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Organising China's Wal-Mart

Building the union, Chinese style

Chris White

At the high-rise Beijing headquarters of the All-China Federation of Trade Unions (ACFTU) on 30 January 2007, I asked Ms Guo Chen from their Grass-Roots Organization and Capacity Building Department to go through their steps of unionising Wal-Mart.1 Why? The retailer Wal-Mart is the largest company in the world and actively anti-union. The China union breakthrough is a significant achievement. The ACFTU reputation was that it unionised top-down with management approval. But arguably Wal-Mart was different, bottom up. Does this herald a shift from the unique Chinese servicing model to an organising model of unionism?2 Can the ACFTU be an effective collective bargaining voice for Chinese workers? How do Australian labour movement activists engage with the ACFTU? The organising

First, what happened with Wal-Mart? I asked about the organising steps. Ms Guo Chen in the Department organising in non-public enterprises, with a focus on western corporations, made her report. This is my version of what she said. She knew the process, as she was involved since Wal-Mart China set up in 1996.

For years, the regional ACFTU's reported back to central Beijing that Wal-Mart managers opposed unions. Local union organisers were concerned about how local Wal-Mart management always rebuffed them, repeating, 'our workers do not want to join. We are reluctant to have our Chinese workers in the union.' Other multi-national corporations used Wal-Mart line. The 2003 ACFTU Congress resolved to set up unions among Wal-Mart workers. In 2004, unionising foreign multi-nationals was publicly debated. A National People's Congress (NPC) committee in a nationwide inspection reported on the enforcement of China's Trade Union Law. There is a legal right for 25 workers to start a local union committee in an enterprise, and join as part of the ACFTU. Since then, the ACFTU at the national and local level held meetings to unionise Wal-Mart. In 2005, again the request was made to each regional city union organisation and to local trade union cadres in branches to talk to the local management in Wal-Mart stores and ask them to allow their workers to be in the union. This was done, but again rebuffs. In Nanjing the Trade Union Council was rebuffed 28 times. Wal-Mart China Head Office is in Shenzhen City, Guangdong Province, and was targeted, but the management did not change. In the consultation process, all the store heads rejected the ACFTU approach, saying they were under instructions from Head Office China. Their workers did not want to join. The ACFTU's usual top-down attempts did not succeed.

In 2005, the ACFTU strategy turned to the workers, strengthening their resolve into 2006. Normally the ACFTU did not organise from the bottom up, as happens elsewhere where unions face hostile management. But elsewhere, unions had not succeeded in Wal-Mart. By 2006, Wal-Mart was expanding its 60 chain stores in 30 cities with more workers employed. Wal-Mart's headquarters was rebuffing the ACFTU headquarters. An article of concern came to the attention of the ACFTU in the Chinese business news: 'Is Wal-Mart or Chinese ACFTU the more powerful?' The ACFTU leadership put pressure on the Grass Roots Organising Department to focus again on Wal-Mart. There were debates inside on resourcing. In July 2006, the ACFTU Vice Chairman, Xu Deming, gathered together the trade union heads and all of the organisers for a large meeting that, after debate, resolved to: 1. mobilise all workers in Wal-Mart into the union; 2. give planning attention to a public campaign in the mass media, TV and extensive leafleting and pamphlets etc; 3. increase the investment materially and manpower for unionisation; 4. enforce the legal provision that any management cannot prevent workers from joining and hindering or limiting is illegal - business investing in China must abide by local Chinese laws; 5. increase investment in dealing with those workers who have been punished unfairly or mistreated by management; improve low wages and conditions.

The local union cadres then went out to do this with various means. In front of Wal-Mart exits, organisers were active handing out of flyers and leaflets urging joining. Union pamphlets showed the benefits of joining with special offers for a range of services. Local cadres met workers in restaurants and in their dormitories and homes at night. Reports came in that young women were too scared to join, as management would discriminate against them. Trade union cadres complained to management pointing out the law allowing workers to join. Management said their workers did not want to join. The union locally discussed how to go forward. Wal-Mart's rude and arrogant attitude was put in the newspapers. Journalists reported the contest, leading to public outcry.


