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Wal-Mart's Trade Union in China
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Wal-Mart's trade union in China

Baogang He and Yuhua Xie
Economic and Industrial Democracy 2012 33: 421 originally published online 25 July 2011
DOI: 10.1177/0143831X11411327
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411327 EIDXXX10.1177/0143831X11411327He and XieEconomic and Industrial Democracy
Article
Economic and Industrial Democracy
Wal-Mart’s trade union

33(3) 421–440
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DOI: 10.1177/0143831X11411327
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Baogang He
Deakin University, Australia
Yuhua Xie
Hunan University, China
Abstract
In 2007–8, more than 100 Wal-Mart stores in China established trade unions, which were praised
by labour organizations and scholars throughout the world. This article questions these positive
assessments and evaluations through an empirical study. The empirical findings reveal a dark and
unpleasant picture of a double cooptation in that both the Chinese government and Wal-Mart
have successfully coopted a few more or less independent unions. Although the presence of
the trade union seems to challenge Wal-Mart’s neoliberal corporate ideology and governance,
the compromise and tacit agreement between Wal-Mart and the party-state not only reflects a
marriage of convenience but also indicates some deeper compatibility, the compatibility between
China’s state corporatist model and the neoliberal approach taken by Wal-Mart. This study finds
that China continues to move in a ‘state corporatist’ direction and that the transition towards
civil society and ‘societal corporatism’ has been stymied.
Keywords
China, industrial relations, labour movement, neoliberalism, trade union, Wal-Mart
Neoliberalism has been dominant in the US, the UK (Smith, 2009), Canada and Australia
and its influence has expanded to Japan, South Korea, Taiwan and even China (Kong,
2005). Central to the neoliberal order are the weakening of unions, the dismantling of
collective bargaining, labour flexibility, the domination of property rights over labour
rights, the use of outsourcing as a means of individualizing the employment relationship
and reducing union influence (Teicher et al., 2006), and the domination of human
resource management over trade unions, even to the point of replacing trade unions with
Corresponding author:
Baogang He, The School of Politics and International Studies, Deakin University, 221 Burwood Highway,
Melbourne 3125, Australia.
Email: baogang.he@deakin.edu.au
422 Economic and Industrial Democracy 33(3)
the human resources departments of companies. Wal-Mart embodies this type of neoliberal
corporate ideology and governance.
With US$405 billion in revenue, Wal-Mart occupied third place in the world’s 500
largest corporations in 2009. (It was ranked number 1 in 2002 and 2010.) One of Wal-
Mart’s main competitive advantages has been its low cost strategy. One aspect of this
strategy comes in the shape of cheap labour. Wal-Mart’s strong resistance to unionized
well-paid labour has contributed to higher profits. In the US, Wal-Mart has managed to
keep trade unions out of its organization by exploiting weaknesses in American labour
laws (Lichtenstein, 2008). The American Federation of Labor and Congress of Industrial
Organizations (AFL–CIO) has made concerted efforts over the years to establish trade
unions within Wal-Mart, but has failed at every turn. At home and abroad Wal-Mart has
been obstinate in its position that a union presence within its operations would cause a
massive blow to its bottom line.
Branching out beyond its base in the American retail sector, Wal-Mart set up its first
supermarket in mainland China in 1996. By the beginning of 2008 Wal-Mart had 105
stores across 56 cities in China. Wal-Mart has been awarded certificates as ‘the best
company in the retail sector’, ‘the most outstanding employer’ and ‘the best company in
advancing the career of employees’ in China. Its management practice has been and
continues to be highly regarded (Wang, 2006). One book chapter on the management of
Wal-Mart was selected by the Central Department of Propaganda and the Department of
Personnel Organization as a key text for national cadres’ reading material (Wang, 2006).
In 2004, the All China Federation of Trade Unions (ACFTU) started pressing Wal-
Mart to allow for trade unions in its operations. Senior officials of the ACFTU began
meeting with Wal-Mart executives, who eventually yielded, accepting that the union was
part of Chinese custom and law. On 29 July 2006, the first trade union in Wal-Mart China
was established in Jinjiang (Liu, 2006). Within six months all Wal-Mart operations had
trade unions.
The establishment of trade unions in Wal-Mart stores in China was seen by labour
organizations throughout the world as a positive step in the development of industrial
relations. Professor Eugene Fram, an American research scholar in marketing, saw it as
‘a watershed event’, adding that it was the first time Wal-Mart had truly accommodated
a union (Barboza, 2004). Greg Denier, a spokesman for the United Food and Commercial
Workers Union in Washington, stated that they were pleased the Chinese had forced Wal-
Mart to accept the trade union (Barboza, 2004). Anita Chan (2006) regarded it as an
important revolution within the ACFTU itself.
In China, the vice chairman of the ACFTU, Xu Deming, regarded Wal-Mart’s union
movement as an ‘historical break-through’ (Shao, 2006a). Even Han Dongfang, a
Chinese labour dissident and activist, echoed the Chinese official’s praise. According to
Han, the ACFTU’s standard approach of only dealing with managerial levels of corpora-
tions, not the workers, was now in the past. Doing away with all the usual formalities it
was the first time the ACFTU had gone against the customary Chinese way of doing
business. Prior to Wal-Mart the ACFTU rarely approached employees themselves, let
alone encouraged them to organize a union or provided them with the means to set one
up (Han, 2006). However, these positive assessments and evaluations need to be sub-
jected to empirical scrutiny as they were made shortly after the trade union first became
established in Wal-Mart’s stores. A follow-up study is needed.
He and Xie 423
The establishment of trade unions in China’s Wal-Mart stores raises questions and
highlights certain puzzles. First, Meyerson (2004) observes that it is intriguing that
20,000 Wal-Mart workers in China have unions but millions of Wal-Mart workers in
America do not. Moreover, when Wal-Mart purchased an already-unionized retailer, it
had to operate in a unionized environment in Argentina, Brazil, Great Britain and Japan.
However it closed down a few stores when unions were troublesome in Canada, and
pulled out of a strongly unionized Germany in 2007. So why did Wal-Mart make a con-
cession to allow the establishment of unions in China where its stores did not have unions
previously? Do trade unions in China’s Wal-Mart merely function like a ‘club’ or are
they authentic organizations that set out to look after workers’ rights? Second, the estab-
lishment of trade unions seems to depart from, challenge and undermine neoliberal cor-
