China Labor Watch said the manufacturers - which served a handful of global players, including Walt Disney Co, Bandai and Hasbro Inc - paid "little heed to the most basic standards of the country."
"Wages are low, benefits are nonexistent, work environments are dangerous and living conditions are humiliating," it said.
The report comes as Chinese exports are under growing scrutiny abroad over safety concerns.
Last week Mattel Inc recalled millions of toys, including 436,000 die-cast toy cars from its 'Cars' line, because they may contain excessive amounts of lead.
China has also been hauled over the coals for the safety of food, drugs and other exports ranging from tyres to toothpaste. Officials have been quick to say that the vast majority of the country's exports meet standards.
"Whether it's high prices for construction equipment, gasoline shortages and high prices, what you continue to hear is China is the reason for it because of their burgeoning growth," said Pam Ellen, an assistant marketing professor at Georgia State's Robinson College of Business.
"It's likely to create a consumer backlash."
The report concluded that "short-sighted policies" drive major companies to "turn a blind eye to safety - and to ignore the labour conditions in their supplier factories as well."
"Instead of concentrating on improving product safety and workers' lives, companies spend their energy creating beautiful pamphlets on social responsibility, disputing critical reports and shifting blame," it said. - © 2007 ABC Australia
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