Copenhagen 2.008
WALL-MART AND LABOUR RIGHTS
INDEX
1.- Introduction
- Explanation
2.- Wall-Mart in the world
3.- Wall-Mart in China
4.- Chinese Labour Regulation
5.- WORKING CONDITIONS IN A SUPPLIER’S FACTORY
AND LABOUR LAW
INTRODUCTION
Wal-Mart has been the focus of tough and never-ending critics during the last
three decades. However, especially in the last ten years, it can be found an incredible
increase in those critics. Thereby, the situation of human and labour rights in China has
become an international issue, by which the Chinese Government has been criticized in
innumerable moral and economic ways. However, I will present the Chinese Government
as a second main character, giving Wal-Mart’s role in China a special significance.
Therefore, I will focus my attention in four main points. Firstly, I will give a brief
explanation of Wal-Mart as a company and its main achievements. Secondly, I will study
the numerous connections between Wal-Mart and China. Thirdly, and principally, I will
compare a factory report with the actual Chinese Labour Law. Finally, I will present my
conclusions.
EXPLANATION
Regardless, I had decided to work in a comparative exercise, where both sides,
Chinese workers and Wal-Mart policy, could be understood and supported. That goal has
turned out unsatisfactory. When Wal-Mart has tried to justify its lack of labour rights, its
arguments could be describe, at least, as unprofessional. Inter alia, our suppliers are often
safer and healthier than local alternatives, which may include prostitution, the drug trade
or scavenging.
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On the other hand, it has been impossible to use any information that comes
directly from Wal-Mart Company. So far, twelve emails have been sent to different
customer services in US, China and Canada, with a common negative outcome. I will
explain this situation in the last part of my essay.
WAL-MART IN THE WORLD
Wall-Mart was found by Sam Walton, in Des Moines, Iowa, in 1962. It is the
world's largest public corporation by revenue as well as the largest private employer in
the world, with over 1.9 million associates worldwide and more than 7,000 stores in 14
countries. Thereby, Wal-Mart is the single largest importer of foreign-produced goods in
the United States.
WAL-MART IN CHINA
In relation to China, which is its biggest trading partner, family Walton’s empire
would rank as China's eighth largest trading partner, ahead of Russia, Australia and
Canada1. Moreover, Wal-Mart is responsible for approximately ten percent of the United
States' trade deficit with china, which in figures given by the Economic Policy Institute,
might be quantified in $18 billion dollars.
Regardless, Wal-Mart has been presented as a pioneer in Chinese market, by the
time Wal-Mart opened its first buying office in Hong Kong in 1981, manufacturers were
used to deal and work with western companies. Oddly enough, that movement was taken
in a period were a highly publicized “Buy American” campaign was going on. In words
of a Wall-Mart executive: “Sam wanted everything possible [made] in the U.S., but he
was not going to pay [extra] for it to stay [...]”. Hence, in order to hide Chinese
production, Wal-Mart needed a buffer, (a middleman or a buying agency), that would
purchase Chinese products without showing Wal-Mart’s hand. As consequence, George
Billingsley, who was a close friend of Sam Walton, was commanded to set up Pacific
Resources Export Limited (PREL) as an exclusive buying agent for Wal-Mart.
Since 10,000 suppliers compete for Wal-Mart's orders every year, it is impossible
to know how many workers are employed by Wal-Mart’s suppliers.
1
Scott, Robert E. "U.S.-China Trade, 1989-2003: Impact on jobs and industries, nationally and state-bystate
2
On the other hand, and focusing on stores and their employees, the first Super
center was opened in Shenzhen, Guangdong Province. Today, there are 102 units in 53
cities, including 97 Super centers, 3 SAM’S CLUBs and 2 Neighborhood Markets.
Across China Wal-Mart employs over 50,000 associates. 2
Finally, there are two reasons why more than 80% of the 6,000 in Wal-Mart's
world-wide database of suppliers are in China:
1. - The Communist Party Government has become the world's greatest facilitator of
capitalist production, beckoning multinational giants (inter alia, Wal-Mart) with tax-free
zones and harsh punishment for anyone designs on organizing a labor movement. The
best example might be found in the former fishing village of Shenzhen.3
2. - However, and as a precedent, money is not the only factor. Joe Hatfield, president of
Wal-Mart's Asia operations has stated: “If we have to look at a country that's not
politically stable, you might not get your order on time. If you deal in a country where the
currency fluctuates, everyday there is a lot of risk. China happens to have the right mix”4
CHINESE LABOUR REGULATION
Nowadays, we have to take into consideration three labour laws in China:



1992, Trade Union Law of the People's Republic of China.
1994, Labour Law of the People's Republic of China.
2007, Employment Contract Law.
If we read carefully all of them, firstly, we will realize how advance are these
laws in comparison to other developing countries, and secondly, we will wonder about
the scope of these laws in a real case.
WORKING CONDITIONS IN A SUPPLIER’S FACTORY AND
LABOUR LAW
Report given by China Labor Watch5 and National Labor Committee.6
Factory name: Junda Huangwu Toy factory7
2
A Brief Introduction to Wal-Mart in China. Wal-Mart China website.
http://photo.shenzhenweb.com/d/159-1/shennan+road+in+the+centre+of+shenzhen.jpg PHOTO
4
Washington Post Foreign Service. February 8, 2004.
3
5
6
www.chinalaborwatch.org
www.nlcnet.org
3
Location: Dongguan City, Guangdong Province, China.
Production: Plastic Toys.
Working Hours
The peak Production season lasts nine months, from September to May. During
this period workers are forced to work 87 to 91 hours a week, which means 13 hours a
day8. Taking into consideration, article 36 of Labour Law,
“[...] labours shall work for no more than eight hours a day and no more than 44
hours a week on average”
In this case, a single worker over works 43 hours a week and 5 hours a day.