porate ideology and governance. If so, it is really puzzling that a post-socialist trade
union of China would do so in a context where Chinese governments must attract foreign
investors in order to generate tax revenue and economic growth, and where Chinese
companies are keen to learn from western corporate management. Alternatively, does
China follow or adapt to Wal-Mart’s neoliberal corporate governance model? What does
the future hold for unions in foreign companies in China? Third, in the Chinese political
vocabulary, the Chinese unions repeatedly stress ‘zujian gonghui’ (‘establishing trade
unions from above’) rather than ‘zuzhi gongren’ (‘organizing workers from below’).
Often directors of factories and enterprises appoint a senior manager or human resource
director as the chairperson of the trade union (Taylor and Li, 2010). The ACFTU, how-
ever, has mobilized workers to establish a union in Wal-Mart. This organizational
approach to Wal-Mart presents a perplexing exception to this common practice. Why?
What was the end result?
All of the above puzzles and questions make a fascinating case study. In 2007–9, we
studied about 160 newspaper reports and 33 journal articles covering Wal-Mart and trade
unionism, and undertook various field studies where we visited three stores and con-
ducted a series of interviews with the key labour activists and managers (more than 10
interviews with two elected chairmen of Wal-Mart unions, another six with managers or
assistant managers of Wal-Mart and numerous talks with ordinary workers).
The structure of this article is as follows. First, it introduces the conceptual under-
standing of the structure, nature and features of China’s official trade union, the three
typologies of union – bogus, genuine and coopted – and the two conceptual alternatives
–state corporatism vs societal corporatism – to describe the future direction of China’s
trade union. Second, it explains the background as to why the Chinese government has
pushed for the establishment of trade unions in Wal-Mart. Third, it traces the history and,
in particular, the activities of the trade union. Fourth, it examines the functions of the
trade union through a detailed comparative case study of the two different empirical
phenomena. Fifth, it discusses strategies Wal-Mart has used to coopt unions.
A conceptual introduction
Trade unionism in China fundamentally differs from trade union models in the western
world. Taylor and Li (2007) argue strongly the ACFTU is not a trade union organization
but a ‘state organ’, closely subordinated to the Chinese Communist Party. The former
general secretary of the International Union of Food and Allied Workers, for example,
also refused to recognize the ACFTU as a trade union, and China is regarded as a huge
non-union factory (Bergene, 2005: 109, 135). Historically the ACFTU has followed the
Party’s orders and has always been an integral part of the Party leadership (Taylor and Li,
2009: 56). The ACFTU can be seen as an integral part of state corporatism.
The ACFTU functions as a social club and welfare organization. It services employ-
ees with recreational activities and the provision of occasional welfare support to those
who have financial or other difficulties. Unions do not often fight for the rights of work-
ers, nor do they represent workers. If there is conflict between employers and employees,
unions tend to play the role of mediator.
In recent years Chinese workers themselves have organized unions to increase their
bargaining power. In some provinces, workers have fully embraced the notion of unioni-
zation through autonomous organizational activity. Chinese official unions have become
increasingly irrelevant to China’s unfolding intensified industrial relations (Taylor and
Li, 2007, 2010). Often workers’ strikes and protests bypass official unions.
The ACFTU faces the challenging question of whether it should reconstitute its tradi-
tion role through collaboration with the government and management, or whether to
develop its ability to defend the rights and interests of workers (Clarke, 2005). It has intro-
duced trade union reform experiments including the establishment of trade unions in pri-
vate and foreign companies, direct elections of the president of the union in a few factories
(Chan, 2008b), collective consultation on wages, deliberative forums (He, 2008: Chs
14–15; He and Thogerson, 2010) and a defence of the rights of workers. For example, the
official trade union in Yiwu city has forced employers to pay delayed wages or pay decent
compensation to workers (Han et al., 2008). Even a few more or less independent unions
have emerged. These new developments in the wider context of emergent civil society in
China (He, 2007) have been called ‘the seed-germ of societal corporatism’ (Chan, 2008a:
81–5). Nevertheless the ACFTU has been severely constrained by the Party in undertak-
ing reform measures despite enjoying the support of the Party to push trade union reforms.
One critical issue is whether more or less independent trade unions might develop in
foreign enterprises. This is because Communist Party organization does not exist in
these companies, foreign enterprises are independent economic entities from the
Chinese government and often American and European companies provide better work-
ing conditions and deal with conflict in a civilized way. Workers we interviewed
informed us that they were ruthlessly punished by their bosses for trying to establish
genuine unions in Chinese-owned private factories, but they were treated better in for-
eign companies, including Wal-Mart. Zhao Wei (2003) finds that workers in foreign
companies are keener, and have higher expectations, in demanding genuine unions to
protect their interests. To understand the status of trade unions that have been estab-
lished in foreign enterprises, we have developed a conceptual classification of three
types of unions – bogus, genuine and coopted.
A bogus union is a workers’ voluntary organization that represents the interests of
workers, defends the rights of workers and is responsible for workers. It is ‘bogus’ as it
is not legally recognized by either the government or enterprises, and does not conduct a
formal election process. An example is the migrants’ hometown organizations of various
kinds. It is possible for them to evolve into authentic union organizations. In Zhejiang
and Guangdong, migrant workers distrustful of the official ACFTU have effectively
He and Xie 425
organized alternative ‘hometown unions’ via allegiances to other workers who migrated
from the same hometown. Although hometown unions are not officially recognized by
the government, workers in China are at least beginning to demand alternatives to the
Party-controlled ACFTU. This is a wake-up call for the CCP. In order to prevent rene-
gade union activity it has adopted proactive measures to establish officially sponsored
trade unions. The local officials of the Dongguan Federation of Trade Unions have per-
suaded foreign companies to establish official trade unions with the argument that home-
town unions may turn out to be nothing more than a gangster-like club with an agenda to
simply shake up the established order (Taylor and Li, 2010: 418).
A genuine union is legally recognized by, but independent of, both the government
