The Toy Industry in China: Undermining Workers’ Rights and Rule of Law

Cheap, plastic toys, the kind found in stores, fast food restaurants, fairs, daycare centers, cereal boxes and homes across the United States, almost all come from China. The Chinese toy industry, the largest in the world, generates billions of dollars in export profits and employs millions of people in thousands of factories. These factories are an important part of the economic boom that has lifted many out of poverty in the People's Republic, but they have a dark side, too: excessive work hours, dangerous equipment and chemicals, cramped employee dormitories, abusive managers, crooked hiring practices, and pay below even China's minimum wage.

This report, based on investigations of eleven randomly selected toy plants in Dongguan City, Guangdong Province, attempts to give a picture of some of the problems shared by the industry as a whole and to serve as a wake up call to corporations, local governments and concerned citizens. It shows that high profile exposés and newly adopted corporate codes of conduct have not halted the infringement of toy workers' rights. Abusive conditions persist, threatening to undermine any gains made in workers' standard of living and hindering the development of rule of law in China.

The focus of this report is one shop in particular, the Hong Kong-based Kai Long factory in Dongguan City, which produces toys for McDonald's, KFC, Hasbro [1] and Mattel. The report also details conditions at ten other Dongguan factories: Jieling, Yatian, Dongxu, Yisheng, Guolian, Weiwang, Long Hua, Shun Lian, Long Chang and Ling Xian. These sites were investigated over a three-month period from January to April 2005; a follow up investigation was conducted in August 2005.

Among the report's findings are work schedules that surpass the legal limit by at least 36.5 hours per week, pay rates as low as only 59 percent of the local minimum wage, unsanitary cafeterias, dorm rooms housing 22 people each, and employees forced to foot the entire cost of their work-injury insurance and, in some instances, lack of insurance of any kind. The simple disrespect for Chinese law displayed by these factories may surprise readers. Out of the eleven sites investigated, only one, Jie Ling, abides by the work time and pay regulations set out in the China Labor Law.

Corporations often try to avoid responsibility for such gross infractions by pointing out that factories serve several different clients at the same time. It is common for plants to only devote about 20 percent of their production to any one company. Kai Long, as mentioned, manufactures for four clients: McDonald's, KFC, Hasbro and Mattel. If laws are broken, each corporation claims that much as it would like to ensure compliance, it cannot control the work orders of the other corporations. However, companies' attention to even the slightest changes in cost, changes that can lead them to move their production to other plants the moment profits per item drop by pennies, belie their professed inability to stay informed of total work hours at a given factory or the total pay given workers.

Almost all major corporations now have corporate codes of conduct. Each of the corporations at Kai Long has a code that calls, among other things, for strict obedience to local law. Hasbro Inc. says in its Global Business Ethics Principles that facilities must comply with all applicable national and local wage and hour laws, including minimum wage laws. Mattel Inc.'s Global Manufacturing Principles demand wages for regular and overtime work must be compensated at the legally mandated rates. And Yum Brands Inc., owner of KFC, declares, Employees should not be required to work more than the number of hours allowed for regular and overtime work periods under applicable local, state and federal law. If these codes are to mean anything, they cannot apply only under narrowly defined circumstances, such as only when a factory has no other clients (which is rare).

Toy companies must go beyond fine words and clever excuses to ensure that the employees of their suppliers receive the treatment that Chinese law and common decency require. With profits in the billions and enormous advertising budgets, multinationals can afford to provide more than just jobs; they can provide dignity, too. China Labor Watch urges consumers to contact the owners of Hasbro, Mattel, McDonalds, KFC and Wal-Mart and demand that they make serious efforts to improve the conditions in their factories.

Li Qiang
Executive Director, China Labor Watch

[1] This report listed Hasbro Inc. as one of several toy companies whose products are manufactured at the abusive Kai Long factory in Dongguan City. Following the report's release, Hasbro contacted CLW and expressed concern that it had been misidentified.
At this time, CLW is unable to produce photographs or other definitive evidence of Hasbro manufacturing. 
We trust our worker contacts, who have rarely provided us with inaccurate data. However, shop floors are confusing places and information is tightly guarded. Moreover, factories often pick up each other's orders.
Pending further information, China Labor Watch asks our readers and allies in the labor movement to take these concerns into account when using the report.