Then on 29 July 2006, the first trade union committee in the world was formed in Wal-Mart's Jinjiang Store in Quanzhou City, China's coastal province of Fujian. This was in secret, at night to include night and day shifts. Executive members of the union committee elected, with Ke Yunlong, a young 29 year old meat-packer, as the leader and chair and thumbprints to record their union oath. Their names were kept secret at the local level so as to not give information to management. With the first 30 joining, the feeling was that it was historic. There was celebration, the singing of the Internationale, and photos and speeches from Ke Yunlong that it was 'the most meaningful achievement of our lives' (more detail in Anita Chan's account). Vice Chairman Xu Deming attended.

After 29 July, the chairpersons of the local and city level unions all received a phone call to increase their organising and to put the gains in the media. Two other stores were unionised the next day. The workers of Wal-Mart Jinhu Shop in Shenzhen were to hold their first meeting on August 4, but decided to move up the date in spite of opposition from the management. The 31 workers of Wal-Mart's Shop in Nanjing set up a union on 5 August, despite management trying to ban any union involvement. ACFTU at the higher level continued to assist Wal-Mart's Jinjiang Shop. Union leaders worked seven days and nights in a row giving advice in Shandong Province. Legal advisors were used to help dispel the misgivings of those who feared to join the union. The union would defend their rights. There are more stories of this process.

When Wal-Mart found out with the public announcement of the trade union committees, it first responded adversely. Various tactics were used to intimidate workers not to join. The company alleged in the business press its workers had not joined voluntarily. But after an argument, management started to say locally that, if 25 decided to join, then they would recognise the law. Many workers were saying they had a long aspiration to join, but were worried about being punished or dismissed, and worried to raise their demands. Other union local committees emerged in stores. Unionising Wal-Mart was a national and then international story.

On the 5th of August, Vice President Xu Deming personally had a meeting in Beijing to ensure all city and regional stores were in forward drives. After that, five stores got union committees. The ACFTU wanted management to compromise and accept all stores would be organised. Then on 11 August, Wal-Mart's China head came to the ACFTU headquarters. At this official meeting Wal-Mart's purpose was to have management play a greater role. One point they put up was local management could be the chair of the union committee. This was rejected. Wal-Mart then said that it would be better if they organised the trade union committee elections, rather than the union. The ACFTU said they would survey the union members, who all said the union should play the bigger role. Union policy is that candidates should all come from the workers and not be put up by management. Back in the stores, this was debated. By this time, workers were insisting that they had to elect the union committee. They did not want 'an employers' union'. Wal-Mart had to back off selecting the candidates, but some middle management levels are apparently eligible. The ACFTU says the elected committees are now fair.

On 16 August in Shenzhen, ACFTU officials led by Vice Chairman Xu Deming, after much negotiation with Wal-Mart, made a five-point agreement on the procedures for setting up trade union committees as operational. Workers are to seek guidance from the union, membership is voluntary and open to all, and democratic elections must be carried out for the chair of trade union committees in each store. A compromise is that the preparatory committees have management, district union officials and employees, but management is to be only 20 per cent of committee members.

This was the report. Any questions?

