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Millions of workers affected

Foreign businesses in China forced to unionize

Published Oct 18, 2008 6:54 AM

China is forcing some of the biggest corporations in the world to immediately allow workers in their giant plants, offices and shops to unionize. In a widely publicized 100-day campaign, the Chinese government set a deadline of Sept. 30 for corporations doing business there to recognize unions.

The ruling benefits millions of Chinese workers, who will now have a say not only in their wages but in working conditions and health and safety issues.

This sweeping change impacts almost all the U.S. Fortune 500 companies doing business in China. Wang Ying, a senior official with the state-backed All-China Federation of Trade Unions, explained that there are holdouts, such as Microsoft and pharmaceutical giant Wyeth. But even they “don’t dare say they will not set up unions. They are finding all kinds of excuses to put it off.” (Christian Science Monitor, Sept. 29)

The ACFTU is under the leadership of the Chinese Communist Party. Two years ago it represented 170 million workers. Its goal by the end of the 100-day campaign was to increase its membership to 200 million—more than 12 times the number of unionized workers in the United States.

Will these unions be just paper organizations? The giant transnational corporations don’t think so, judging by their hostility.

Jim Leininger, the Beijing head of the U.S. management consulting firm Watson Wyatt, explained that “Many foreign firms see unions as an unnecessary hindrance.” But they have acceded to the unions, he said, because “they don’t really have a choice.” (CSM, Sept. 29)

These are companies that moved to China to lower manufacturing costs and avoid unions in their home countries. Now they “fear admitting the unions will give their Chinese employees the power to slow or disrupt their operations and will significantly increase the cost of doing business here.” (New York Times, Sept. 12) In other words, they will have to pay more in wages and benefits. The new laws will also make it more difficult to fire workers.

Wal-Mart, McDonalds, Disney

Wal-Mart, McDonalds and Yum Brands—which operates KFC and Pizza Hut—have all been forced to agree to unions. Yum Brands has 160,000 workers in China. Wal-Mart has 83,000 workers at its 108 Chinese stores in 55 cities. Wal-Mart, Disney and Adidas have been singled out for using contractors that violate Chinese labor law.

A contract with Wal-Mart signed in late July brought an immediate 8 percent pay increase, along with job protection and legal support in addressing workers’ grievances over intimidation, forced overtime, fraudulent pay stubs and dangerous work conditions. Workers at Wal-Mart stores in the U.S. and other countries where unions have been kept out face similar conditions.

ACFTU representative Wang Ying says more than 4,100 major foreign companies run by the Fortune 500 are doing business in China. She says that despite “tremendous resistance,” especially from U.S. companies, 82 percent of the companies have formed trade unions to date, and the figure would reach 90 percent by the end of this year. As of July before the campaign was started, workers had been able to form unions in less than 50 percent of the Fortune 500 firms. (China Daily, Oct. 7)

While global companies were the target of the 100-day campaign, Chinese companies and contractors make up the bulk of manufacturing work, and those not already unionized are facing pressure to do so.

The 100-day union drive follows strong legislation on labor contracts and arbitration passed by China’s parliament, the National People’s Congress, to strengthen employee rights “after decades of laissez faire investor-friendly policies.” Chinese labor laws now guarantee the right to strike and the right to sue the employer directly. Chinese workers are increasingly turning to courts to enforce their rights to organize. (China Law Blog, Sept. 15)

Wildcat strikes led the way

The wave of unionization follows several years of growing wildcat strikes, tens of thousands of job actions, and efforts of Chinese workers to organize to defend their rights against super-exploitive conditions in foreign-owned plants. From 1995 to 2006 labor disputes increased 13-fold, according to China Law Blog. Many disputes erupted into mass demonstrations.

The role of unions is also changing. In Guangdong Province in the south, long the center of the largest number of foreign-owned plants, unions are becoming more aggressive in their demands. New labor laws and stricter labor law enforcement means that corporations can no longer avoid paying overtime.

ACFTU also has an active campaign to reach out to millions of new migrant workers who continue to flood in from the countryside. These are the workers with the lowest skills who hold the most oppressive jobs.

These campaigns are not socialist measures. Rather they are defensive efforts, spurred by mass struggle, to protect the workers from the worst effects of capitalist ownership, which has grown in China ever since the adoption of “market socialism” in the late 1970s.

‘Market socialism’—a concession

The Chinese Communist Party in the early years of the socialist revolution led heroic efforts to conquer extreme underdevelopment through such campaigns as the Great Leap Forward and the effort to move from collective farms to communes and rural industries.

These heroic efforts enabled the Chinese Revolution to mobilize a largely peasant population to lay the groundwork for a more modern society. Giant strides were made in literacy for the whole population. Mass immunization campaigns and basic health brigades brought epidemics and plagues under control. Infant mortality and life expectancy improved dramatically. Major construction projects undertaken by millions of volunteers brought irrigation, dams and modern roads to the countryside for the first time.

Meanwhile, the developed imperialist world kept China blockaded, sanctioned and isolated from the modern technologies that were changing the West.

In the late 1970s the grouping in the Chinese leadership often called “capitalist roaders” made dangerous concessions in an effort to overcome underdevelopment and attract modern technology and investment capital. China opened its doors to imperialist corporations. The communes were broken up and land use was virtually privatized.

Initially, special capitalist enterprise zones were established. Thousands of Western corporations flocked to take advantage of the low wages that millions of peasants arriving from rural areas were willing to accept.

From the 1990s on, the socialist economy made further concessions. Today more than 150,000 foreign-owned enterprises operate in China. They parcel work among hundreds of thousands of subcontractors.

The All-China Federation of Industry and Commerce reported last February that nearly 200 million Chinese, out of a 1.3 billion total population, worked in private enterprises. However, these enterprises produced 60 percent of the country’s gross domestic product.

The government’s policy also encouraged the growth of a capitalist class within China. In perhaps the most dangerous concession, the Chinese Communist Party has agreed to allow members of that class into the workers’ own party.

Imperialism remains hostile

U.S. imperialism for decades has aimed to penetrate China’s economy and political structure enough to carry out a complete capitalist counter-revolution.

Even while U.S. corporations flooded into China, the Pentagon continued its plans to surround China with bases. It arms and continues to support a separate, hostile government in Taiwan, an island that is internationally recognized as part of China.

The U.S. also supports and gives endless publicity to the Tibetan separatist movement and finances the phony government-in-exile headed by the Dalai Lama.

China’s economy has continued to grow. It now holds a huge trade surplus with the U.S. But the money that China holds means that a significant part of the economy is hostage to the constantly devaluing U.S. dollar. Nevertheless, China has been able to invest billions in infrastructure projects and finance its development.

The capitalist market has made serious inroads in production, distribution and finance. International banks were just recently granted the legal right to buy major stakes in Chinese banks. A great deal of China’s growth is linked to export-oriented manufacturing industries.

The impact of the worldwide capitalist crisis on foreign corporations doing business in China is not yet known. The interests of several million small entrepreneurs, merchants and traders, along with a growing number of big Chinese capitalists, are bound up with imperialism.

But China’s revolutionary break with imperialism in 1949 still remains a mighty social force. It inspires millions of Chinese workers to this day. The recent laws and organizing campaigns are giving the workers new strength when and where they most need it. By all accounts, in both the Chinese media and the Western corporate media, they are taking advantage of the moment.