What Impact Will the Revised Trade Union Law of China Have on Foreign Business?

By Bugaighis, Zana Z. | Pacific Rim Law & Policy Journal, March 2007 | Go to article overview

What Impact Will the Revised Trade Union Law of China Have on Foreign Business?


Bugaighis, Zana Z., Pacific Rim Law & Policy Journal


Abstract: Cheap labor. Minimal regulations. Bribable officials. Foreign corporations attracted to China because of its low cost of business have avoided the unionization desired by the Chinese Communist Party ("CCP") despite China's history of weak trade union laws and inconsistent enforcement of union mandates. However, recent concerns of social unrest have forced the CCP to consider reforming the political tools used to control Chinese society. The CCP wants to create social stability, avoid independent unionization, and prevent the westernization of China. Foreign Investment Enterprises ("FIEs") present new challenges for labor market regulation in China with their large number of non-unionized workers revolting at poor working conditions, as well as FIEs' importation of western values. The Trade Union Law amendment of 2001 affords the All-China Federation of Trade Unions ("ACFTU") more avenues of enforcement through which to force FIEs to unionize and obliges the ACFTU to become a greater presence in private enterprises-especially FIEs. Moreover, the proposed (draft) Labor Contract Law provides the ACFTU with greater oversight power through which to monitor the actions of FIEs and Chinese workers.

The new regulatory environment providing greater legal authority to the ACFTU does not need to cause foreign enterprises to withdraw from China out of fear of increased unionization or further legislation. The ACKTU and CCP value harmonious relationships over striking workers and value foreign business. Moreover, unionization will help consolidate workers under the socialist regime of the CCP, creating a more stable society and working environment in China, which ultimately will benefit FIEs. China's battle with FIEs to increase unionization is being waged by the CCP in order to enable the CCP to control the Chinese workforce and minimize outside influence, not in order to impose stricter conditions on foreign investment and take control over foreign business from enterprise management.

I. INTRODUCTION

Recently, China's push for unionization of Foreign Investment Enterprises ("FIEs") has become big news due to the country's unionization of mega-store Wal-Mart's Chinese workforce.1 Wal-Mart, staunchly antiunion in the U.S., conceded suddenly to unionization requests by the AllChina Federation of Trade Unions ("ACFTU")2 after a fight lasting more than two years.3 Most interesting in this story, and explored in this comment, are the reasons why Wal-Mart allowed unionization in its Chinese stores and the motivations and legislation behind the Chinese Communist Party's ("CCP") and ACFTU's push to compel Wal-Mart to unionize.

For years, dwindling trade union membership4 has threatened the CCP's control over increasingly agitated Chinese workers,5 allowing for an increasing number of strikes in China.6 FIEs' increasing role in the Chinese economy, and their refusal to unionize, caused the CCP concern over possible westernization of the Chinese workforce inconsistent with socialist ideals.7 With large numbers of workers' protests, widespread labor unrest, and increased independent organization, as well as a real fear of foreign influence, the CCP recognized the ability of the ACFTU to exert control over the troubled Chinese workforce.8

The CCP is attempting to reassert control over Chinese workers by increasing unionization through a grant in the Trade Union Law9 of more enforcement and oversight power to the ACFTU and by creating further legislation10 in order to improve political relations with, and labor conditions for, workers.11 This move is meant to strengthen the power of the CCP through national unionization and to facilitate economic development through social stability in China's new market economy.12 Spurred by the CCP, the ACFTU, China's only legal trade union,13 is attempting to unionize the entire Chinese workforce, with a goal of unionizing eighty percent of FIEs by the end of 2007. …

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What Impact Will the Revised Trade Union Law of China Have on Foreign Business?
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