EMPLOYEES FORM FIRST UNION AT WAL-MART IN CHINA

UNCLAS GUANGZHOU 025215 SIPDIS SENSITIVE SIPDIS STATE FOR EAP/CM, DRL/IL STATE PASS USTR FOR KARESH, ROSENBERG LABOR FOR ILAB HELM, LI ZHAO, SCHOEPFLE USDOC FOR 4420/ITA/MAC/MCQUEEN STATE PASS USTR USPACOM FOR FPA E.O. 12958: N/A TAGS: ELAB ECON CH SUBJECT: EMPLOYEES FORM FIRST UNION AT WAL-MART IN CHINA (U) THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE ACCORDINGLY. ¶1. (U) SUMMARY: WAL-MART EMPLOYEES IN THE CITY OF QUANZHOU, FUJIAN PROVINCE, RECENTLY ESTABLISHED THE FIRST UNION FOR THE STORE'S EMPLOYEES IN CHINA. ON SATURDAY, JULY 29, THE WAL-MART UNION MEMBERS ELECTED A SEVEN-PERSON COMMITTEE AND SELECTED 29-YEAR OLD KE YUNLONG AS CHAIRMAN. ACCORDING TO THE XINHUA NEWS AGENCY, THIS FLEDGLING UNION IS COMPRISED OF 30 WORKERS AND OPERATES UNDER THE AUSPICES OF THE ALL-CHINA FEDERATION OF TRADE UNIONS (ACFTU) -- A GOVERNMENT CONTROLLED ORGANIZATION AND THE ONLY LEGAL UNION IN CHINA. CRITICS FEAR THAT THE RECENT WAL-MART UNIONIZATION IS MERELY A GOVERNMENT PUSH TO WIELD INFLUENCE OVER FOREIGN COMPANIES, RATHER THAN PROTECT CHINESE WORKERS. END SUMMARY. ¶2. (U) GATHERING IN THE CONFERENCE ROOM OF THE GENERAL TRADE UNION OF QUANZHOU MUNICIPALITY, WAL-MART EMPLOYEES IN FUJIAN PROVINCE RECENTLY ESTABLISHED THE FIRST UNION FOR THE STORE'S EMPLOYEES IN CHINA -- THE JINJIANG STORE TRADE UNION. ON SATURDAY, JULY 29, THE WAL-MART UNION MEMBERS ELECTED A SEVEN-PERSON COMMITTEE AND SELECTED 29-YEAR OLD KE YUNLONG AS CHAIRMAN. ¶3. (U) WAL-MART CHINA HAD PREVIOUSLY RELEASED A STATEMENT THAT SHOULD ASSOCIATES REQUEST FORMATION OF A UNION, WAL- MART CHINA WOULD RESPECT THEIR WISHES AND HONOR ITS OBLIGATION UNDER CHINAS TRADE UNION LAW. NEVERTHELESS, WAL- MART ASSERTED THAT IT WOULD RATHER DEAL WITH THEIR EMPLOYEES DIRECTLY. PRESS REPORTS ON JULY 31 QUOTED A WAL-MART SPOKESWOMAN AS SAYING THAT THE COMPANY WAS NOT AWARE OF THE UNION'S FORMAL ESTABLISHMENT. POST CONTACTED A WAL-MART CORPORATE AFFAIRS OFFICIAL IN FUJIAN WHO DECLINED TO COMMENT. THE QUANZHOU GENERAL TRADE UNION MERELY REFERRED THE CONSULATE TO A JULY 30 QUANZHOU NEWSPAPER ARTICLE FOR DETAILS AND COMMENTS. ¶4. (SBU) ON AUGUST 2, ECONOFF SPOKE WITH MR. LI CHENGJIE, DEPUTY DIRECTOR OF THE CORPORATE RELATIONS DEPARTMENT FOR WAL-MART IN SHENZHEN, WHO SAID THAT THIS IS A SENSITIVE ISSUE. LI ADMITTED THAT THEY LEARNED OVER THE WEEKEND THAT 29 WAL-MART ASSOCIATES HAD FORMED THE UNION. WAL-MART IS CURRENTLY ARRANGING A MEETING IN BEIJING WITH THE ACFTU TO "CLARIFY ISSUES." LI NOTED THAT THE WAY IN WHICH THE UNION WAS FORMED WAS "RATHER UNUSUAL." HE SAID THE EMPLOYEES WERE BUSSED OUT IN THE MIDDLE OF THE NIGHT WITHOUT INFORMING THE COMPANY TO HOLD THE MEETING FORMING THE UNION. LI STATED THAT WAL-MART HAS HAD A GOOD DIALOGUE