Unions and corporations: a very Chinese puzzle

Foreign companies setting up shop in China never used to have to worry about unions. That might be about to change. After a series of bitter developments at Wal-Mart and a proposed amendment to China's Trade Union Law, foreign companies may now be obliged to establish unions, whether they like it or not.

by CSR Asia Weekly; Pacific Bridge
Last Updated: 23 Jul 2013

Under present law, MNCs are only required to form unions if their employees request it. About 30% of foreign companies therefore have unions, whilst many, such as Wal-Mart, have steadfastly opposed mandatory unionisation.

This kind of opposition may explain the All China Federation of Trade Unions (ACFTU)'s dogged determination to start branches in Wal-Mart stores. The country's main union has been moving heaven and earth over the last couple of years to get Wal-Mart employees to request local ACFTU branches, and its efforts seem to have paid off.

Three branches have now been opened, in Quangzhou (Fujian), Wujin (Shenzen) and Xinjiehou (Nanjing). Xu Deming, vice-chairman of ACFTU, called it a historical breakthrough while other dignitaries hoped this would encourage union presence in foreign companies.

Yet, it is not clear whether this will be the case. The ACFTU is the only authorised union in China and is strongly controlled by the state. Many therefore question how much protection it offers workers, claiming that more widespread ACFTU presence would simply help fill the pockets of the organisation (which levies 2% of the total wages' bill from employers).

Wal-Mart was not formally notified of the opening of any of the union branches and reacted angrily in the press when it occurred, saying it would investigate who was responsible and make deductions from other welfare payments to pay for the union fees.

The law amendment, which has already been mooted several times, is unlikely to be passed. But the friction between foreign companies and state unions is unlikely to pass either.

Sources: ACFTU pushes harder on Wal-Mart union
Brian Ho
CSR Asia Weekly Vol 2 Week 32

China suggests requiring foreign companies to unionize
Pacific Bridge

Review by Emilie Filou

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