A Fight against the Elephant
By Hong Zhou “Because I’m happy. Clap along if you feel like a room without a roof. Clap along if you feel like happiness is the truth,” the American pop star Pharrell Williams led the 14.000 audience singing the song ‘Happy’ in the hall in Fayetteville, Ark, where the world’s largest retailer was holding the annual shareholders’ meeting. Not at all was the upbeat tone tempered by the strikes and criticism Wal-Mart has drawn. One day before the meeting kicked off, “Wal-Mart moms” protested against low wages and poor working conditions in front of its headquarters in Bentonville, Arkansas, in a series of non-union protests over 20 cities. Thousands of miles away in central China’s Hunan province, about 70 workers from the union at Wal-Mart’s Changde supermarket were determined to extend a marathon protest over its improper closure of a store. Happy Wal-Mart workers?
Not in China at least. Workers are awakening to strive for better treatment as their American counterparts are doing. It is the first time that the union appears to have exerted real influence on the labor dispute, which was not expected by Wal-Mart when it bowed to the pressure from the Chinese government eight years ago to allow the establishment of a workers’ union. The retailer was known for its long-standing anti-union stance.
The recent protests of union workers against Wal-Mart may also portend a shift in the power balance between Chinese employees and foreign companies which have enjoyed decades of policy preferential since the late 1970’s, when the government was yearning for the influx of foreign investment.
Wal-Mart landed in the Chinese market in 1996, selling ‘made in China’ to local customers, but the tactic has not been as successful as it was at home. Last year 25 Wal-Mart stores were closed due to poor performance amid large scale restructuring following the fast expansion. It plans to shut down 15 to 30 stores before 2016 while opening 110 stores to improve its operation in China. The retailer operated about 400 stores in China by the end of January.
Wal-Mart has not met with resistance as strong as the one in Changde, a city northwest of central Hunan province, since it launched the restructuring plan last year. Chinese workers have long held reputations for great endurance of overtime work, military-like management and silence on mistreatment, the backbone ethic of the ‘world factory.’
The company brought the plan to close the Changde store without consultation with the union beforehand in early March. The decision would literally put most of the 143 members of staff out of job at a time when the economy appears sluggish. Although Wal-Mart offered an alternative of relocating staff to another supermarket one hour ride by train from Changde, without providing extra financial aid to help them settle down. It was in fact pushing its employees, 90 percent of whom are women, into a jobless situation. A woman employee was crying during a private meeting with the management. Shocked by the unexpected changes and displeased with the compensation, anger quickly accumulated among employees. Led by Huang Xingguo, the chairman of the union at the store, half of the employees refused to sign the termination of the working contract before they were guaranteed proper compensation.
It has been an exhausting fight where hope and despair alternated. Protest is a risky business in a country where the participant would face up to seven years imprisonment if the protest is deemed to cause disorder in the society. The local government stepped in mid-March, initially siding with Wal-Mart, and sent security forces to disperse workers who gathered to stop Wal-Mart from moving merchandise and equipment out of the store. One worker was detained under the accusation of “disrupting the normal business operation.” Motivated by having good records on stimulating the economy to polish their political careers, local government officials usually align with the foreign companies in dealing with the labor unrest. That is also one of the key factors that alleviated Wal-Mart’s concerns about allowing unions in the stores in 2006.
Union Acts
In the following tussle, Wal-Mart persuaded a few workers to accept the severance package by adding payment equivalent to a half month’s salary, but refused to negotiate with the union. It insisted on addressing complaints individually, even though it recognized the store union, the smallest unit of the All China Federation of Trade Unions (ACFTU), the only legal union supervised by the communist party.
Back in 2006, Wal-Mart eventually conceded to agree on unionization, which was seen by ACFTU as a major breakthrough in urging foreign companies, an increasingly important part of the composition of the economy, to set up union branches. With the shrinking state-owned sector where ACFTU had the most influence, reaching out to the private sector was of political significance to ACFTU. Some experts argued that installment of unions at the grass roots level was aimed at empowering the government to tighten control over the rapidly expanding private-sector workforce. In the eight years to 2012, the number of workers in the private sector and those self-employed rose to 200 million, more than double the number in 2004, while the state-owned companies added one million employees in the same period of time.
Yielding to the unionization call was very usual for Wal-Mart. All attempts at organizing labor unions at Wal-Mart stores in the US have failed. In Europe, Wal- Mart exited the German market in the wake of pressure on unionization in 2006. Tough as it was, it probably could not afford to lose the market with over 1 billion consumers. And considering the role of ACFTU as little more than a workers’ club with the goal of stabilizing the society, accepting unionization to get along with the government seemed to be a safe bet for Wal-Mart.
Now the wind is changing, probably into a course that has not been in Wal-Mart’s picture. The recent labor shortage has boosted salaries. Official data shows the average annual salary of those working in private sectors rose by 60 percent to 28.752 yuan ($4600) from 2009 to 2012 when the GDP growth rate declined to 7,8 percent, the slowest in 13 years. Besides, the enforcement of the Labor Contract Law in 2008, which better safeguards workers’ right and easy accessibility of social media, has also contributed to the rising awareness of labor rights among workers. Labor unrest is becoming common in today’s China, particularly among the 260 million migrant workers.