and enterprise. Workers organize to form a union to protect themselves and defend their
rights. Its presidents are directly elected by workers, represent the interests of workers
and are responsible for workers. This kind of union, in Chinese political language, is
‘zuzhi gongren’ (‘organizing workers from below’) and it was established in Reebok in
2002, Ole Wolff in Yantai, Shandong in 2006 and in Wal-Mart’s Nanchang store as well
as in other enterprises, but most such unions only survived for a short period.
A coopted union is legally recognized but controlled by both the government and
enterprises. It occasionally defends the interests of workers, but often follows the line of
the government and enterprise if there is a conflict between employers and employees.
Such a union, in Chinese political language, is ‘zujian gonghui’ (‘establishing trade
unions from above’). The majority of trade unions established in Wal-Mart are this kind
of union. Wal-Mart initiated the process of establishing unions and appointed the presi-
dents of its unions. Both the ACFTU and Wal-Mart have been involved in this cooptation
process; this might be called a ‘double cooptation’.
How do these three kinds of unions evolve? Gordon White (1996) examined two
scenarios of organizational evolution: corporatism and civil society, and Chan (2008a:
81–5) briefly discussed the seed-germ of societal corporatism. The question is, will Wal-
Mart’s trade unions continue the tradition of state corporatism, or constitute a step
towards societal corporatism?
Background
The ACFTU’s mission of establishing trade unions across foreign companies came from
the Party, which has attempted to penetrate its organization into all corners of society,
including private and foreign companies, in order to control potential collective action
and prevent social unrest. Moreover, the rapid decline of union membership and union
fees in the 1990s gave the ACFTU a strong material incentive to expand their organiza-
tion into foreign companies (Taylor and Li, 2010). The expansion was also due to mount-
ing domestic and international pressure. Export-oriented strategies, cheap labour,
protection of capital investments and various restrictions imposed on employees all led
to China’s economic expansion and rapid economic growth. Policies were put in place to
suppress conflicts between employees and capital investors, but could not contain a
growing disenchantment among workers. Employee–employer relations across both
modern and traditional industry sectors in China have become more tense as more con-
flicts have bubbled to the surface.
Within a 10-year period the number of reported labour disputes increased dramatically.
Yu Jianrong (2008) provides comparative figures dating back to 1993. In 1993, there
were 8709 incidents reported. By 1999, the number of incidents reported was 32,000.
That is a significant increase in its own right. But by 2003 this figure had almost doubled
to 60,000 reported incidents. In 2004, it reached 74,000 and in 2005, 87,000. Thirty-five
percent of the reported incidents related to employee disputes in the farming sector and
30 percent to employee disputes across all other industries. From 1994 to 2003 the
number of labour disputes and the number of people involved in them increased by 30
percent every year (Chang and Tao, 2006).
Most of the employee-related disputes have occurred across the coastal regions of
China, which have been a haven for a large influx of migrant workers. Migrant workers
who relocated from their hometowns or provinces to take up work opportunities in the
coastal regions were powerless. They did not have the same privileges afforded to local
residents. Disputes more or less remained unresolved. Reluctantly, many of these migrant
workers ended up ‘voting with their feet’, leaving their jobs and moving somewhere else,
either to a different company or different geographical area.
In a concerted effort to balance the interests of workers and employers, the govern-
ment emphasized the importance of the ancient Chinese ethos of a ‘harmonious society’.
Taking measures to create industrial harmony the government drafted and put in place
new laws and regulations. The most significant of these were the Labour Contract Law,
the Promotion of Employment Regulation and the Regulations to Implement Arbitration
Ordinance (Feng, 2008). Despite attempts by the government to address the imbalance,
however, employees are as a whole still in a much weaker position.
From an international perspective China’s full integration into the global economic
system will to a certain extent depend on its willingness to comply with international
industrial relation systems (Huang and Guo, 2006). Heavy restrictions placed on inves-
tors by international organizations have gone some way to alleviating the problem of
workers being exploited under the capitalist system, with its drive to maximize profit.
For example, the International Labour Organization (ILO), in advocating for the protec-
tion of workers’ rights, has stipulated that three parties – the national government, the
employer and the trade union – must all be involved in the negotiation process (Guan,
2004). In 1999, the Decent Work Agenda was put forward at the 87th International
Labour Conference. Participant nations who have integrated this agenda into their
national policies are obliged to fully comply with its international standards, ensuring
that both men and women have equal access to decent and productive employment under
conditions of freedom, fairness, security and dignity (Chang, 2003).
Over the years a number of famous international companies have come under scrutiny
from various lobby groups who have pressured them on human rights issues pertaining
to the countries they operate in. In China’s case, the International Labour Rights
Foundation (ILRF) and the Global Exchange drafted a set of policies called ‘China
Business Principles’ (Yu, 2003). The World Bank, the International Youth Foundation,
Nike and Gap formed the Global Alliance for Workers and Communities. The alliance
set up ongoing training workshops in China so that employees could gain a better knowl-
edge of healthcare, mental health, labour law and urban life (Yu, 2005).1
He and Xie 427
One effective way of informing workers of their rights is through the Internet. NGOs
have utilized the communication power of the Internet to inform workers and create
networks or groups in China. The International Workers’ Internet is one such site that has
helped inform a number of workers in the Chinese manufacturing industries as to how to
set up a trade union. NGOs have also established institutions and support centres through-
out China such as the Institution of Contemporary Observation, the Panyu Migrant
Workers Administrative Service Centre and the Women’s Service Centre in Nan Shan of
Shenzhen (Huang and Guo, 2006). Sometimes just being the focus of international atten-
tion is enough to prompt corporations and governments into action. In July 2001 and
December 2002, Reebok, with the assistance of local trade unions, established unions
using a formal voting procedure in two of their manufacturing plants in Shenzhen and
Fujian (Chan, 2008b).
The process of establishing trade unions

