South-Western College Publishing - Economics  
Wal-Mart Unionizes in China; Is the US Next?
Topic Labor Markets
Key Words Wal-Mart, China, labor unions, collective bargaining
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Reference ID: A149281130

News Story Wal-Mart announced in August that it will agree to unionize all of its stores in China. In fact, the superstore giant will work closely with the Chinese government to get the unions operating in the stores. Aligning itself with the All-China Federation of Trade Unions is a step in a significantly different direction for the retail giant; can unionizing its stores in the U.S. be far behind?

Probably not. Unions in China work differently than they do in the US. First of all, the Chinese require unionization for some stores to invest in China at all. Second, Chinese unions feature little collective bargaining. So why did Wal-Mart allow the unions?

China's market is growing, and Wal-Mart wants to ensure that its stores help create the "harmonious society" that the Chinese government envisions. The retail giant is not going to engage in anything that goes against corporate success in China. Given that collective bargaining is not part of the union's mission, it's unclear exactly what Wal-Mart has given up in allowing the unions.

Meanwhile, in the U.S., Wal-Mart virulently opposes unionization in its American stores. American unions engage in collective bargaining for their workers, so Wal-Mart would have much more to lose were it to allow unions in the U.S.

Questions
Discussion Questions:
1. What is the purpose of collective bargaining by unions, and why is would it be potentially so damaging to Wal-Mart to allow unions in its U.S. stores?
2. If Chinese unions don't engage in collective bargaining, why do you think they even have unions?
3. What would Chinese workers gain by striking against Wal-Mart?
Multiple Choice/True False Questions:
1. True/False. Wal-Mart has agreed to unionize all of its stores worldwide.
2. True/False. Unionization in China creates the same opportunities for workers as does unionization in the US.
3. If Wal-Mart were to allow unions in its U.S. stores, what would happen to the distribution of consumer and producer surplus, respectively?
  1. Fall; rise.
  2. Fall; fall.
  3. Rise; fall.
  4. Rise; rise.
Source Barboza, David. "Wal-Mart will Unionize in All of China." The New York Times. August 10, 2006.
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