WITH ITS ASSOCIATES AND WANTS AN OPEN DISCUSSION WITH THEIR EMPLOYEES. EFFORTS TO FORM UNIONS AT OTHER STORES HAVE BEEN ONGOING, BUT LI REMARKED THAT REQUESTS TO FORM UNIONS AT THEIR STORES IN OTHER CITIES HAVE GREATLY INCREASED SINCE THE QUANZHOU UNION STORY BROKE IN THE PRESS. LI SPECULATED THAT THE ACFTU'S METHODS ARE AN EFFORT TO BOOST DECLINING MEMBERSHIP ROLLS. ¶5. (U) THE UNIONIZATION APPEARS TO BE RIDING ON THE HEELS OF A RECENT ACFTU PUSH TO EXERT MORE CONTROL OVER FOREIGN COMPANIES. VICE PRESIDENT OF THE ACFTU, XU DEMING, SAID THAT ONE OF THEIR MAJOR TASKS IN 2006 WAS TO PUSH FOREIGN- FUNDED OR TRANSNATIONAL COMPANIES TO UNIONIZE. IN EARLY JULY, ACFTU PRESIDENT WANG ZHAOGUO SINGLED OUT WAL-MART. "WE STARTED TO PUSH WAL-MART TO SET UP UNION BRANCHES TWO YEARS AGO," HE STATED. WANG WANTS THE GOVERNMENT TO MAKE IT MANDATORY FOR ALL FOREIGN FIRMS TO SET UP UNIONS FOR THEIR EMPLOYEES. WAL-MART CURRENTLY HAS 60 STORES AND 23,000 EMPLOYEES IN CHINA, WHERE IT HAS BEEN OPERATING SINCE 1996. THE ACFTU IS THE ONLY LEGAL UNION IN CHINA WITH A MEMBERSHIP OF 150 MILLION AND 1.174 MILLION BRANCHES. ¶6. (U) SKEPTICS DOUBT THAT UNIONS WILL REALLY BENEFIT WAL- MART'S APPROXIMATELY 23,000 CHINESE EMPLOYEES. THE ACFTU HAS BEEN ACCUSED OF FAVORING BUSINESS INTERESTS OVER WORKERS' RIGHTS. THEIR MEMBERS HAVE LITTLE AUTONOMY AND ARE NOT ALLOWED TO ORGANIZE INDEPENDENT TRADE UNIONS OR ARRANGE COLLECTIVE BARGAINING ACTIVITIES. WORKERS WHO STRIKE OVER WAGES AND WORKING CONDITIONS ARE DISMISSED, AND ORGANIZERS OF LABOR PROTESTS FACE IMPRISONMENT. DEPUTY CHAIRMAN OF THE ACFTU, XU MING DE, SAID THAT THE TRADE UNION "PLAYS AN IMPORTANT ROLE IN PROTECTING EMPLOYEES LEGAL RIGHTS AS WELL AS PROMOTING THE HARMONIOUS RELATIONSHIP" BETWEEN THE EMPLOYEES AND THE COMPANY. THE WALL STREET JOURNAL REPORTS THAT THE ACFTU MAY USE ITS CONNECTIONS WITH THE GOVERNMENT TO BRING ABOUT FINES AND ADDITIONAL WORKPLACE INSPECTIONS AGAINST WAL-MART. ¶7. (U) COMMENT: THE CREATION OF THE WAL-MART UNION COMES IN THE CONTEXT OF DEBATE OVER A PROPOSED LABOR CONTRACT LAW. A SECOND DRAFT OF THIS LAW WAS RELEASED IN MARCH AND WOULD GIVE THE ACFTU THE RIGHT TO NEGOTIATE ON BEHALF OF WORKERS THROUGH COLLECTIVE BARGAINING; UNIONS WOULD HAVE TO BE CONSULTED ABOUT MASS LAYOFFS AND APPROVE COMPANY RULES FOR EMPLOYEES. CRITICS FEAR THAT THE RECENT WAL-MART UNIONIZATION IS MERELY A GOVERNMENT PUSH TO WIELD INFLUENCE OVER FOREIGN COMPANIES, RATHER THAN PROTECT CHINESE WORKERS. UNIONIZATION MAY PROVIDE AN OPPORTUNITY FOR THE CHINESE GOVERNMENT TO BRING WORKERS IN THE PRIVATE SECTOR UNDER STATE CONTROL. THE QUANZHOU UNION SETS A PRECEDENT FOR THE OTHER 59 WAL-MART STORES IN CHINA. IT COULD ALSO ENCOURAGE OTHER FOREIGN AND DOMESTIC COMPANIES' EMPLOYEES TO FORM UNIONS. MARTIN