Mulan's Sisters and the Disney Sweatshops

by Sarah Cox

Inside the huge Fifth Avenue Theatre, where the Walt Disney Company's annual shareholder meeting is about to begin, Mulan stands on a balcony overlooking the lobby balcony in flowing silk robes. Goofy cavorts nearby and Pocahontas appears, scantily clad in buckskins. Looking like they have just stepped off the screen, they sign autographs with what they insist are their "real" names -- Mulan, Goofy, and Pocahontas. Flik from It's a Bug's Life entertains a small crowd, until his blonde handler spots a reporter beside him. "Flik," she advises the six-foot-tall insect, "You're needed back in the colony."

Disney excels at this blurring of fact and fiction, and the February 23 shareholder meeting is no exception. While almost 1,200 stockholders -- from children to octogenarians wheeling oxygen tanks -- mingle with some of Disney's most celebrated characters, the song "It's a Small World" trills in the background. It's an ironic musical choice given item number four on the day's business agenda, a shareholder resolution which aims to improve working conditions in the 18,000 factories around the world that produce Disney apparel, toys, books, and software products.

Outside, the theatre's glittery billboards advertise a musical production of Camelot. Only a small placard tucked in the entranceway announces the Disney shareholders' meeting.

The lack of hoopla is a sharp contrast to the last year's gathering in Kansas City, where a protester dressed as Mickey Mouse pretended to lash other demonstrators posing as third-world sweatshop workers. This time, the only visible sign of dissent is a man in a grey business suit handing out press releases to journalists.

"Working for Disney Is No Fairy Tale: A New Report by Hong Kong Group Uncovers Widespread Abuse at Disney's Chinese Factories," says the press release. Its distributor, Conrad MacKerron, is indistinguishable from the other shareholders, a mixed collection of people wearing everything from jeans and fleece jackets to business suits. MacKerron represents the 18 institutions who have put forward the resolution. It would require Disney to allow independent monitors into overseas factories, to pay workers a "sustainable living wage," and to report to shareholders on enforcement of the company's code of conduct -- for instance, by making public the results of 6,600 audits conducted last year of factories making Disney product.

Employees work daily 8:00-12:00 and 1:30-6:30. Workers can seldom take even a short break. They always work overtime until 2 or 3AM, especially in the high season.

-- Hong Kong Christian Industrial Committee report

"We're not going to be the people who are out there on the streets shouting that Disney is evil," says MacKerron, a representative for Domini Social Investments, one of the initiators of the resolution. Of course, Domini has reasons for soft-pedalling its criticisms: last year its shares in Disney increased in value by 20 percent, six percent more than Standard & Poor's 500 Index. "We own the company and we want it to do well," says MacKerron. "Whether they [Disney executives] like it or not, they have to respond to us."

The press release is based on a report by the Hong Kong Christian Industrial Committee, a labor rights group that visited four factories in southern China which produce garments with Disney characters like Winnie the Pooh. The visits took place between July 1998 and February 1999.

Researchers found that all four factories violated both Chinese labor laws and Disney's own code of conduct. They interviewed workers earning as little as 13.5 cents an hour and toiling up to 16 hours a day, according to the report. The minimum hourly wage required to meet basic necessities for a small family in a Chinese city is 87 cents an hour, the report says. It also points out that Chinese labor law prohibits a work week of more than 49 hours, and that Disney's code promises respect for local labor laws.

At the Sheng Li factory, which makes Mickey Mouse clothing, some workers live in a four-story building whose lower two stories and half of the third floor are used as a warehouse, in violation of Chinese fire regulations. At the Guo Nian Garment factory, which researchers visited this February, workers making Disney children's clothing could not afford to go home for the Chinese New Year because they had not been paid for three months.

The Hong Kong report is not the first time Disney has been publicly criticized for dismal working conditions in overseas factories. In Haiti, workers making Disney clothes are paid as little as 28 cents an hour and cannot afford to feed their children adequately or send them to school, according to the New York-based National Labor Committee. By comparison, the Disney proxy statement distributed at the shareholder meeting says that company CEO Michael Eisner earned $764,423 in fiscal year 1998, as well as a $5 million bonus.

