Relationship Between Walt Disney Co (NYSE:DIS) And Chinese Toymaker Sours Leading To Contract Termination

Walt Disney Co (NYSE:DIS) has cut off business ties with one of its Chinese toy manufacturers. The move by Walt Disney follows reports that the manufacturer was violating labor laws. News of the severance of ties between Disney and Chinese toymaker were first communicated in a memo that Disney posted online. The Chinese toy manufacturer was identified as Dongguan Qing Xi Juantiway Plastic Factory.

The acts of labor violations by the Chinese toymaker were brought to Disney’s attention by China Labor Watch. is a non-profit that is based in New York. In the memo, Disney indicated that efforts to encourage better labor practices at the toymaker’s plants had failed.

“…Dongguan Qing Xi Juantiway Plastic Factory failed to remediate hiring and human resource issues identified during an investigation of the facility last year, despite our encouragement of remediation and their contractual requirements to us,” read the memo, after the severance of the relationship between Disney and Chinese toymaker.

Second chances in another Disney and Chinese toymaker case

At the same time, Disney also urged another toymaker to fix labor issues that had been pointed out or risk losing Disney’s business. The toymaker, Lam Sun Toy Limited Co, was faulted for not meeting expectations with regard to the accuracy of record keeping as well as not observing proper health, fire safety, and human resource best practices.

The labor practices abroad are a constant problematic area for US multinationals. It’s even a bigger headache for a giant company like Disney since its brands may be licensed to other vendors who then go on to make their own manufacturing arrangements overseas.


China Labor Watch Report

Disney’s International Labor Standards program has been in existence for two decades now and was put in place to prevent abuses. Disney employs over 120 members of staff in a dozen countries to assist in improving the labor conditions in more than 30,000 manufacturing sites. Approximately a little over one-quarter of those factories are in mainland China. Last year, China Labor Watch released a report detailing labor violations. It is this report that is believed to have lead to the cutting off ties between Disney and Chinese toymaker.

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