At its 2003 Congress the ACFTU made a strong push for unions across the whole private
sector, including in Wal-Mart, McDonald’s and KFC. The ACFTU has often stressed the
harmonious cooperation between government and enterprises, adopting a method of per-
suasion and avoiding a confrontational approach. However, Wal-Mart’s refusal to coop-
erate with Chinese trade union officials to allow a trade union to be established in the
company was an exception to this normal process. This forced the union officials to
adopt an adversarial mobilization method, that is, encouraging workers to mobilize
themselves to form a union.
Naturally, Wal-Mart was apprehensive about establishing a trade union in China. The
senior managers of Wal-Mart used the Trade Union Law of the People’s Republic of
China to argue their case that trade unions should only be formed by workers voluntarily
and that they not be held to account for the establishment of a trade union. Resorting to
the rhetoric they use back home, Wal-Mart argued that the absence of trade unions in
their stores was simply a sign that their employees did not desire or see any benefit in
having a union.
In one of the most important official meetings in 2004 the key politburo member, the
chairman of the ACFTU, Wang Zhaoguo, according to an insider,2 had rejected all
motions for unions in Wal-Mart simply on the basis that: ‘we should not push Wal-Mart
to establish trade unions because it has none in the United States’. But trade union offi-
cials forcefully argued that Wal-Mart should consider their case for organizing trade
unions across their stores because they should obey China’s union law and because the
top leaders in China favoured the establishment of trade unions in foreign companies.
They proceeded to target Wal-Mart because its worldwide anti-union reputation meant
that its unionization would therefore act as a benchmark for other private foreign indus-
tries in China that also opposed unions.
On 14 March 2006, President Hu Jintao reportedly signed an official document which
attempted to improve labour regulations, laws and the system of industrial mediation,
and to establish both trade unions and a Communist Party branch in each foreign company
(Liu, 2006). Since then, the ACFTU intensified its push to carry out legal inspections and
publicly shame Wal-Mart for its refusal to take any part in the establishment of trade
unions across its stores. The ACFTU held a media conference, making very clear their
position that ‘international companies which refuse to establish a trade union will have
to set up a trade union as soon as possible’ (Zhu, 2006). The ACFTU’s adamant stance,
with its particular focus on Wal-Mart and other international companies, received mass
coverage in the national Chinese media (Zhang R, 2006).
In early July 2006 the ACFTU convened a national meeting in Quanzhou city, Fujian
Province to coordinate these activities (Chan, 2007: 89). The first attempts by local
Chinese officials to implement the policy of establishing trade unions in Wal-Mart failed.
The general secretary of the Chinese Communist Party in Jinjiang city initiated talks
with the manager of the Wal-Mart store in Jinjiang. Because he had assisted with the
establishment of Wal-Mart in Jinjiang in the past he thought he would have no trouble in
persuading the manager to help organize a trade union. To his surprise, the store manager
politely refused his request, saying that he was not in a position of authority as the head-
quarters in China had not yet come to a decision (Feng, 2007).
Wal-Mart’s statement that it would not thwart voluntary unions gave the ACFTU
some ammunition. The ACFTU urged Wal-Mart to consider trade unions by keeping up
communication with Wal-Mart’s managerial department over the issue. It also persuaded
the national government to place restrictions on international companies that resisted
unions. District and city trade unions across China began drafting up regulations and
policies and contacting Wal-Mart stores. They even directly engaged Wal-Mart’s work-
ers in the hope they would form trade unions on their own initiative.
On 29 July 2006, the ACFTU’s hard work finally paid off. The trade union in the Wal-
Mart store in Jinjiang city was established and recognized as a good model for unions all
over China (Liu, 2006). One leading ACFTU official at the grassroots level stated that:
‘the formation of Wal-Mart’s trade union [in Jinjiang has] encouraged both core manage-
rial staff and general staff. This inspires other stores to follow suit and also promotes the
formation of trade unions in other companies nationwide, encouraging more workers to
join’ (Shao, 2006b). Within two weeks trade unions in six other stores across different
cities were set up.
The Nanchang store was established in August 2003 in the capital city of Jiangxi
Province. A trade union in this store was established by its workers on 14 August 2006.3
Back in 2005, one of Wal-Mart’s staff trainers in a session for new staff told them they
had the option to organize a union, but at the same time warned them that the cost of
running a trade union would use up to 40 percent of the annual fees and thereby effec-
tively reduce the funds human resources normally put aside for staff social activities and
general welfare. New staff member Gao Haitao, however, suspected that the trainer had
intentionally overestimated the cost of the trade union. After the session Gao found the
Beijing ACFTU’s phone number on the Internet and told them what had transpired in the
training session. In response to his call the ACFTU in Beijing demanded that the
Nanchang trade union inform these workers about union matters where the Wal-Mart
trainer had failed to do so, and that they provide the necessary assistance to Gao, who
was now keen on the idea of organizing a trade union.
Gao began working for Wal-Mart in February 2005. He worked part-time at Wal-Mart
to fund his own self-education in law. After sitting the Chinese national test in law and
He and Xie 429
acquiring the necessary qualification, he decided to stay on with Wal-Mart. Here he

