Chinese Economy - Wal-Mart Agrees to China Union, Govt. Targets Foreign Firms
November 25, 2004
Wal-Mart announced this week that it would allow branches of the ACFTU (All-China Federation of Trade Unions) in its Chinese stores if employees took the initiative to establish them. Chinese labor officials are hoping that Wal-Mart's departure from its no-union policy will help persuade other multinationals and private companies to follow suit.
In late October, the ACFTU, the official trade union of the Chinese Communist Party, warned that it would take legal action against foreign companies such as Wal-Mart, Dell, Eastman Kodak, and Samsung if they refused to set up union branches for their China operations. The threat came after the national legislature launched an investigation into foreign companies' compliance with labor laws. It found that some leading multinationals were resisting efforts to set up unions, with the aforementioned companies heading the list.
The drive to unionize is the ACFTU's latest attempt to make inroads into the ever-expanding private sector of the economy, and thereby enlarge its membership and political capital. Unlike past campaigns, this one appears more aggressive, and if enforced, could force foreign-invested companies to tolerate an arm of the Communist Party interfering in their China operations. The trade union federation has collaborated with local governments and company employees to compile a "black list" of foreign-invested companies that have been resistant to unionization.
The ACFTU is the only entity that is permitted to organize workers in China, and presently, it has around 123 million members. The ACFTU is mostly seen as a labor management mechanism of the Communist Party, which works to prevent conflict and protests.
Chinese law is unclear about whether foreign companies are required to allow unions. The ACFTU contends that union branches are required by a law, amended in 2001, which states that unions "shall be set up" in all companies. The statute in question does not specify the penalties for violating the law.