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Wal-Mart, world's No.1 retailer, has become the target of the All-China Federation of Trade Unions (ACFTU), for refusing to establish trade unions in its branches in China.

Before the opening of the Chinese Trade Unions 14th National Congress on Sept. 22, the ACFTU officially urged Wal-Mart to establish trade unions.

"For companies depriving the rights of employees to establish trade unions, we reserve the right of resorting to lawsuits," the ACFTU announced.

Wal-Mart's China headquarters responded the next day that "it had constituted a series of regulations under Chinese laws, especially those that relate to trade unions, offering effective channels to resolve complaints from employees."

"All the legal rights of employees, involving wage rises, promotion, and vacations, have been written in contracts and the company's employee manual," said a Wal-Mart spokesman, reported in the 21st Century Business Herald, a well-known national business newspaper.

According to the ACFTU, participation in trade unions is a basic right of employees in all enterprises in China, enshrined in law, which can not be removed by any organization or individual.

Wal-Mart said that according to Chinese law, a trade union could only be installed at the free request of employees, and since there have been no requests yet, there is no necessity to establish a union.

But the ACFTU contended that although employees of foreign- funded enterprises wish to have local trade unions of their own, they can not afford to raise the issue with their employer for fear of losing their jobs or other benefits.

"And the competition for jobs is so fierce today," a union activist said.

The disagreement also derives from legal differences. A Wal- Mart spokesman explained that there are no trade unions in its branches in other parts of the world either.

But according to Chinese law, a trade union is usually required to be installed at every company of a certain scale. In the United States, workers can establish their own trade unions for the protection of their rights, without organizational affiliations with their specific employers.

Since November 2000 all efforts by the ACFTU to urge Wal-Mart to establish trade unions have been in vain.

"We have contacted Wal-Mart several times," said Feng Lijun, an ACFTU official, "but no progress has been made so far."

Xu Xicheng, vice chairman of the ACFTU, told Wal-Mart it should "establish trade unions sooner than later, and actively rather than passively."

Insiders say the actual reason for Wal-Mart denying trade unions is cost saving. According to the regulations of Chinese trade unions, the fees managed by trade unions account for two percent of employees' total salary, of which 60 percent returns to employees in bonus, and 40 percent is spent on the daily work of trade unions. Analysts say Wal-Mart is reluctant to allow trade unions to allocate the money instead of itself.

Since 1996, when the first Wal-Mart supercenter and Sam's Club opened in the city of Shenzhen in south China, it has set up 30 stores in 14 cities all over China in which over 99.9 percent of its employees are Chinese.

Since September 2001, Wal-Mart has been the defendant in 28 complaints brought by the US National Labor Relations Board over activities against trade unions, including firing employees suspected of being friendly to organized labor.

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