A new union at the world"s largest retailer seeks “harmony” The world’s largest retailer saw the establishment of its first union in China last month, and according to local labor leaders the union will strive to improve harmony within the company.
Ke Yunlong, the 29-year-old college graduate who has been named leader of the Jinjiang city-based Wal-Mart union, said “my major goals in the future are to build communication channels between company management and employees and also build harmonious relationships between capital and labor,” according to Worker’s Daily.
“The trade union will be devoted to safeguarding the legal rights and interests of the employees and the healthy development of the company,” Zhang Huiping, Vice Chairman of Quanzhou City Federation of Trade Unions, told Beijing Review. Quanzhou City administers Jinjiang, the smaller city in which the Wal-Mart Stores Inc. union was founded.
Zhang, who said he couldn’t comment on the impact of the trade union on Wal-Mart’s development, added, “The trade union wouldn’t challenge the authority of company management.”
Unions in China have long been seen as serving a different function from their Western counterparts. While in the West, unions typically have fought against management on behalf of workers to increase salaries and benefits, Chinese labor organizations under the umbrella of the All China Federation of Trade Unions (ACFTU) have sought to build a cordial relationship between management and employees for the general benefits of both sides.
It appears the same will be true with the new union at Wal-Mart, especially since the union--according to Zhang--was founded under the direction of the ACFTU. Still, the concept of a Wal-Mart union in China could be keeping company managers up at night wondering how this will affect their bottom line.
According to Worker’s Daily, on July 21, Ke Yunlong and other Wal-Mart employees applied to set up the trade union in the company. This apparently was a high-profile application among area trade union leaders, who then assisted in guiding the would-be union toward successful founding on July 29. The union currently has 30 members.
Despite assurances from labor leadership that the union would seek to promote good relations with Wal-Mart, the company appears slightly--if not more so--on edge.
It’s well known that Wal-Mart has ardently resisted union membership in the United States, although Beth Keck, the company’s Director of International Corporate Affairs, said some international employees are union members outside of China.
The approval of the Wal-Mart union also raised questions for Keck.
“We’ve learned that there were very small numbers of associates who work in a store in Fujian Province who have been recruited to be members of the China trade union organization,” Keck said. “We have not been notified, or received confirmation of this. We must say that the reports that we received about this activity--they raised questions about the process that was used…for recruiting members.”
Continued Keck: “We think there are questions that should be asked about the process because it’s a new process…and we will be inclined to contact the appropriate authorities to learn more about the procedures and clarify that process.”
Keck said Wal-Mart would take a “wait-and-see” approach to analyzing the new union.
Such an approach will likely focus on whether the company can continue to operate profitably, which it has been struggling to do in other countries of late.
Wal-Mart has been cutting entire stores in some countries from its business portfolio because of unsatisfactory results. In May, the company announced it would scrap its South Korean business, selling it for $882 million.
“It became increasingly clear that in South Korea’s current environment it would be difficult for us to reach the scale we desired,” said Wal-Mart Vice Chairman Mike Duke.
Then late last month, the company announced it would scrap its German business, incurring a pretax loss of about $1 billion for the second quarter of fiscal year 2007.
“It has become increasingly clear that in Germany’s business environment it would be difficult for us to obtain the scale and results we desire,” said Duke with more than a hint of deja-vu.
Certainly, to say Wal-Mart is struggling financially would provoke much laughter. In the company’s fiscal year 2006, earnings rose 9.4 percent to a record $11.2 billion. Sales also increased 9.5 percent to $312.4 billion.
Further, Wal-Mart’s China operations are far different from those that took place in Germany and South Korea.
In 2004, Wal-Mart directly purchased $9 billion in goods from China, Keck said. It purchased another $9 billion indirectly from intermediate merchants, she said. For U.S. stores, it’s the most important source of goods outside the United States.
And just last month, Wal-Mart opened three new stores in China, bringing its total to 59 outlets including Supercenters, Sam’s Clubs, and Neighborhood Markets. Wal-Mart operates in 29 Chinese cities with over 30,000 associates.
Then again, with that many employees--and now presumably potential union members--Wal-Mart is understandably wary about the new “harmony.”
Growing organization
But the union is by no means a new experiment in China, and therefore, not something that will likely make Wal-Mart a guinea pig.
According to Chinese official media’s reporting of ACFTU figures, 39,350 of 151,783 foreign-invested enterprises have founded trade unions, accounting for 25.9 percent. Membership in these unions has reached 4.29 million, the figures show.
Since November 2000, media reports urging foreign-invested enterprises to found trade unions topped the ACFTU work agenda. It was in that month that the ACFTU held a high-profile meeting in Ningbo, east China’s Zhejiang Province, where private companies are popular. At the meeting, union leadership realized that membership was in decline as many employees had quit state companies and organizations, moving to foreign-invested and private companies which at the time had little union representation.
Soon enough, Wal-Mart became a key “target” of the ACFTU because, for one, it repeatedly resisted unions at its China outlets, media reported.
But with so many stores across China, will Wal-Mart be subject to further unionizing efforts?
Guo Wencai, Director of ACFTU’s Department of Grassroots Organizations, says yes, according to a report by People’s Daily.
A Wal-Mart spokesman in Beijing, as of press time, was unclear about further union developments.
But earlier, Keck outlined what she said is the company’s view toward unionization.
“Our view is that whether to be a union member or not should be a free choice for our associates and we will always respect their views and their wishes on this,” Keck said.
“Just as we follow the laws concerning labor relations in the other countries, we follow the laws concerning labor relations in every country where we operate and we do that in China as well,” Keck said.
Judging by past experience, Keck suggested relations with union employees would be good.
“Outside of China we’ve had very cordial relationships with trade unions in countries where we operate and some of our associates there have been union members for many, many years,” Keck said. “But we have never had any relations with Chinese trade unions.”