70 per cent target in 2007

What happenned after this? By October 2006, the ACFTU was in 60 chain stores in 30 cities and recruited 6000 members. Wal-mart has lost.3 The ACFTU admit in most regions Wal-Mart management is now co-operative. Shanghai store has 75 per cent in the union. More than a half of Wal-Mart workers were unionised by December 2006. The trade union committees in some stores have increased wages. For example, in Fuzhou, capital of Fujian Province, the union committee succeeded in persuading the management to raise part-time workers' wages to 6 yuan ($A1) per hour, above the lowest wage standard, 5.5 yuan. Stores agreed to abolish the probation period for part-time workers. The union in Shenyang, capital of Liaoning Province, successfully negotiated the right for one day off a week. The union assists in disputes. Collective agreements are being signed. Wal-Mart now says, 'we are abiding by the law allowing workers to join. Chinese unions are different from unions in the west. The ACFTU has made it clear that its goal is to work with the employers, not promote confrontation.' Critics say the arrangement is still top-down. The ACFTU insists it sticks to the principle of relying on workers to form unions and that it is a departure from past organising, as in their optimistic editorial on the ACFTU website of 16 August 2006.

Ms Guo Chen said this organising experience is being driven into all foreign enterprises not unionised, with the target of 70 per cent unionised by the end of 2007 (China Daily 5 January 2007). I saw news reports on their wins.4 It sounds like 'normal' organising. ACFTU Congress resolution prioritised the strategy to unionise the foreign sector, so target the biggest company and others would follow. Interesting times indeed.

Wal-Mart is big and anti-union

But why is this significant? How should Australian activists engage? First, as Wal-Mart is not in Australia, here are some basics. Wal-Mart is the biggest company in the world, has 1.3 million employees, sells annually more than the GNP of most countries, is the biggest employer in the US, in 2007 it had opened 70 super centres in China. Some 80 per cent of the corporation's 6000 supplier factories are in China, meaning many American manufacturers have closed. Chinese suppliers are screwed down on price, so they exploit their Chinese workers.

Worldwide, Wal-Mart trumpets its low prices. Each year, 7.2 billion people shop at Wal-Mart. One part of its strategy is anti-unionism. 'No union at all' is its practice, which it proved by closing a Canadian store rather than negotiate a collective agreement. It fights legal battles on underpayments. The management handbook: 'Staying union free is a full time commitment. The commitment to stay union free must exist at all levels of the management - from the Chairperson of the Board down to the front line manager ... The time involved is 365 days per year.' Wal-Mart's deeply paternalistic and military style of HRM is successful. Its low price strategy of pressing its suppliers relies on union-busting, 'crushing labor'.5 On 22 March 2004, China Newsweek reported 'The Dark Side of Wal-Mart's Low Prices: Suppliers Seriously Violate Labour Law.'6 The NGO report on Wal-Mart in China detail lower wages, longer hours and the poorest of conditions, huge profits made in large sweatshops.7 Wal-Mart has since said it does audits of these suppliers complying with labour law. But these audits are known as not effectively independent from Wal-Mart management, nor from local government officials. The ACFTU pushes for greater compliance in 2007 against companies from the labour administrations.

ACFTU servicing

Second, the ACFTU is not the same as Western unions. It is indeed a great servicing organisation. I stayed in Beijing at 'The People's Palace', one of its four star hotels, next to its multi-storied headquarters. It has 70 per cent membership, 111 million members. This has been declining as state owned enterprises shut or are privatised, and with anti-unionism in the large private sector. ACFTU past practice was principally services, such as organising health insurance and social security benefits in state-owned enterprises, senior citizen homes, assisting workers to housing, canteens, medical centres, kindergartens and public baths. Some 80 per cent of union members in a poll in private companies on what it did well put cultural events, cinema tickets at the top and only 8 per cent that the union fights for workers' workplace wages and conditions. Is this servicing being turned around to organising?

The ACFTU says it does fight for workers. I received their priorities in 'The Blue Paper on the Role of Chinese Trade Unions in Safeguarding the Legitimate Rights and Interests of Workers (2005)'.

The ACFTU supports the government, which has strengths such as consultation in labour law changes. Their main responsibility is for economic development in line with Party policy. In all the enterprises, the union supports production and economic efficiency; indeed, in some enterprises the union head is also at the top of management. Finance for the union is guaranteed, as the enterprise is required by law to submit 2 per cent financial assistance. There are union participatory rights, particularly in state owned enterprises and increasingly in the private sector. In 2001, new consultative union rights were included on personnel issues in private and overseas companies. But although there are 'employee councils and assemblies', and rights for the union to conclude collective agreements, these collective agreements are not extensive, only in 22 per cent of the private sector. The ACFTU is not yet in a collective bargaining role to improve wages and conditions as in the West. But it has to respond to the increasing demands of its members.