could apply his knowledge of law and play an important role in establishing the Nanchang
store’s trade union.
At Gao’s behest 26 staff members at the Nanchang store expressed interest in setting
up a trade union. Eighteen of these, however, withdrew their support for the union when
Wal-Mart pressured them not to join. Despite this, the ACFTU in Beijing instructed the
Nanchang city union to continue mobilizing the workers. Although a couple more agreed
to join, the number gradually fell to eight over a period of time. Matters reached a head
at midnight on 14 August, when the eight remaining members formed a ‘preparation’
group for a trade union. It was called a ‘preparation’ group because they lacked the mini-
mum 25 people for a union. This was done without giving the required notice to the
Nanchang store. At the meeting – the first official meeting of its kind – they voted in the
committee members and a chairman. Next they completed all the necessary paperwork
pertaining to the legal documents and healthcare cards of the provincial union. Finally,
the Nanchang city trade union informed the managers at the Wal-Mart store that the
workers had legally organized a union.
On 16 August 2006, the ACFTU reached a memorandum of understanding with the
headquarters of Wal-Mart. The memorandum included the following five points: first, all
Wal-Mart stores should have a preparation group, 20 percent of which should consist of
members from senior and administrative staff and the other 80 percent shop floor
employees; second, trade union representatives from a higher level would oversee the
organizational structure and the processes of a store union, ensuring a transparent and
democratic voting process when electing a committee, chair and vice chair; third, general
managers, deputy general managers and human resource managers, as well as employees
who are related to them, cannot be part of the organizational structure of the union;
fourth, trade unions are allowed to visit stores, disseminate information about the Trade
Union Law of the People’s Republic of China and the Labour Law, and assist employees
in establishing a trade union; and finally, trade unions assist administrators in Wal-Mart
stores to ensure, on the one hand, that managerial matters are implemented legally and,
on the other, that workers remain motivated as Wal-Mart employees. It was recom-
mended that trade unions and administrators in stores fully cooperate by regularly meet-
ing to discuss the development of both the store and the industry in general (Pan, 2006).
All Wal-Mart stores in China adopted the recommendations of this memorandum
after Wal-Mart proposed modifications that the ACFTU then agreed to. Under these
modifications Wal-Mart provides a shortlist for the trade union’s preparation group. The
group still consists of both managerial and general staff, but the leader must come from
either the store’s administration division or the human resources department. Only when
the group reaches a minimum number of 25 members can an election be held to vote in
committee members, the chair and the deputy chair. The unions and Wal-Mart stores
cooperate on a number of fronts: social activities such as entertainment fosters teamwork
among staff; financial assistance is provided for staff who are in financial difficulty;
training programmes give staff opportunities to upgrade their skills; and traditional
Chinese customs are followed with annual home visits to staff to either give gifts or to
provide general welfare support for each individual staff member. This model has now
become the prototype for the majority of trade unions in Wal-Mart’s 105 stores. The
various employee initiatives used to establish trade unions prior to the memorandum
have not been repeated.
Both parties reached a tacit consensus. The ACFTU could point to the newly formed
union as a measure of its success in its report to the CCP. In return for Wal-Mart’s agree-
ment to establish unions, it would not carry out any investigation of whether these unions
were really accountable to workers and it ensured that Wal-Mart’s coopted unions did not
threaten the company’s normal operations or its internal order. While Wal-Mart followed
Chinese laws to establish unions, it successfully appointed managerial staff to be the
presidents of unions, provided union fees and made unions an integral part of manage-
ment. Notably in Wal-Mart’s mobilization model the process involved the absence of
workers’ active participation, which made unions extremely weak and rendered them
vulnerable to dependence on, or domination by, management. This is what Wu Qingjun
(2008) called a ‘tacit agreement’ between foreign enterprises, which follow Chinese laws
in a formalistic way, and the ACFTU, which appears to be seen as defending the rights
of workers to form unions. Both, however, agreed to suppress independent and repre-
sentative unions and ensure the existing economic order remains. Ironically, while the
CCP pushed strong unionization it only allowed weak unions to be established (Taylor
and Li, 2010: 423).
Wal-Mart’s acceptance of the union was a highly strategic means of containing and
controlling independent union activists. Acquiescing to Chinese labour laws was intended
to increase their stature in the eyes of the Chinese government. In a way, Wal-Mart’s
acceptance of the trade union could be seen to play right into the hands of the CCP, who,
some argue, have used trade unions to control the masses (Blecher, 2008). Arguably,
Wal-Mart has taken advantage of this situation by coopting trade unions as a kind of
work-related social club. Wal-Mart’s coopted unions in China pose no real threat in rela-
tion to negotiations over wages and other employee entitlements or benefits (Chen, 2009;
Deng, 2006). In this view, the union’s only role is to organize recreational activities dur-
ing festivals (as has been the Chinese custom) and to look after the general welfare of
workers. The welfare services trade unions provide are, as Goldstein (2003) argues, a
virtual extension of the Communist Party and the local government.
The functions of the trade union

