FIFA recently suspended the Shanghai firm's contract over accusations that its employees worked in sweatshop conditions.
Global Brands Group (GBG), the licensee for 2010 World Cup merchandise, withdrew its contract from Shanghai Fashion Plastic Products (SFPPC) earlier this week.
The firm said an audit of the factory found it failed to meet standards required by employing under-age workers in poor conditions and paying minimal wages.
GBG said in a statement: "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."
But, the BBC has reported that 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.
The contract to make the mascot was won by an entrepreneur and member of South Africa's ruling party, who then outsourced the work to China, resulting in criticism from Cosatu, South Africa's largest trade union.