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Forget jolly elves. Think sweatshops.

Many of the cuddly Disney stuffed animals, cute clothes and fun toys that will appear under Christmas trees in Canada this year are made in Chinese factory complexes where underpaid and overworked labourers live and toil in crowded and unsafe conditions, a Hong Kong church group says.

The Walt Disney Co. says that it can neither verify nor deny the allegations of the Christian Industrial Committee. But if the claims prove true, the company said, it will rectify the situation. Disney has an international code of fair-labour practices it expects all its manufacturers to follow.

Disney spokesman Ken Green said the company is stymied by the allegations because the church committee refuses to identify the Chinese factories in question.

There's the rub. The committee won't identify the sweatshops because it doesn't want Disney to cancel contracts and put the factory hands -- most of them young women from poor peasant families -- out of work.

"We don't want Disney to wash its hands, to cut and run," said May Wong, a spokeswoman for the Hong Kong group.

Mr. Green said the company takes its obligations to workers making Disney products seriously, and enforces its code of conduct vigorously when it learns of violations. Disney officials and third-party auditors monitor compliance with the code, which says ethical and responsible conduct and respect for human rights are guiding principles in all company operations, he said.

But there are thousands of licenced manufacturers of Disney products in China and throughout Asia.

Mr. Green said Disney officials have met with the Christian Industrial Committee in the past and thought they had an agreement that the group would provide the company with the details of any new violations of the company's code of conduct for licencees.

"Suddenly this [new]report appeared. We were very disappointed," he said.

The committee report says its undercover investigators discovered that sweatshop conditions prevail at 12 Disney-contract factories in the province of Guangdong in southern China where toys, clothing and stuffed toys destined for Canada and the United States are made.

The investigators, who interviewed five to 15 workers at each of the plants, were told that some people are forced to work up to 16 hours a day, seven days a week, for as little as $90 a month to meet peak demand for Christmas holiday products. Some have to work overnight shifts on overtime and were then expected to work their regular day shifts.

Many of the factory workers, typically young women from rural areas, complained of hazardous conditions, bad food and dangerously overcrowded dormitories. In one case, 21 women share a single room with triple-decker bunk beds, the report said.

Workers said they could not refuse overtime. Many workers make piece rates and overtime is not fully compensated.

No social-security benefits are provided, a violation of Chinese labour laws.

Workers said they have never heard of the Disney workplace code. Others said they had been intimidated to falsify work records or answer questions "properly" according to a script prepared by management if a Disney representative showed up to monitor compliance with the company code.

The church committee does not call for a boycott of Disney's Chinese-made products.

"That would hurt the workers and we don't want that," Ms. Wong said.

But the committee said Disney needs to do more to promote workers'-rights-training in the factories and to monitor compliance with its code.

Among its many provisions, the Disney code forbids child labour, stipulates that workplaces and company housing must be safe and sanitary, sets a maximum work week of 48 hours, plus 12 hours of paid overtime, and says manufacturers must respect the right of workers to organize and bargain collectively.

Forming unions that can effectively negotiate wages and working conditions is still a big problem in China, says Errol Mendes, an expert on the Chinese situation and the director of the Human Rights Research and Education Centre at the University of Ottawa.