companies as well as their suppliers have the responsibility in seeing that the Chinese Labor Law as well as the voluntary codes of conduct or ethical business standards of the toy industry be implemented in real terms. The trans-national toy retailers and brand name companies that determine the pricing and delivery lead time of the actual manufacturing of toys should take up a larger share of liability. They should demonstrate their commitment by evaluating their order placing practices that, eventually are responsible for the labor rights abuses and OSH problems found at the supplying factory level.
The HKCIC demands that, both the trans-national toy companies and their suppliers,
1. Develop both long and short term plan of corrective actions, to address and eventually eliminate the occupational safety and health hazards found at the work place.
2. Comply with the Chinese Labor Law and improve the working conditions of toy workers.
3. Set up occupational safety and health committees with workers representation and participation at the factory level to monitor the safety and health conditions in the manufactures of toys.
4. That the Hong Kong Toy Manufacturers' Association and the Hong Kong Toy Council develop a plan of occupational safety and health education that aims at improving the consciousness of toy workers towards safety and health issues, as well as their legal rights. Such a platform should be open to NGO participation.
Statement on the Presentation and Usage of this Report
The HKCIC would like to make a clear statement here regarding the objectives, presentation and usage of this report.
1. This report is published to give a general illustration of the problems regarding the OSH and working conditions of toy workers that manufacture for the world's top brand name companies, namely Hasbro, McDonald's, Mattel and Disney.
The HKCIC, as well as concerned international communities, would condemn any penalizing actions, or gestures which would result in a penalizing effect, that might be taken up by the above 4 brand name companies towards the 20 supplying factories that are currently employing a 90,000 strong work force.
Any utilization of the report information that results in a simple cut and run action by the concerned brand name companies that would lead to the closing down of the supplier factories and mass unemployment of the toy workers would be condemned and exposed to the international community.
In August 2000, McDonald's consented to the termination of contract with City Toys, a premium toy supplier operating in Shenzhen, mainland China. The move was made after the release of HKCIC's report on the gross violations of labor rights and South China Morning Post's coverage of the use of child labor at City Toys. The cut and run act resulted in the closing down of 4 subsidiary plants of City Toys and the immediate lay off of tens of thousands of workers without due compensation. In a meeting HKCIC had with the Corporate Responsibility Department of the McDonald's headquarters in HK in November 2000, HKCIC demanded reinstatement and compensation to City Toy workers. It was met with rejection and a clear statement from the McDonald's representative, declaring that the City Toy workers were not McDonald's workers. Having learned about how fragile a ground lies corporate responsibility, and not wanting to see a repetition of the same disaster, HKCIC has no choice, but to veil the names of the 20 supplying factories that are covered in this report. The supplying factories are named by alphabets as Factory A, Factory B etc. They could be identified with the toy labels they were manufacturing. It should be noted that such arrangement would, in no way, diminish the responsibilities the brand name companies have for their suppliers.
1Two reports, namely "Labor Rights Report on Hong Kong Invested Toy Factories in China No.1" and "Labor Rights Report on Hong Kong Invested Toy Factories in China No.2"edited by AMRC for Coalition for the Charter on the Safe Production of Toys were released in 1996 and 1997 respectively. "The Working Conditions of the Toy Industry in China" written and edited in the same collaborative effort was released in 1999. In August 2000, the HKCIC released a report on McDonald's, named "McDonald's Toys - Do They Create More Fun or Exploitation". Later in the same year, HKCIC released the "Beware of Mickey" report on the conditions of Disney workers in China. In December, the AMRC released a report on the monitoring system of Mattel, named "Monitoring Mattel: Codes of Conduct, Workers and Toys in Southern China".