Disney case highlights China supply chain pitfalls

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Shenzhen, China, Feb 12: In his dim two-room flat, Huang Renzhong showed a visitor a Mickey Mouse statuette and explained how creating Disney figurines during 15-hour work days in a grim factory led to a $90,000 lawsuit.

The circumstances surrounding the case Huang filed with four colleagues last year suggest that firms such as the Walt Disney Co that outsource production to licensees are more exposed to poor labour practices than companies with more direct control over their supply chains, despite concerted efforts to stamp out labour violations. Conditions in the factory where Huang worked in Shenzhen, a boomtown across the border from Hong Kong, were tough, and for years Disney did not even know its branded products were being made there. Huang said about 80 % of his work was Disney-related.

Workers were threatened with the sack if they paused, even to help someone who'd fainted, Huang said. They had no insurance, slept 12 to a dorm room, and were charged for room and board. During five years at Haowei Toys, Huang often worked from 8 a.m. until 11 p.m., or later, with breaks. "We worked extremely long hours, but the amount they paid us was too little," said, Huang, 39, puffing on a cigarette.

Huang and four other craftsmen decided to act after hearing media reports of workers who had won back-pay cases.

In February 2007, they quit Haowei and, after fruitless talks with the boss, sued the district labour bureau claiming it had failed to help recover what they calculated to be about 650,000 yuan ($90,310) in unpaid overtime. Haowei has said it owed them nothing, and the labour bureau says it did all that it legally could to help them.

They launched their case after one of the workers found contact details on the Internet for a Hong Kong NGO that monitors labour violations in China. They also called a newspaper, the Legal Daily, which wrote about them.