Wal-Mart opens up to unions in China

Retailer's concessions abroad come under fire from U.S. labor groups


SHANGHAI, China --After years of fighting unionization efforts, Wal-Mart Stores Inc., the world's largest retailer, said yesterday that it would work closely with Chinese officials to establish labor unions at all its outlets in China.

Wal-Mart said it would form an alliance with the government-backed All-China Federation of Trade Unions because it wanted to create "an effective and harmonious way of facilitating the establishment of grass-roots unions" at its stores.

The announcement came less than two weeks after Wal-Mart employees established a branch of the official union in Fujian province, the first union at a Wal-Mart in China. Unions have since been formed at four other of the company's stores in China, federation officials indicated.

Wal-Mart's decision has been something of a surprise because while the company signaled earlier that it would not do anything to stop unions from being formed at its Chinese stores, it never suggested that it would actively support unionization efforts.

Its acquiescence comes after years of pressure from the All-China Federation of Trade Unions, which has been pushing large companies with foreign investments to allow unionization, something required under Chinese law.

Forming a union at a Wal-Mart store, many of which have had labor disputes, has proved difficult.

In the United States, unions affiliated with the AFL-CIO have tried and failed to organize at Wal-Mart stores. But exactly what it means to have a unionized Wal-Mart store in China is unclear because unions in this country do not have a history of bargaining power.

Wal-Mart executives see China as a potentially huge market and are determined to expand rapidly. The company already has about 60 Chinese retail outlets and 30,000 employees, and China is the primary source for millions of items that Wal-Mart sells around the world.

The company initially signaled its approval of unions in China late in 2004, when it said that if workers moved to unionize, it would not stop them.

Wal-Mart statement

But yesterday, after meeting with union officials, Wal-Mart issued a statement that seemed not just conciliatory but carried a strong echo of the government's campaign promising to build a "harmonious society."

In a brief statement titled, "Wal-Mart Supports China's Effort to Build a Harmonious Society," the company said that it would work with the Chinese trade union federation because the two groups had the "mutual aim" to establish grass-roots unions.

Exactly how the unions are being formed and who has control of them is unclear.

But some experts doubt that the unions now being formed will engage in collective bargaining with the company.

Liu Kaiming, director of a labor rights organization in Shenzhen, a city in southern China, applauded Wal-Mart's announcement yesterday but questioned whether it would lead to significant change.

"I don't see any bargaining power in the unions in China," Liu said. "The function of Chinese unions is to urge workers to participate in the work, to care about their welfare and to organize recreational activities for them."

Independent unions are banned in China. But the All-China Federation of Trade Unions, the government-controlled labor umbrella group, issued a statement earlier this week suggesting that it would be able to contend with Wal-Mart, one of the world's biggest companies.

"If Wal-Mart union members are subjected to unfair treatment at work," it said, "unions at the national, provincial, city and district level will strive all out to protect employees' legitimate rights."

The five Wal-Mart unions are relatively small, with about 25 to 30 members each. Three of the Wal-Mart unions are in Shenzhen, with others in the eastern city of Nanjing and in Quanzhou in the southeast.

Labor criticism

The huge retailer has come under fire from labor organizations such as the AFL-CIO in the United States. Trade union critics contend that Wal-Mart contributes to American job losses and human rights violations when it does business in China.

By allowing unions into its Chinese stores, "Wal-Mart's applying a complete double standard here," said Nu Wexler, a spokesman for Wal-Mart Watch, a coalition of labor, religious, community and environmental groups that wants the company to boost wages and benefits.

"Why are they comfortable with it in one country and fighting it in another?"

Bloomberg News contributed to this article.

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