Financial Times: Official China union raises stakes in Walmart closure programme

China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher.

March 23, 2014

By Tom Mitchell in Beijing and Barney Jopson in Washington

A restructuring of Walmart’s China business is being challenged by the country’s normally reticent official union, which is involved in at least one of three protests that have erupted at stores slated for closure this month.

A unit of the government-sanctioned All China Federation of Trade Unions has been leading the protests outside a Walmart store in Changde, Hunan province that closed last week. The ACFTU’s involvement in an industrial action, which is extremely rare, could increase official scrutiny of the closures.

“The fact that the union president has come forward in Changde has given the workers great confidence,” said Wang Jiangsong, a labour expert who has been advising the workers in Changde and at two other Walmart stores in Maanshan, Anhui province.

The protests highlight Chinese workers’ growing willingness to demand higher compensation during corporate acquisitions and restructurings, in addition to agitating for higher pay adjustments every year. A historic demographic shift in 2012, when China’s working-age population declined for the first time, has given workers greater bargaining power.

China has proved to be a difficult market for Walmart. It opened its first stores in the country in 1996 and now has about 400, but it has struggled to get a satisfactory return on investment and in the past two years has admitted to making mistakes in its haste to expand.

While China’s ACFTU was instrumental in establishing branches at Walmart’s Chinese stores in 2006 and 2007, many labour activists say that it is more interested in collecting lucrative payroll fees than fighting for workers’ rights. ACFTU officials played no part in a recent strike that affected an IBM factory in southern China and have also been silent on two other labour protests in which workers were charged with disrupting public order.

China Labour Bulletin, a Hong Kong-based rights group, has described the situation in Changde as “historic”.

“It’s a very unusual and encouraging sign that a store union chairman would take the initiative and take such a strong stand in defence of his members’ interests,” said Geoffrey Crothall at CLB.

Chinese workers have been picketing the stores in Changde and Maanshan since it was announced that they would be closed. They are demanding twice the compensation offered by Walmart to workers who will lose their jobs, and also rental and other subsidies for those who transfer to stores in other cities.

The more than 140 workers at Walmart’s Changde store have been offered positions in the city of Yiyang, a three-hour bus ride away. “Workers cannot survive elsewhere on their low wages,” said the store’s union head, Huang Xingguo. “Walmart’s offer is an empty cheque. Our families are in Changde. It would cost more to rent new homes in Yiyang.”

Mr Huang has vowed to continue the Changde protest even after police forcibly detained workers at the weekend.

Walmart has denied claims that its workers in Changde and Maanshan were given inadequate notice about the closures and says that it consults closely with local governments, the ACFTU and affected workers. “The nearest store [to Changde] is Yiyang, which unfortunately is about 100km away,” said Ray Bracy, a senior vice-president with Walmart’s China operations. “That makes it really difficult for the associates to transfer.”

Mr Bracy said Walmart was closing about 20 stores as part of a wider restructuring of its China business, but also has plans to open another 110 new stores and hire 19,000 more workers over the next three years. “Those stores [that are closing] are not acceptable from a dollars and cents standpoint,” he added. “In the cases where we’re closing it’s a decision of last resort.”

Additional reporting by Wan Li

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