Wal-Mart to Allow Unions in China

By Allen T. Cheng and Lee Spears
Bloomberg News
Thursday, August 10, 2006

BEIJING, Aug. 9 -- Wal-Mart Stores Inc., the world's largest retailer, said it will allow employee unions in China, breaking from its long-standing practice of resisting organizing efforts at its stores.

Wal-Mart, which employs 23,000 people in China, will let the All-China Federation of Trade Unions set up branches in all its outlets, said Jonathan Dong, a company spokesman.

The retailer has come under fire from unions, including the AFL-CIO, which says the Bentonville, Ark., company contributes to U.S. job losses and human rights violations when it does business in China. Wal-Mart's U.S. employees are not unionized.

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?"

Wal-Mart has 60 outlets in China and plans to open as many as 20 more stores this year. China's average annual economic growth of 9.1 percent over the past decade has raised household incomes, making it an attractive market.

"My suspicion is they're doing this because it's the only way that they can maintain their plan in China," said Richard W. Hurd, a professor of industrial and labor relations at Cornell University in Ithaca, N.Y. "Part of getting along with the government in China is accepting government-sponsored unions."

Establishment of unions at Wal-Mart may put pressure on other foreign companies in the world's fastest-growing major economy to let employees organize. About 39,000 out of more than 100,000 overseas companies in China have set up unions, according to a report last month by the official New China news agency.

Wal-Mart, which has allowed only "a few" unions into its stores elsewhere around the world, "isn't afraid of strikes in China," Dong said. "China's unions are different from unions elsewhere. The goal of China's unions is to build a harmonious society."

Since July 29, unions have formed at five Wal-Mart stores in China, Xinhua said. The stores include one in Shenzhen's Dafen district, where 27 employees joined. At the company's Fujian province branch, 30 of Wal-Mart's 500 employees joined the union.

Attempts to organize at almost 5,000 Wal-Marts in North America have mostly failed. Workers at one store in Quebec have organized. Last year, the company closed a store in Jonquiere, Quebec, after workers there voted to unionize. The company said the store was not profitable. In 2000, a store in Jacksonville, Tex., switched to prepackaged meat after butchers voted to organize.

Other companies, including DaimlerChrysler AG's Mercedes-Benz unit, have no unions in the United States while permitting them elsewhere. Allowing unions in Chinese stores probably will not make it easier for labor to organize at Wal-Mart locations in the United States, Hurd said.

"Among the advanced industrialized countries, the policies in the United States are the least supportive for collective bargaining and unions," he said.

This week, Wal-Mart said it would raise starting wages at almost one-third of its U.S. stores by 6 percent and place a cap on the maximum that hourly employees could earn in each job category.

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