The emergence of China as an economic superpower

As we all know, Wal-Mart has a history of banning labor unions in its company, which is why it has been widely criticized by human rights and labor organizations. However, after several years’ negotiations, Wal-Mart China has finally allowed the Chinese to establish labor unions in its 22 outlets and the 60 Wal-Mart stores across the nation.

Analysts said that the reason Wal-Mart made this concession is because of the mounting pressure from the All China Federation of Trade Unions (ACFTU) and the public. This is partially true - at least on the record. In 2004, Wal-Mart China said that the company would respect worker’s wishes and honor its obligations under China's labor union law. However, these words can be regarded as diplomatic language as well.

The fundamental fact is, Wal-Mart as a discount retailer company is highly sensitive on the cost management, particularly on its employers’ wage cost side. Due to China’s abundant labor supply and its market wage system, Wal-Mart doesn’t need to worry too much about the labor costs in the foreseeable future. In the U.S., the labor unions asked for the living wage rate while Wal-Mart preferred a minimum wage system. That is why Wal-Mart could allow the Chinese, but not Americans, to set up labor unions.