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Wal-Mart Bows Down to China
After a long fight the American giant allows trade unions in all 60 of its Chinese supermarkets
Xu Zhiqiang (xuzhiqiang)     Print Article 
Published 2006-08-14 18:42 (KST)   
"Have you joined the trade union in this Wal-Mart supercenter?" I asked the young girl sitting at the cash desk as she processed my shopping yesterday.

"No, I haven't heard of it." She smiles.

"The news is on the frontpage of a lot of newspapers." I looked at her with surprise.

"Really? I didn't read the newspaper. There is no trade union in this supercenter." It seems she does not care about it very much.

"But I will check the news." She says just before I leave, handing me the invoice and smiling again.

We were standing in an ordinary Wal-Mart supercenter in south China's Shenzhen city, which is also the home of Wal-Mart China headquarters.

A Wal-Mart supercenter in Shenzhen, China.
©2006 Xu Zhiqiang
The young cashier is one of the 31,000 employees in the 60 Wal-Mart supermarkets now open in China. Most of the supermarkets are located in eastern provinces and big cities but most employees are from the hinterland.

In the past two weeks, since the first trade union for Wal-Mart employees was established in southeast Quanzhou city on July 29, over 10 more groups have been founded. At the time of writing there are four in Shenzhen, three in Fuzhou, one in Nanjing and one in Shenyang. Just yesterday, four new trade unions emerged.

According to the plan of the All-China Federation of Trade Unions (ACFTU), every Wal-Mart supermarket in China will have its own trade union. At such a rate perhaps by next month the young girl cashier will also be a union member.


To persuade the world's biggest and toughest retailer to recognize and accept the trade unions, which it opposes violently, has been hard work. The ACFTU and Wal-Mart have been dancing around each other ever since the supermarket entered into China through a joint venture in Aug. 1996.

"It is a hard won victory." Said a senior ACFTU official.

Actually it is. Unlike other foreign companies who often follow ACFTU's suggestions, Wal-Mart doggedly insists on its "no trade union" tradition.

In 2004, the ACFTU pushed hard to establish unions in foreign firms and Wal-Mart was listed as the biggest target. ACFTU warned Wal-Mart and even talked about taking proceedings against it, but still Wal-Mart didn't bow down.

Wal-Mart alleges that it will comply with China's Trade Union Law and will not oppose trade unions if its employees voluntarily propose the idea. Actually, many workers reveal that they are "advised" by managers not to participate in and think of such activities.

This year, ACFTU is determined to start another wave of unionizing the foreign companies. After learning from past experience, special countermeasures are necessary.

The establishment ceremonies of the first four trade unions in Quanzhou, Shenzhen and Nanjing were carried out late at night without managers from Wal-Mart on the scene. Before the ceremonies, the corresponding local government trade unions had made detailed preparations.

These sudden moves were not expected by Wal-Mart. At first, Wal-Mart said it hadn't been formally notified. It later agreed to negotiate with the ACFTU on the condition that no media should be present. Last weekend, Wal-Mart made the final decision to allow trade unions in all 60 of its supermarkets.

In Nanjing, the officials of the local government trade union exchanged mobile phone numbers with Wal-Mart managers for the first time.

To some extent, Wal-Mart's rapid turn about has surprised the media and the Chinese public. Many are curious about the thinking behind Wal-Mart's decision.

The turbulent market changes of the last two years may be the answer.

On the one hand, on July 28, Wal-Mart sold its 85 stores in Germany to METRO AG after selling its 16 stores in South Korea in May. While on the other hand, Wal-Mart is accelerating its single venture store openings in China after the government lifted regulatory barriers to foreign retailers last year.

Chief Executive Lee Scott once said that China is the only country where Wal-Mart, of Bentonville, Arkansas, can feasibly duplicate the size and success it has had in the U.S.

According to Wal-Mart's figures, its total procurement in China surpassed US$18 billion in 2004. Analysts point out the annual procurement number will be between US$20 billion and US$25 billion in the next 5 years.

At the same time, Wal-Mart's competitors, such as METRO, Carrefour SA and Trust-Mart are expanding rapidly and all of them have established trade unions.

What is more, Wal-Mart knows the trade unions in China are more symbolic and less substantial than their South Korean and American counterparts. For its tens of thousands of employees, belonging to the trade unions does not necessarily mean higher labor standards or greater control. For the transnational companies allowing trade unions is a gesture to show that they obey China's government and laws.

That means that if Wal-Mart had continued to be stubborn about this issue it would have lost its credibility with the Chinese government and created opportunities for its competitors to grasp.
©2006 OhmyNews
Other articles by reporter Xu Zhiqiang

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