Amid growing labor incidents, what makes the Changde case special is “Enterprise-level union's active involvement,” said China Labor Bulletin (CLB) in an email interview. The founder of the Hong Kong based labor right NGO, Han Dongfang, participated in the Tiananmen Square protest in 1989. The organization also pointed out that the role of the chairman of the store union, Huang Xingguo, is indispensable. A former laid off worker from a state-owned company in 1990’s massive economic reshuffle, Huang had a Bachelor degree, and was better-educated than most of his colleagues. He started as a cashier with a salary of 900 yuan ($140) per month and was quickly promoted to the mid-management level in the Changde Wal-Mart store. He was elected the chairman of the store union, rather than being appointed by Wal-Mart like most union leaders in other stores. He was trusted among union members.
Huang Xingguo told his peers to hold on when some agreed to accept the compensation and quitted the protest. After the harsh involvement of the local government and the ambivalent attitude of the ACFTU disappointed employees, he turned to social media for support. He started a blog dedicated to illustrating their fight with texts, pictures and videos. He united the staff by setting up chatting group via QQ and Wechat, the most popular instant message applications in China. He got in contact with Wal-Mart workers who were protesting at the same time in the northern Ma’anshan region. Changde protest soon captured the attention of foreign and domestic media, labor rights NGOs, lawyers and experts, who later composed the crucial supportive team behind the campaign. Pressures mounted on the local government and ACFTU as media coverage sympathizing with workers grew and legal experts on behalf of the workers engaged with discussions with government officials.
China Labor Bulletin also noted that the general political atmosphere seemed to be in favor of the workers. Since the new government took office in 2013, it has been advertising the “Chinese dream” with the commitment of creating an equal and harmonious society. Workers, who were once the major force of revolution and progressive movement in Chinese history, have been promised they will not be left out of a chance for a better life. Some labor rights observers say, under the policy guidance, ACFTU has to answer the call of the central government to safeguard workers' rights. At least it should not be a stumbling block.
“The union was truly representing workers in this case, which is rarely seen among strikes in China,” said Chang Kai, a professor specialized at labor law, who sits on the legal consultant committee for Changde workers, in an interview with an independent Chinese news portal, Icenci.
The local government no longer threatened the employees with force in the following standoffs and instead advised Wal-Mart to open negotiations with workers. Wal-Mart still resisted, defending itself by stating that it has complied with the labor law. But what concerns it most is probably the fears that subjecting to employees’ demands would set a bad precedent.
Enemies or Friends?
Those Chinese workers even looked beyond the country for support. They wrote a letter in English to the American Federation of Labor–Congress of Industrial Organizations (AFL-CIO), one of the two umbrella labor organizations in the US, with the help of volunteers, accusing Wal-Mart of misconduct in China and seeking support and empathy from Wal-Mart employees globally. The AFL-CIO quickly responded by saying it “supports the demands of Chinese workers.” It has symbolic meaning: confronted by the monopoly of multinational companies, enemies could turn into friends, even though antagonism recedes in the form of vocal support.
Cheap labor in China has long been criticized as one of the major factors that keep the wages of the American workers low in the accelerating process of globalization. Meanwhile, voices of boycotting Chinese products are still loud in the public debate. In 2013, $440,4 billion US worth of goods were imported from China, accounting for 20 percent of the overall imports in the US. Union bargaining power has been weakened to a certain extent by economic globalization. Companies in the US used to counter the pressure of unionization by threatening to move factories or outsource part of productions to low-wage countries like China.
On the transnational stage, Chinese and US workers are competing for jobs, but at the same time they are taking a hit from the intimidating power of the multinational company. Both of them want decent lives out of a slightly bigger chunk of Wal-Mart’s profit. Chinese workers at Changde Wal-Mart supermarket are asking to be treated with respect in addition to fair payment; women employees in the US are demanding higher wages and flexible working hours to take care of families.
Critics say Wal-Mart’s success is at the expense of smaller shops, community, employees and suppliers, but backed by global outsourcing at the lowest cost, and that Wal-Mart is too important to the American society. “The giant retailer is at least partly responsible for the low rate of U.S. inflation,” and a McKinsey & Co. study concluded that about 12 percent of the economy's productivity gains in the second half of the 1990s could be traced to Wal-Mart alone. Charles Fishman, a business journalist pointed out in his column for Fastcompany.
In the documentary film Wal-Mart: The High Cost of Low Price, an American whose family store was forced to close due to the arrival of Wal-Mart in the community, commented: “It(Wal-Mart) is just a Chinese company with American board members! ” Sam Walton, the founder of Wal-Mart, who was once described by an old friend as “cold as a Sunday night supper,” might not find the judgment too offensive. The company has thrived on squeezing the employees and suppliers and it is a big purchaser of Chinese goods. It bought $15 billion US products from China in 2003, making up 10 percent of what the US imported from China, according to an interview with Wal-Mart officials by the official China Daily.
But China is more than just the manufacture factory to Wal- Mart. It is the biggest consumer market and the market is expanding. There are also a new generation of workers epitomized by Changde Wal-Mart employees who are determined and articulate and demand collective negotiation with employers. On June 1st, Walmart Changde employees refused the retailer’s offer of 3000 yuan ($480 US) to each worker as compensation for legal cost after two days’ arbitration. Huang Xingguo, the chairman of the union, told the official Xinhua News Agency, "We didn't feel respected." The prospect of these workers getting what they deserve is uncertain, but they are no doubt writing the founding note of the Happy song of Chinese workers.
Ina Zhou has worked for Dow Jones Newswires in Shanghai, specialising in financial news, before coming to Europe to pursue a masters in Journalism. Picture via *