To shed light on the union movement in China’s Wal-Mart stores it is worthwhile to
provide a more detailed comparative case study of the two different models. In the
workers’ model the main drive for a union came from the workers themselves, with
the backing of the official Chinese trade unions. The chairpersons of these trade
unions were usually elected from ordinary shop floor workers. Prior to the memoran-
dum three stores, located in Quanzhou, Nanchang and Shenzhen, had organized trade
unions. After the memorandum another 102 stores opted for the Wal-Mart company’s
model in which Wal-Mart managers initiated and organized unions. To expound on
the function of these two different models we have selected the Yueyang and Nanchang
stores. The trade union in the Nanchang store as mentioned previously was organized
by workers themselves, while the trade union in Yueyang was established by the
Wal-Mart management.
He and Xie 431
Nanchang store
Support for the protection of trade union members’ rights. In September 2006, roughly one
month after the union was established in Nanchang, an employee was dismissed. On
finishing his nightshift this employee had taken his Wal-Mart uniform off and had gone
into the store to purchase some breakfast. His mistake was to first taste a free sample of
food given to him by one of the sales promoters. One of the store managers, assuming
that the employee had requested the food sample from the promoter, told the employee
that what he did was against company regulation that employees are forbidden to
receive any kind of gift from sales staff. Attempting to justify his case, the employee
argued that because he was not in uniform, he was no longer a member of staff, but a
customer. But this fell on deaf ears and he was instantly dismissed. Wal-Mart did not
bother with the union regulation that they must consult the union before dismissing any
employee. Standing his ground, the employee refused to sign the dismissal form and
took the matter up with Gao Haitao, the elected chairman of the union. After making
enquiries into the case, Gao argued that Wal-Mart’s reasoning for his dismissal was too
strict and simplistic. He met with the store’s human resource manager and declared the
union’s position that the grounds for the dismissal were not sufficient to warrant such
action. Furthermore, he added, Wal-Mart had ignored the requirement to notify the
union prior to dismissing the worker. Under labour law, if a company is found to have
disregarded this requirement it must reconsider its decision. Wal-Mart conceded and
withdrew the dismissal.4
In 2007, another employee was instantly dismissed. This employee was dismissed for
having dinner in the Wal-Mart cafeteria after a staff training session, violating the rule
that ‘if not on duty you should not have a meal in the cafeteria’. This case went on for
some time. Gao tried to negotiate with managerial staff three times over this incident, but
was not successful. On each occasion he reiterated the three relevant conditions under
the labour law: first, any dismissal decision must be approved by the union; second, the
trade union has the right to amend terms in the staff manual they find unreasonable; and
third, the trade union has the right to overturn dismissals. Wal-Mart would not budge.
The only option left for the employee was for the trade union to take the case to court.
The court ruled against Wal-Mart’s dismissal on 13 August 2008, and the employee was
reinstated.
The protection of union members’ welfare. Every Chinese New Year, Wal-Mart gives
employees a 150 yuan shopping credit card. On the eve of Chinese New Year in 2007,
the Wal-Mart head office in China emailed an urgent message to all store managers, stat-
ing that the annual welfare budget was from now on to be funded by trade unions. On
learning this news, Gao Haitao responded immediately by publicizing his own state-
ment: first, trade union funds are primarily intended for educating workers and other
union activities; second, trade union funds and company welfare funds are essentially
two different things; and third, employees are entitled to separate welfare benefits from
the company and the union. Gao posted his statement, titled ‘Notice for Trade Union
Members of the Nanchang Store’, on the store’s staff information board. He got an over-
whelming reaction from fellow employees, who were shocked that Wal-Mart would
shirk its funding responsibility and pass it on to the trade union. On receipt of Gao’s
notice, the ACFTU instructed the more powerful trade union at the city level to renegoti-
ate with the managers over the funding at the Nanchang store. Wal-Mart eventually
provided welfare funds for Chinese New Year in 2007.
Wage negotiations. Renowned throughout the world for its ‘low cost strategy’, Wal-Mart
has often been labelled as a labour-intensive industry that exploits employees by paying
low wages. In April 2007, the union at Nanchang voted on two matters of primary impor-
tance: each worker’s pay should increase 200 yuan per month in line with inflation, and
Wal-Mart should pay overtime rates to floor staff who frequently worked extended
hours. The trade union drafted this in a document entitled ‘The Nanchang Store Collec-
tive Wage Agreement’. This document was then passed on to the store managers,
requesting that they make a decision on it within 20 days. The Wal-Mart store refused to
sign the agreement on the basis that wage issues cannot be decided by just one store as it
would undermine Wal-Mart’s principal ‘low cost strategy’.
Improving the trade union system. In view of Wal-Mart’s refusal to cooperate with their
proposed agreement, union members in the Nanchang store held elections for three sub-
committees in April 2007: the Trade Union Committee, the Fund Review Committee and
the Women’s Committee. These subcommittees made the overall trade union at Nan-
chang store a healthy and efficient organization, while ensuring that union funds were
properly administered. Committee meetings were held once a month and a simple proc-
ess put in place to allow employees to enrol, withdraw, or transfer their membership
across the committees. Membership was based on a small fee system. Wal-Mart also set
up an office at the Nanchang store to cater for both the trade union and the Communist
Party branch. However, this office was just window dressing for visitors like scholars
and government officials who wanted to study how and why the union in the Nanchang
store was established, and the Communist Party branch in the Nanchang store does not
pay any substantive role.
Yueyang store5
The Yueyang trade union, which Wal-Mart itself established, has been the prototype
for other Wal-Mart unions in China. An examination of its actual functions highlights
the difference between this model and the worker-initiated model discussed above.
Notably, the Yueyang union has never been involved in a single organized strike. Its
focus has been on organizing entertainment and sports activities, supporting workers
with physical disabilities or those that are in financial difficulty, and lobbying Wal-
Mart on wage increases. Additionally, it has provided technical training for union
members, held workplace skill competitions and organized health examinations and
seminars for female workers.
In May 2007, there was talk of a strike among employees at the Yueyang store over
wages. The trade union, however, was unaware of this. Employees did not believe the
trade union had their best interests at heart and therefore thought that it would not con-
sider organizing a strike on their behalf. What started out as a somewhat clandestine
He and Xie 433
movement, with three key floor staff employees secretly keeping in touch with each
other by phone, turned out to be quite a significant event. The key players planned to
picket the Yueyang store at 2:30 p.m. on 25 August. They posted flyers in the staff can-
teen and the staff changing rooms, alerting other employees to the time of the strike and
the meeting place. On 25 August, a total of 40 employees gathered around the informa-
tion desk in the supermarket, proceeded outside to the front of the supermarket and
demonstrated in silence. Wal-Mart’s managerial staff instructed them to leave the prop-
erty. Of the 40 strikers, 24 refused to comply with the manager’s instructions. Conceding
a little ground, the managers gave the remaining strikers an ultimatum to which the strik-
ers agreed: any negotiation was only to take place inside the staff training room. However,
once inside, managers told the strikers they could not meet their demands because wages
decisions are only made by head office. After half an hour of negotiations with no out-
come all the strikers gave up their cause and left.
We can conclude from these two cases that the more or less independent trade union
in the Nanchang store protected the welfare of workers by invoking workers’ rights. It
was more confrontational and overall much better than that of the Yueyang store in vig-
orously defending the rights and interests of workers. By contrast, the trade union under
the Wal-Mart-initiated model provided welfare to workers or some form of assistance to
workers. It was more interested in looking after the welfare of workers in a restricted and
limited manner than defending the rights of workers.
Wal-Mart’s cooptation strategies

