Executive Summary: “Suppliers Escaped: Disney Abandoned Mizutani Toy Makers Viciously”


Full report: “Suppliers Escaped: Disney Abandoned Mizutani Toy Makers Viciously”

This is an independent case report documenting a series of violations of labor rights in a manufacturer of Disney-branded products in mainland China, namely Mizutani (Shenzhen) Toy Factory Co. Ltd. This case demonstrates how Walt Disney has not been successful in fulfilling its corporate citizenship goals for managing a responsible supply chain. It is important for the public especially the customers to pay attention to the workers’ sufferings behind the Disney-branded products.

The primarily evidence collection and analysis of this report has been prepared by Worker Empowerment (WE) since the second collective dispute broke out in June 2015 and completed jointly with Hong Kong Confederation of Trade Unions (HKCTU). All the information on the labor disputes of Mizutani were compiled from first hand sources from Mizutani workers, official and public record on the company profile, laws and regulations as well as views from experts.

Major Findings

1. By underpaying social insurance contribution, severance compensation and unlawfully dismissing workers, Mizutani has violated China’s Labour Contract Law and Social Insurance Law.
2. The livelihood of 196 Mizutani workers has been severely affected by the sudden factory closure. Most of these middle-aged workers have served in Mizutani between 10 and 20 years and seeking new jobs would be a big challenge for them. Missing social insurance contribution would leave them no pension and this would create serious trouble when they retire.
3. Walt Disney Co.’s International Labour Standards Programme requires all its suppliers to follow local laws, they are specifically required not to threaten workers and respect freedom of association (including rights to organize and collective bargaining). However, it has ignored Mizutani’s grave violations of the above-mentioned labour rights. Those include:

a. Violations of Chinese labour legislations: Mizutani is moving to the Philippines and is financially sound. Yet, it deliberately violates Labour Contract Law and Social Insurance law and owes workers some 9 million Yuan.
b. Rejection of collective negotiation: since the announcement of the closure of the factory, workers had requested to negotiate with Mizutani but it refused.
c. Denial of workers’ rights to organize: out of desperate, workers launched a strike and road blockage. They were violently taken away by riot police and 23 workers were detained.
d. Refusal of paying severance compensation and threatening workers to “voluntarily resign”: when it announced to close its Shenzhen plant in June 2015, it forced workers to sign “voluntary resignation agreements”
4. Walt Disney Co. has been informed of these labour rights violations and the dispute at Mizutani through formal complaint and media exposure, yet it has only reacted to this dispute through emails, phone calls and a non-constructive meeting. Until now, no formal investigation has been seen and no solution has been provided to these violations.

Key Recommendations:

1. Disney must investigate the case and fulfil its commitment to workers’ rights across the supply chain and help the Mizutani workers reclaim their missing compensation in the wake of the company’s abrupt factory closure in June 2015.
2. Mizutani unilaterally terminated workers’ labour contracts. By law, it should pay double severance compensation and Disney should pay the missing part of the compensation, which should be calculated by wages payable.
3. Mizutani must pay the missing premiums of workers’ social insurance and housing provident fund since their dates of commencement.

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