The migrant worker problem

I asked about the exploitation of the migrant workers. They ACFTU has a campaign on this issue - 'migrant workers to turn to unions when they find themselves in difficulty.' The ACFTU will campaign to enforce new Contract Employment amendments to be passed by the NPC in May that will assist migrant workers.8 The ACFTU is starting up 866 new legal aid centres to the existing 2,900. The ACFTU proposes new arbitration processes to assist the grievances of migrant workers. A big problem is that millions of these migrant workers flooding into the cities are not registered for benefits and the ACFTU wants this long-standing disadvantage against rural workers to be removed, so all have the health and social insurance entitlements as city citizens. Already the union is linking rural workers from the province they leave to the union in the coastal cities and aims for 10 million new members by the end of 20007. Organising migrant workers into the union is as important a change as Wal-Mart.

I asked about the appalling safety record, with many deaths in mines reported and major OHS problems for workers. In Harbin, where I saw their magnificent Ice Festival, a huge up-stream chemical plant with cancerous liquids spilled into the river system, with major health problems for years. In the Blue Paper, there was a campaign on these questions and the Ministry was improving compliance. Collective bargaining?

I said their campaign for more trade union rights in collective bargaining was most interesting.When the Emplyment Contracts Law goes through this year, there will be more union consultation rights. Also, the ACFTU is pushing for a separate chapter on collective bargaining in the labour code next year as a priority. Tripartite regulations will be first drawn up governing collective bargaining. This struck me as a significant development - but tripartism the Chinese way. The ACFTU is not in favour of the right to protect workers enagaged in bargaining over their economic and social interests. They see their task as more consultation, negotiation and the prevention of disputes.

Wildcat strikes and social workplace disturbances, public protests - for example, against unpaid wages - are on the increase and not organised by the union, but where the union has to settle the dispute with a return to work. 'Labour disputes threaten stability' headlined the China Daily on 30 January 2007, the morning I met the ACFTU. The ACFTU uses the reality of escalating unofficial strikes over grievances as one reason these new Contract Employment laws have to be passed by the NPC; otherwise China's reputable stability is threatened.

The debate for new conflict resolution institutions, on reforms to mediation, arbitration and judicial determination is occurring. I attended a conference on Labour Resolution Diputes at the Labour Institute Renmin University Beijing, where the industrial relations community and the ACFTU is pushing for a better legal framework. In the debate about a future model, there was academic support for the right to strike and legally independent unions.10 There is neither a lawful right to strike nor are strikes illegal. There is both tolerance of strikes and and repression, where strike leaders are arrested not for organising the strike but usually some trumped up criminal offence or disturbing the peace. But improvement in the practice of successful collective bargaining comes first. Professor Liu Chen from Shanghai University told me: Progress is step by step. Change is over many years. Same with the unions. They have to change in practice. Union work has to change in practice and then the laws will develop. On collective bargaining, there are more collective agreements, but too often only copies of minimums and not improvements. This is the next step. Workers have to learn in practice better collective agreement making. There is the issue of better rules for the method of election of candidates in the enterprise, so reform of the process is fairer. We are working on these issues so as to improve for both parties more harmonious labor relations with Chinese characteristics.

