Report Release: “Suppliers Escaped: Disney Abandoned Mizutani Toy Makers Viciously”

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Mizutani (Shenzhen) Toy Factory Co. Ltd., a Hong Kong-registered enterprise producing for Tokyo Disneyland since 1997, announced its sudden closure and relocation to the Philippines in June 2015. A total of 9 million yuan of severance compensation, social insurance and housing provident fund payments covering 196 employees has been in arrears. The livelihood of Mizutani workers, among which a lot of them are middle-aged and find looking for a new job challenging, is seriously affected by the sudden change.

Worker Empowerment (WE) and the Hong Kong Confederation of Trade Unions (HKCTU) have been assisting Mizutani workers in their protests against Mizutani and Disney and subsequent rounds of negotiations. So far Mizutani simply agree to settle the dispute with one tenth of the compensation to which workers are entitled according to the Labour Contract Law and Social Insurance Law, and workers refuse to accept such an unlawful compensation. Disney in Japan and USA has remained silence since a symbolic meeting with WE and HKCTU in mid-July 2015, regardless of repeated demands for their intervention.

This case demonstrates how Disney has failed to fulfill its corporate responsibility. The report titled “Suppliers Escaped: Disney Abandoned Mizutani Toy Makers Viciously” jointly published by WE and HKCTU aims at disclosing how Mizutani and Disney violate Chinese labour regulations and its betrayal to frontline workers. It is important for the general public, especially customers of Disney-branded products, to pay attention to workers’ suffering behind them.

The full report is available here, with an executive summary.

Key findings include:

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 for 10-20 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, including:

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.

We strongly demand for the following actions of Mizutani and Disney:

1. Disney must investigate the case and fulfill 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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