Wal-Mart Gives in to China’s Union Federation

Wal-Mart, the world's largest retailer, said on Tuesday it would agree to establish officially-sanctioned unions in its 40-odd Chinese stores, but only if its workers requested that it form one.

Wal-Mart, which has long battled to keep unions out of its stores in the US and around the world, has been under pressure from the All China Federation of Trade Unions, an official organisation, to allow it to establish branches in its stores.

Wal-Mart said in a statement that the company was in full compliance with Chinese law "which states that establishing a union is a voluntary action of associates." Wal-Mart refers to its workers as "associates."

"Currently there are no unions in Wal-Mart China because associates have not requested that one be formed," the statement said. "Should associates request the formation of a union, Wal-Mart China would respect their wishes and honour its obligation under China’s Trade Union Law."

The Chinese union federation claims to have 123m members, a result of the monopoly the government has allowed in the representation of workers' interests.

Independent unions are banned in China, and the federation unions have traditionally been an instrument for the communist party to control workers, not a vehicle for agitation and strikes, which are almost never allowed.

The federation says all companies, foreign and local, are required to establish a union, using funds from a 2 per cent levy on wages.

In an interview given during the launch of their campaign against Wal-Mart last year, a federation official said they had often tried to talk to the US company but had been met with excuses, "like the boss is not in, and so on."

A federation official, when informed of Wal-Mart statement on Tuesday, said he hoped that other foreign companies would follow suit.

In practice, however, Wal-Mart will not have to form a union if it can say that none of its workers have asked for one.

In the statement, Wal-Mart said it encouraged its workers to have "direct communications with the company."

"Issues of concern are taken seriously by the company and followed up with prompt action," the company said.

Wal-Mart has ambitious expansion plans for its stores in China, where it lags its global rival, France's Carrefour.

Wal-Mart also uses China as a major sourcing center for its US stores, buying about US$15bn worth of goods last year from the mainland.

At one stage, about two years ago, Wal-Mart purchases from China were worth 10 per cent of the country's total exports to the US, according to a State Department briefing paper.