Eisner, who will call the meeting to order at 10AM, is not giving interviews. Nor are any other Disney executives. Tom Deegan, Disney's vice-president of corporate communications, says he knows nothing about the report on working conditions. Deegan is posted in the press room across the street at the Four Seasons Hotel, which is conspicuously empty. Three long tables outfitted with power outlets, phones and pads of paper, are unoccupied. A lavish breakfast buffet -- free for the media -- is virtually untouched. Eight well-coiffed Disney personnel mill about the room, watching a television screen featuring the goings-on in the theatre lobby. "Oh, look at Minnie, girl!" someone squeals.

Disney's Internet Guide (www.dig.com), part of the Go Network, promises to "point families to thousands of kid-appropriate Web sites."

Number of references to baseball through a DIG search: 385
Number of references to Kosovo: 58
Number of references to Monica Lewinsky: 10
Number of references to sweatshops: 0

(Searches made March 13, 1999)

Disney, like all publicly-held corporations, is required by law to hold this annual meeting. It's an opportunity for shareholders to see top company executives in the flesh, ask them potentially tough questions, and consider resolutions brought forward by other shareholders. But this, of course, is show business -- and the people who run Disney adroitly turn the meeting into a glitzy preview of the company's upcoming attractions.

The Go Network is featured on a giant movie screen, and Eisner demonstrates innovations that will allow surfers to customize their homepage, checking on everything from the value of Disney stock to their horoscope from the moment they log on. Then shareholders get a sneak peek at three animated films Disney plans to release worldwide over next year. Tarzan, muscles bulging, flips through the trees saving Jane from wild animals. In a scene from Toy Story 2, Woody and his pals try to cross a busy freeway without getting squished. A volcanic eruption in Fantasia 2000 has the shareholders literally on the edge of their plush seats.

Finally, more than an hour and a half later, it's time for business. MacKerron rises and goes to the microphone. He reads a prepared statement that uses conciliatory phrases, saying that paying a sustainable wage is "a smart business move" and telling stockholders to vote for his resolution "to protect Disney's good name." Yet his message is blunt. He acknowledges that Disney has taken significant steps to improve monitoring of overseas contractors, but says the company must strengthen its policies "to help eliminate potentially abusive sweatshop working conditions at its contract suppliers around the world."

In February the workers complained that they had not been paid for three months. As the Chinese New Year was approaching, many workers planned to return home for the holidays. Management had promised to deliver their wages on November 9, three months earlier. Several workers who could show their confirmed train tickets for traveling home were given their wages, but most of the workforce could not get any money. As the price of train tickets was increasing daily, workers wanted to buy the tickets as early as possible, but they had no money to do so. Because they hadn't been paid for three months, most of the workers could not join their families for New Year, the most important holiday in the China.

-- Hong Kong Christian Industrial Committee report

MacKerron also urges the company to set and pay a sustainable wage, stressing that in many countries where Disney operates the minimum wage is not sufficient to cover basic necessities such as food, clothing, medical care, transportation, shelter and potable water. "Disney wants to move in a substantial way into Asian markets like China and Indonesia. How many Mulan figures will families be able to buy in China with workers earning 13 cents an hour and Indonesians not much more?"

Eisner shifts from foot to foot while MacKerron speaks. The CEO assures shareholders that the company takes concerns about overseas working conditions "dead seriously" and has stepped up efforts to ensure contractors' compliance with local labor and health standards. But Eisner says it is "neither realistic nor appropriate" for Disney to attempt to set minimum wages, and that independent monitoring by non-governmental organizations is simply not feasible.

The vote, which has largely taken place by mail, is announced perfunctorily by a Disney spokesperson. She states that shareholders representing 101,585,799 shares -- eight percent of all Disney stock -- support the resolution. Shareholders representing 1,109,513,123 shares -- 85 percent percent of the stock -- are opposed. "I declare the resolution has not been adopted," says Eisner. He turns to the next item on the agenda, a proposal concerning the adoption of a shareholder rights plan. It is also soundly defeated.

At the meeting's conclusion, MacKerron lines up to shake Eisner's hand. He admits he is a "little disappointed," but says shareholders will continue pressing for change.

"What we try to do, even though it's a daunting task, is to appeal to the mainstream financial community on the whole idea of shareholder value, why the brand name needs to be protected. And no matter what their feelings about these issues are, they should recognize it as something that needs to be resolved." In the lobby, Disney staff are packing up annual reports and thick computer printouts listing shareholders' names. Mickey Mouse and his cohorts are nowhere to be seen. The show is over.