Labor groups criticize Disney over worker conditions at China suppliers

[June 14, 2016]  SHANGHAI (Reuters) - China-based labor groups have criticized Walt Disney Co over conditions at a small number of its local suppliers, highlighting issues such as low wages, high rates of injury and health risks from exposure to chemicals and dust.

Disney, set to open a $5.5 billion theme park in mainland China on Thursday, said it took any violation of labor regulations "seriously" and that it would investigate any allegations against its suppliers.

A report from Hong-Kong based advocacy group Students & Scholars Against Corporate Misbehavior (SACOM) said some workers at eight Disney suppliers it had investigated were forced to work long hours and paid wages below the minimum legally allowed. Injury levels were also high because of old machinery and a lack of training or protective equipment.

In a separate report, China Labor Watch cited issues at two other factories, including low wages, exposure to chemicals and ineffective audits of working conditions by clients.

A Disney spokeswoman said in emailed comments that the firm takes "seriously claims of labor standards violations against the independent facilities producing Disney-branded products".

"It is our practice to thoroughly investigate those allegations and assist facilities in remediation efforts and comply with local regulations."

Disney is not the first global name to come be criticized for worker conditions in China: iPhone maker Apple Inc has been singled out on several occasions over supplier issues in the country.

Both SACOM and China Labor Watch pointed out their investigations, which involved working undercover at the factories, had only covered a fraction of suppliers to Disney, which raked in $52.5 billion last year worldwide, including $4.5 billion from consumer products.

The entrance gate to The Walt Disney Co is pictured in Burbank, California February 5, 2014. REUTERS/Mario Anzuoni

SACOM said it has found that the supplier companies withheld full overtime payments, fined workers for taking leave, and often employed staff without an official contract, which it said was a "breach of law".

The group also criticized Disney for lax oversight of the supplier factories and for third-party inspections being flagged in advance. The factories made products such as branded bags, hair clips and mugs.

"Knowing the time and subject of the audit, the factories were able to hide things in advance, and the genuine labor conditions could not be uncovered," SACOM said.

Disney is making a big bet on China with its Shanghai park, its first in mainland China, and already contends with challenges from popular local cartoons to a sometimes hostile reception from Chinese business rivals and state media.

(Reporting by Adam Jourdan; Editing by Christopher Cushing)

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