Toys are big business at this time of year. Supply chains prepare 12 months ahead of the day to get organised, but when it comes to CSR, many still need a lot of work, finds Adrienne Margolis

Christmas is coming and if the predictions prove correct, the toy industry is in for a prosperous festive season. Spending on toys in Europe has risen by 6 per cent in the first nine months of the year, and for 2010 as a whole, analysts are predicting sales at their best levels for eight years. Even hard-pressed US consumers are set to match last year’s spending.

The sums involved are huge. In 2009, the largest countries in Europe – France, the UK, Germany, Spain and Italy – spent €10.7 billion (£9.1 billion) on toys. The US market was worth $21.5 billion (£13.8 billion) that year. There is plenty of guidance on what parents should buy, with the likes of retailer Hamleys circulating wish lists.

Hessler agrees with many NGOs who point out that very little of the huge revenue from toy sales finds its way back to the manufacturers. “There is a problem with how profits are distributed,” according to Debby Chan, project officer at Students & Scholars Against Corporate Misbehaviour (SACOM), a Hong Kong-based non-governmental organisation (NGO). “It is always the brand that gets the lion’s share. Manufacturers work to low margins and there is a tendency to shift the blame to them when things go wrong.”

Two months ago, SACOM published a report on a supplier in Shenzhen and a manufacturer in Dongguan, which both supply big brands and are certified by the ICTI. The research claimed workers could be fined for being one minute late for work. Security guards were posted at toilet doors and workers were fined 100 yuan for using the toilet without permission. These problems are “just the tip of the iceberg”, SACOM says.

A year earlier SACOM reported on the conditions in two Hong Kong-operated factories in southern China. Both were manufacturing products for big toy brands when the research was carried out. These factories were also certified by the ICTI. Despite this, SACOM researchers, who produced the report with Stop Toying Around, a campaign for fair working conditions in toy production, found widespread excessive overtime (up to three times the limit under Chinese law), health and safety violations and deception in audit processes.

Chan urges toy brands not to trust audits in general. Among other problems, workers are often fed model answers when inspections are carried out. Professor Brown also urges caution: “These kinds of codes of conduct and monitoring regimes are limited in what they can achieve. There are ample opportunities to cheat on audits and these regimes rarely reach beyond tier one of the supply chain.”

According to SACOM, big brands argue that the manufacturers who directly employ the workers should ensure they adhere to Chinese laws and to industry codes of conduct. It claims the big toy brands often “cut and run”, deserting factories where violations of labour laws come to light.

But this does not absolve them of responsibility, SACOM argues. It believes the brands put pressure on manufacturers by demanding small quantities, short delivery times and low prices. “The buying practices of international brand companies must change to allow for real improvement in the conditions of toy workers in China,” SACOM says.

Many NGOs believe that the ICTI’s code of conduct needs boosting on several fronts. With financial support from the European Commission, five continental European NGOs have formed the Stop Toying Around consortium.

(This is the abridged version of the article. The full version of the article is originally issued here by Adrienne Margolis, or available here as a pdf file.)