Wal-Mart has been in a constant battle with trade unions during its global expansion. In
response to the varying strength of unions in different countries it has adopted different
strategies. In Germany it resisted the enormous strength of the retail union there up to a
certain point, but closed down all of its operations when pressure from the union became
too great, selling its stores to a competitor at a loss of US$1 billion in 2006 (Hall et al.,
2006). Elsewhere it has simply closed down single stores or departments where unions
had got the better of the company. In Canada, for example, Wal-Mart shut the Jonquiere
outlet after collective bargaining was imposed on the store by the courts in 2004 (NUPGE,
2009). Where unions are relatively weak Wal-Mart has no trouble in dealing with them,
such as in Mexico where unions exist only on paper. The private sector retail unions there
simply collect dues and provide retailers like Wal-Mart with a legal and reliable means
of blocking authentic independent unions (Brunn, 2006; Tilly and Galva’n, 2006).
In China, Wal-Mart has been forced to relinquish a long-standing tradition of opposition
to unionism. Wal-Mart opted for a strategy that would effectively turn the union into an
‘ornament’ or a ‘club’. It took over the initiative of establishing of 102 unions across China
in 2006 and 2007. Most of the chairpersons of the trade unions are, however, managers or
assistant managers from the human resources department, selected by Wal-Mart.
Next on its agenda was to actively incorporate all the unions into one association,
which would make it easier for Wal-Mart to manage its unions, such as the one in
Nanchang, which was considered a loose cannon. This association was called the Trade
Union Supervision Committee. In Nanchang Wal-Mart nominated the members for this
committee from the following positions within the company: a general affairs manager,
a trade union chairman from another Nanchang store, who was an assistant to a general
manager of the store, two human resource directors and Gao Haitao, the trade union
chairman of the Nanchang store discussed earlier. Gao was the only general staff mem-
ber who had been officially voted in by a trade union. The others were all managerial
staff and selected by Wal-Mart. Gao strongly opposed this committee because its sole
agenda was to weaken and impede the trade union’s power, especially in the Nanchang
store. It was obvious to Gao that the other four members of the committee, who were
managers, would favour the company at the expense of workers’ rights. In short, the
practice went against the basic principles of the trade union that Gao stood for.
Subsequently, Gao submitted a report on this committee to the ACFTU. The ACFTU
then asked the high level trade union in Nanchang city to oversee the matter. Wal-Mart
eventually gave up its plan for the committee.
Meanwhile, Wal-Mart has developed another effective strategy of setting up staff
clubs with special funding. If employees perform well, Wal-Mart invites them to be
members of the club. If these members improve their performance they are placed on a
VIP talent bank shortlist, which gives them a chance for promotion into a managerial
position. These clubs compete with trade unions for employee membership and often
win out in the end because of career promotion opportunities. In our interviews some
employees said that they preferred to remain quiet with regard to union membership
rather than kick up a fuss – especially as they risk offending managerial staff by taking
up issues with the union.6
Wal-Mart has also employed subtle tactics that force trade union activists to resign.
While the trade union at the Jinjiang store was being established, Wal-Mart undertook
official investigations as to whether employees had accepted presents (or ‘bribes’) from
the city level trade union (Zhang W, 2006). One by one trade union committee members
submitted their resignation. In March 2008, a union chairman, Ke Yunlong, resigned
because his opinions differed from Wal-Mart management. (Notably, Ke was hired by
the Quanzhou city level union after his resignation.)
Gao Haitao, chairman of the Nanchang store union, had been under a great deal of
pressure from Wal-Mart ever since the trade union was established, and eventually
resigned too. The store’s human resources department went to extremes to undermine his
position. They would pressure him by undertaking a thorough investigation of his
timesheet records. Or they would offer him a managerial position within the store if he
would only give up his trade union chairmanship. The final straw came in September
2008, when the city trade union had recommended that the Nanchang store sign a ‘col-
lective contract’ with its trade union. Gao, having thoroughly read the terms of this con-
tract, which was drafted by the head office of Wal-Mart in China, suggested six
amendments, which were then rejected by the store’s human resources department.
Because the contract had been drafted by head office and approved by a higher level
trade union at the city level, human resources told Gao that they were in no position to
amend it and that he should follow the example of the other stores who had agreed to sign
it. On this occasion, the city level trade union went against Gao, telling him to cooperate
with the Wal-Mart managers. Gao stood his ground and refused to sign the contract.
Human resources simply bypassed his authority by selecting a few workers as ‘repre-
sentatives’ who agreed to the conditions. The lack of support from local government and
He and Xie 435
fellow employees, and the pressure from Wal-Mart, left him with little choice but to
leave. On 9 September 2008, Gao resigned. Sadly, absolutely no sympathy from his col-
leagues was extended to him when he left the company.7 On his resignation, Wal-Mart
chose a union chairman from the human resources department. Needless to say, all union
action related to workers’ rights at the Nanchang store ceased.
Wal-Mart has been very successful in handing the ‘union crisis’ by forging a strong
bond with different levels of the Chinese government. Chinese local governments tend
to be biased towards the interests of investors. City level unions play a vital role in set-
ting up local trade unions, but they also promote private industry opportunities to foreign
investors and maintain good relations with them. The siding of the Nanchang city level
union with Wal-Mart over the signing of the collective contract is such an example. Gao,
commenting on his departure from the Nanchang store, said that ‘the trade union can’t
protect workers’ rights’.8
Wal-Mart has taken great advantage of the fundamental lack of actual grassroots sup-
port for unions from ordinary workers (Tong, 2006). For example, while the union at the
Jinjiang Wal-Mart store was being established, some workers did not even know that the
union existed, let alone that Ke Yunlong was a ‘union chairman’ (Sun, 2006). At other
unionized stores, employees asked to join the union would only sign up if they were
given some kind gift from the union (Liu, 2007). Workers not happy with their working
conditions would go directly to the managers to resolve the problem. Gao Haitao, as the
union chairman at the Nanchang store, was in no position to rally interest from workers.
In the end, he left Wal-Mart because his own colleagues bypassed him to sign the collec-
tive contract drafted by Wal-Mart. In our interviews some employees expressed no inter-
est whatsoever in joining trade unions, believing that the rules and regulations Wal-Mart
had in place fully protected their interests and rights as employees.9
Wal-Mart’s successful handling of the ‘union crisis’ was partially due to the Chinese
state structure in which independent trade unions are not allowed. Trade unions in China
have been coopted by companies rather than independent bodies. Wal-Mart’s strategies
fit in well with Chinese political culture, which regards trade unions as little more than a
‘club’, servicing employees with recreational activities and the provision of occasional
ad hoc welfare support.
It must be added that Wal-Mart is not completely exploiting the situation in China.
There are some tangible benefits for many of its employees. Although the wages are low,
the wages for migrant workers in urban areas are much higher than for those involved in
agriculture and are continuing to rise due to labour shortages generated by the boom in
the export manufacturing sector. Some may even argue that Wal-Mart does provide