Party push

The ACFTU's political role is the transmission belt for Communist Party decisions to the workers. They are involved in debating all new laws in the NPC. President Hu Jintao on 14 March 2006 issued instructions to 'do a better job of building Party organizations and trade unions in foreign invested enterprises'. On 16 March, all ACFTU staff had studied this issue. The ACFTU was pushing the Party for a better legal framework for labor relations. The Party was now putting people into Wal-Mart. The government's position is clear 'Call to protect workers in foreign enterprises', China Herald 1 January 2007: The new ideological drive in China got new momentum as the National Committee of the National People's Political Consultative Conference (CCPCC), an advisory committee of the National People Congress (NPC) called for more protection of workers at foreign-invested enterprises. The report said low wages, unreasonable workloads and a lack of safety measures were among the major causes of an increase in collective labor disputes in the booming southern Guangdong and Fujian provinces.

The ACFTU Blue Paper also covers 'harmonious labor-management' relationships; protect workers rights to join and form trade unions; equal consultation on workplace issues; improve the labor contracts; protect workers right to pay; step up measures to mediate in disputes; promote gender equality and protect women workers' special rights and interests; step up inspections of law enforcement; and calls for wages increases.


Considerable criticism has come over the years from the labour movement outside of China and pessimism about the ACFTU's ability to change. So, is Wal-Mart and the goal of 70 per cent unionisation of overseas corporations by the end of 2007 the new marker of change? We will see. I am optimistic and support those revising early positions, such as Anita Chan, whose optimistic analysis is that ACFTU is changing in 'Organizing Wal-Mart: The Chinese Trade Union at a Crossroads', (8/ August 2006, and her later version 'Organizing Wal-Mart in China: Two Steps Forward, One Step Back', (New Labor Forum, 2007). Anita Chan has been a fierce critic, (2001), 'Chinese Workers under Assault - the exploitation of labor in a globalised economy'. Rolf Geffken in his Labour and trade unions in China book applying up to 2004 argues that the ACFTU will not reform to represent workers. But in his 21 August 2006 lecture on 'Chinese unions and the limits of Wal-Mart's anti-unionism', he is more optimistic.

I wanted to ask about the western unions demand for 'free trade unions,' and explain I had spoken in a Rally in 1989 against the Tiananmen battle, including support for free and independent unions in China. Han Dongfang, from the China Labor Bulletin (CLB), and the Hong Kong-based labour NGO, is the worker who during the 1989 Tiananmen Square movement was a labor leader of the 'Beijing Workers Autonomous Federation'. He goes to the ILO, has international support and comments widely. Surely, the fear of a 'Solidarity Union' by the government is unfounded. He is sceptical the ACFTU is reformable.10 I am in the optimistic camp. I add that workers I spoke to said it was 'useless.'

My time was up. The ACFTU officials had other meetings to go to. China's Spring Festival was near. I thanked them for their time. The 'independent unions' issue is debated, but is not a debate for the ACFTU. It is the union. This is the Trade union law. It opposes any independent union opposition. Unfortunately, it opposes NGOs doing valuable work amongst poor migrant workers and unions outside of China have to work out how to support these NGOs.

I was to ask about the international trade union movement. How should it engage? The ACFTU is close to the World Federation of Trade Unions (WFTU) at the Beijing Conference, of 4-6 December 2006, "Economic Globalization and Trade Unions" and not the International Trade Union Confederation (ITUC). I was to ask about the Australia-China Free Trade Agreement, but there was not the time. I wanted to ask about the new Chinese millionaires; the immense inequality of wealth; about the government's anti-corruption drive; the environmental crisis. But not enough time.

So, what can be concluded, albeit tentatively? The ACFTU is not a monolith. As one expects, there are heated policy debates amongst the factions and the many varied regional and local experiences. The ACFTU is objectively forced to respond to workplace issues better than in the past, in order to maintain legitimacy. In their publications, the campaigns are significant. It is hard to generalise, but there is change. Australian unions have space to positively engage the ACFTU at the top, and with its industry sectors, and at the regional and local union level on a long-term union sustainable strategy. One thing is clear: you cannot tell the Chinese unions what to do. It is their labour movement.


George Williams is the Anthony Mason Professor and Director of the Gilbert + Tobin Centre of Public Law at the University of New South Wales


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