A Chinese company has denied exploiting workers making the mascot for the 2010 football World Cup in South Africa.
Fifa, football's world governing body, has suspended the Shanghai firm's contract over accusations its employees worked in sweatshop conditions.
The work had been outsourced by a member of South Africa's ruling ANC party, who had won the contract.
Unions there criticised the decision to move production to China, saying the jobs should have stayed at home.
Global Brands Group (GBG), the licensee for 2010 World Cup merchandise, said on Tuesday it was withdrawing its contract from Shanghai Fashion Plastic Products (SFPPC).
GBG said an audit of the company found it failed to meet the standards required of a supplier by allegedly employing under-age workers in poor conditions and paying minimal wages.
"The approval for this factory to manufacture these figurines has been temporarily suspended, affording them the opportunity to put in place corrective actions and measures," GBG said in a statement.
But a spokeswoman for SFPPC told the AFP news agency: "Considering China's actual conditions, the environment in our factory, if not the best, is very good indeed."
The accusations were "completely made up" and the company was a victim of South African politicking, SFPPC told AFP.
"It was only because of the high unemployment now in South Africa. Some of their politicians used our working conditions as an excuse," said the spokeswoman, who asked not to be named.
The contract to make the leotard-clad leopard mascot, named Zakumi, was won by an entrepreneur and member of South Africa's ruling party.
He then outsourced the work to China, provoking an angry reaction from Cosatu, South Africa's largest trade union.
"It is outrageous that a public representative of the ANC, which is committed to policies to create decent work, can take such a callous decision which has deprived South African workers of employment," it said.
"Cosatu is adamant that the work should never have been outsourced to China in the first place," it added.
The BBC's South East Asia analyst, Andre Vornic, says the dispute has highlighted not only the extent to which China dominates the global production of low-tech merchandise, but, more specifically, the growing anxiety at China's expansion into African markets.