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DE RUEHGZA #5215 2140751
ZNR UUUUU ACCORDINGLY.
R 020751Z AUG 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 0000
INFO CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEHC/DEPT OF LABOR WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

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