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China authorities make noise over unions

29-Oct-2004

The All-China Federation of Trade Unions said that it will continue to press foreign companies to unionise its operations in China. The federation highlighted ongoing disputes with several foreign-owned companies - including Wal-Mart - which are currently not unionized. Simon Pitman reports.

"We will continue to press these firms to the end, until they comply with the law," Guo Wencai, a federation official, told the Xinhua news service.

The federation is now threatening foreign firms with blacklists and legal action if they do not comply with unionization terms, adding that foreign companies have to comply with the country's working practices in the same way that domestic companies must do.

Wal-Mart responded to accusations by stating that it had already implemented a series of regulations that offered 'effective channels to resolve complaints from employees'. It also added that it would only set up a union if there was a request from its employees to do so and that no formal request had been made to date.

Wal-Mart, which is the leading global supermarket retailer, has a policy of minimal union representation, a factor that has allowed it to expand at such a rapid rate, many industry experts would argue.

But according to a number of reports in the China press, Wal-Mart is stalling over setting up a union in an effort to cut down on costs. According to estimates trade union representation adds a further two per cent on to an employee's salary costs. Currently Wal-Mart has some 19,000 employees in China. Because the company operates a policy of cutting margins to a bare minimum, such a cost hike would be likely to hit the food retailer hard.

In turn the ACFTU argues that trade union representation is a basic right of employees in all enterprises in China, which cannot be denied by any individual or organisation.

Some analysts believe that the moves by the ACFTU could just be political posturing aimed at boosting the image of the government. Either way, the threat of compulsory unionization is likely to be an added consideration for any foreign multinational eyeing the China market in the future.

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