decent salaries in that they are actually a bit higher than the local average in cities across
China. Working for Wal-Mart may also be a springboard for further career opportunities.
Wal-Mart set up a workers’ club, which attracts members and promotes a high standard
of professionalism within the industry. Wal-Mart has also respectfully abided by Chinese
laws. For example, it has appointed managers and assistant mangers as key members of
the union preparation committee or as union chairpersons according to formal election
processes. At the same time, the ACFTU holds a paternalistic view that workers need to
be trained and cultivated. It has outlined how workers should think about unions: first,
workers should have a union even it is merely in name; second, they are cultivated to like
the union when they see the material benefits; third, they will eventually feel part of the
union (Zhao, 2006).
It is worth mentioning that the strategies adopted by Wal-Mart are not exceptional. In
December 2004, in Shenzhen, for example, 16,000 staff from Uniden, a manufacturing
plant of the Japanese electrical manufacturer, went on strike for five consecutive days to
organize a trade union. With support from the city level trade union in Shenzhen, Uniden
eventually agreed to set up a trade union at their plant. In 2006, however, almost two
years later, a senior executive of the Uniden Company appointed a Japanese employee as
the chairman of the trade union. Late in 2007, workers were suddenly dismissed from
this plant en masse. Only a few technical staff contacted the Labour Department, while
most of the other workers didn’t even know they were entitled to worker’s compensation
(Hu, 2009).
Conclusion
Contrary to the initial positive reactions to the ACFTU’s actions our empirical findings
reveal a dark and unpleasant picture. Wal-Mart was at first hostile towards unionization
in China and was successful in preventing it from occurring in the first few years. Due to
Wal-Mart’s procrastination, intransigence and resistance the ACFTU adopted an organ-
izing approach. Under pressure from above as well as from workers, Wal-Mart was
forced to accommodate three more or less independent unions before 8 August 2006, all
of which emerged from the workers’ own initiatives, with a little help from official
Chinese trade unions.
There was some naive hope that international companies would provide an opportu-
nity for independent unions in China. This hope has been dashed. Our research finds that
there is double cooptation. Both the Chinese government and Wal-Mart have coopted
independent unions. Wal-Mart prompted a new strategy to coopt trade unions on their
own terms. Despite the trade union at the Nanchang store presenting a significant chal-
lenge to Wal-Mart over a short period, its union chairman was forced to resign. Union
chairpersons of other more or less independent trade unions likewise shared similar fates.
Consequently, all the trade unions of Wal-Mart in China have ended up like a club or
welfare organization. In contrast, Chinese governments coopt them through officially
sponsored trade unions. Inevitably any union fight with Wal-Mart in China does as much
to showcase the union’s own shortcomings as those of the corporation. Indeed as Andrew
Rothman remarks: ‘Most multinational companies of any size in China have a union
presence, and I’ve not heard of it causing a problem for anybody’ (cited in Goldstein,
2003: 7). The weakness and inability of Wal-Mart’s trade unions to actually protect the
rights of their workers necessitates a crucial need for independent unions in China.
On the surface, the existence of trade unions in Wal-Mart in China departs from Wal-
Mart’s conventional anti-union practices and poses a challenge to Wal-Mart’s neoliberal
order. In essence, however, Wal-Mart and the Chinese government exhibit a significant
degree of ‘relative convergence’, or even ‘cross-vergence’ (Warner, 2002: 215–17). Both
aim at reducing the influence of unions and relying on management departments. They
share the same interest in maintaining hierarchy, harmony and loyalty. Both aim to
achieve efficiency via ‘harmonious industrial relations’ with concern that if workers
He and Xie 437
become more knowledgeable of their rights, they will improve their bargaining power
through the trade unions, and demand successive wage increases. When it comes to
social unrest or strikes by workers the CCP and Wal-Mart accommodate one another.
The interaction between the company and the party-state not only reflects a marriage
of convenience but also indicates some deeper compatibility, the compatibility between
China’s state corporatist model and the neoliberal approach taken by Wal-Mart.
Neoliberalism and state corporatism are actually in harmony. Wal-Mart unions have only
confirmed earlier findings that the integration of the trade union into management ‘pre-
vented collective consultation from providing an adequate framework for the regulation
of labour relations’ (Clarke et al., 2004: 235).
Gordon White (1996) found some elements of both the corporatism scenario and the
civil society scenario, but argued that corporatist industrial relations would be difficult to
establish and maintain. Unger and Chan (1995) observed that some of the old ‘mass
organizations’ were shifting gradually but perceptibly in a ‘societal corporatist’ direction
rather than towards a state corporatism model. The initial response to Wal-Mart’s union
was so enthusiastic that it was hoped that these unions would add further evidence to
support ‘the seed-germ of societal corporatism’ (Chan, 2008a). Our follow-up study,
however, demonstrates that the transition towards civil society and ‘societal corporatism’
has been stymied (He and Warren, 2011). Wal-Mart’s trade unions in China can still be
categorized as state corporatism. The widespread establishment of trade unions and Party
branches across the private sector has effectively enabled the Party’s full control and
prevented any independent tendencies from emerging.
Acknowledgements
The authors thanks two anonymous reviewers for their valuable comments and suggestions, Matt
Hood, Kingsley Edney, Wei Su and Yongxing Guo for their assistance and the Chinese interview-
ees for sharing with us their experience and insight. The support of Australian Research Council
(DP0986641) is gratefully acknowledged.
Funding
This research received no specific grant from any funding agency in the public, commercial, or
not-for-profit sectors.
Notes
1. This Global Alliance, however, ceased operating in 2004. See www.ethicalcorp.com/content.
asp?ContentID=2769.
2. In October 2009, we interviewed a scholar-official who attended the meeting and he requested
that we not reveal his identity.
3. Interview in Nanchang, June 2007.
4. Interview with Gao Haitao in Nanchang, 26 June 2007.
5. The information which follows comes from a number of interviews with union members in
Yueyang, May 2008.
6. Interviews with union members in Yueyang, 28 May 2008.
7. Interview with Gao and the workers in Nanchang store, 26 June 2008.
8. Interview with Gao and the workers in Nanchang store, 26 June 2008.
9. Interviews with union members in Yueyang, 28 May 2008.
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Baogang He is a professor and chair in International Studies at the School of Politics and
International Studies, Deakin University, Melbourne, Australia. Professor He is the
author of four single-authored books and three edited books, and 50 international refe-
reed journal articles. His research interests cover deliberative democracy, Chinese poli-
tics, comparative politics, Asian regionalism and federalism in Asia.
Yuhua Xie is a professor in the College of Business Management, Hunan University,

China. Her major research interest covers industrial democracy and labour relations. She
has recently published a number of articles on industrial democracy, employee participa-
tion and collective bargaining. Email: yhxie66@yahoo.com.cn.
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Wal-Mart's Trade Union in China

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Economic and Industrial Democracy

Wal-Mart’s trade union

The process of establishing trade unions

acquiring the necessary qualification, he decided to stay on with Wal-Mart. Here he

The functions of the trade union

Wal-Mart’s cooptation strategies

Yuhua Xie is a professor in the College of Business Management, Hunan University,

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