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February 20, 2003
Chinese Toy Manufacturer Labor Standards Found Lacking
by Paddy Manning
New report highlights structural obstacles to toy manufacturer implementation of labor codes of
conduct.
SocialFunds.com --
Nongovernment organizations in Hong Kong released fresh research this week regarding labor issues
in southern China's toy manufacturing industry. The research revealed structural flaws in the toy
industry that prevent compliance with the voluntary codes of conduct that name brand companies are
advocating.
 Toy manufacturers in China's southern provinces supply
almost 70 percent of the world's toys, including products for major U.S. brand name companies such
as Mattel (MAT),
Hasbro (HAS), Disney (DIS), and
fast-food giant McDonald's (MCD). The export trade is
estimated to exceed US$7.5 billion per annum.
The Hong Kong Christian Industrial Committee (HKCIC) this
week released a second extract from its major report to be published this month on behalf of the
Hong Kong Coalition for the Charter on the Safe Production of Toys. The report, titled "Unfair
Trade for Unfair Toys," is the culmination of ten years' research. The first extract was released
last month.
HKCIC interviewed workers directly about labor conditions at 34 toy
manufacturers in Hong Kong and on the mainland, all of which were producing toys for different
international brand names. The results were presented to factory managers and 24 of the managers
responded.
HKCIC Associate Director Chan Ka Wai said that the toy factories in China fall
into three categories. He said about five percent are good. "That's not to say they totally observe
the labor law, but they pay minimum wages and try to restrict working hours to 50 hours per week,"
said Mr. Chan.
Mr. Chan said a further 20 to 40 percent of factories are struggling to
improve. The remaining 55 to 75 percent of factories are classified as "poor."
"[Poor]
means they don't pay the minimum wage, workers work up to 80 to 100 hours per week, and safety is a
big problem," he said.
Mr. Chan said it was not possible to identify the toy brands that
were better or worse than others on labor issues in China, because each factory produces for a
range of brands.
"The manufacturers will say the buying practices of the brand names are
the big problem," said Mr Chan. "They [pay] lower and lower prices and also [give] shorter
production times. The manufacturer has no choice but to give less to workers."
Another
problem highlighted by the report includes the seasonality of the toy industry, which translates to
long overtime hours for workers during peak periods. Also, brand name company preference for
just-in-time delivery tends to create peak periods of manufacturing. The report also stated that
there are differences in the codes of conduct that brand name companies are imposing on
manufacturers, and that makes compliance with the codes more difficult.
Manufacturers
reported it is very difficult to extend compliance with codes of conduct to sub-contractors. This
is despite the fact that sub-contractors are aware of the codes of conduct being imposed by western
buyers.
The report concludes, "If price depression becomes a consistent pattern and yet
the labor cost keeps on increasing to meet the requirement of the Chinese labor law and code of
conduct compliance, the gap between the buyers' price and the real production cost will be further
widened. Fair pricing is a real issue for sustainable code of conduct compliance."
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