Even thought Article 41 grants to prolong the working hours due to needs of
production or businesses to the employer. Article 41 only allows prolonging one hour a
day, or three hours a day if such prolonging is called for due to special reasons.
Therefore, even under these special exceptions, Huangwu Toy factory is applying an
illegal overtime under its employees, which exceeds China's limit on legal overtime hours
by 550 percent.
Finally, Article 41 stated:
“[...] the work time to be prolonged shall not exceed, however, 36 hours a month”
In this case, Huangwu Toy factory exceeds limit on legal overtime in 164 hours a month.
Rests and leaves.
Article 38 of Labour Law:
“The employer shall guarantee that its labourers have at least one day off a week”
It is also refused, during peak production season employees have to work seven
days a week and they can only get one Sunday off a month.
7
http://www.nlcnet.org/admin/media/images/China/2205_Blood_Exhaustion/Huangwu%20Factory1.jpg
FHOTO
8
1) 7:30 a.m. to 11:30 a.m.; 2) 1:00 p.m. to 5:00 p.m.; 3) 6:00 p.m. to 11:00 p.m. = 13 hours.
4
Article 40 enumerates four Chinese National Holidays that shall be respected by
employers.
1.
2.
3.
4.
The New Year's Day
The Spring Festival
The International Labour Day
The National Day.
In Spring Festival, instead of getting one to two weeks off with pay, which would be
the normal situation, workers are given just five days off, with no pay, and the other days
of the holiday are paid at an average wage rate.
Workers can get just one day off for National day and International Labour Day, but
again without pay.
Wages
The Labour Law does not give a minimum fixed wages, however mechanism to
stipulate them can be found in Article 48 and, mainly 49.
Earlier, “[...] specific standards on minimum wages shall be stipulated by provincial, [...],
and municipal people's governments [...]”
Article 49 enumerates five factors to be taken into consideration in order to fix and
readjust minimum wages.
In June, 2006 the minimum wage of Guangdong Province was divided in seven
categories, from 684 Yuan/month to 352 Yuan/month.
When Huangwu Toy factory workers complete the assigned quota, they earn 3
Yuan/hour, which makes 520 Yuan/month. Thereby, Huangwu Toy factory is pretty close
to the second highest category of the Guandong minimum wage standard. However, to
reach the assigned quota is not always an easy goal and, in fact, there are occasions when
workers just fail to meet their production quota on time. In these cases, their wages fall to
1 to 1.3 Yuan/hour, or 173 Yuan/month, which is less than half the legal minimum wage
and is against of article 50 of Labour Law:
“[...] the wages payable to labourers shall not be deducted or delayed without
reason”
Overtime
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Employees that work longer hours or on legal holidays have to be paid according to the
article 44:
1. 150% of wage if work longer hours.
2. 200% of wage if work on days of rest.
3. 300% of wage if work on legal holidays.
Despite that regulation, Huangwu Toy factory only apply one fixed rate to all overtime
(3.9 Yuan per hour). However, if we apply the legal regulation, workers should earn:
1. 4.5 Yuan/hour.
2. 6 Yuan/hour.
3. 9 Yuan/hour.
In conclusion, and taking into consideration those 13 hours a day and days rest. A
single Huangwu Toy factory's employee should earn 357 Yuan a week9, which makes
1350 Yuan a month10. Moreover, if they work on legal holydays, this amount shall be
incremented with 9 Yuan/hour.
Social Insurance
Article 70 of Labour law establish a right of a Social Insurance System as well
as a Social Insurance Fund in order to ensure a welfare system by which labourers can
receive help and compensation when they become old.
Moreover, that system should be supported by employer and individual labourers
(article 72)
In Huangwu Toy factory, workers neither are provided of a health insurance nor
are inscribed in a pension program. Although there is an exception, since a group of older
workers in the model department are insured. Unfortunately, the number of them and the
scope of their insurance are unknown.
On the other hand, article 73 enumerates five circumstances that should be
protected by a social insurance treatment. Within these five circumstances, at least one of
them has been condemned by China Labor Watch report, since the legal right to three
months maternity with a pay is systematically denied. Moreover, if pregnant women can
not keep up with the pace of production, they must take time off without pay.
Article 73 of Labour Law
“Labourers shall be entitled to social insurance in any one of the following cases:
9
3 Yuan x 8 hours = 24 ; 4.5 Yuan x 5 hours = 22.5 ; 24+22.5= 46.5 Yuan x 6 days = 279;
6 Yuan x 13 hours on days of rest = 78 ; 279 Yuan + 78 Yuan = 357 Yuan/week
10
357 Yuan/week x 4 weeks = 1428 Yuan - 78 (Workers get one day off per month) = 1350 Yuan/month
6
[...]
(5) Give births.”
Unions and Inspection
Faced with the irregularities at the workplace, workers union should take part in
this case and to push the company to face its responsibilities. Despite there is a “union”,
workers are not allowed to join, thereby there are only two people in it: the plant director
and the manager. Indeed, this situation is a clear violation of article 3 of Trade Union
Law of the People's Republic of China:
“Both manual and mental laborers of enterprises, institutions and organs in
China [...], have the right to participate in and organize trade unions in
accordance with the law”
Special mention should be done to W-M supermarket's employees, since from
2004 every employee, who ask to be a member of All China Federation of Trade Unions,
which is the only union that is legally consider in China, can be represented by this
“vertical union”.11
Supervision and inspection are taken by the company and the labour
administrative departments following articles 85, 86 and 87 of Labour law. However,
the main problem lies in the fact that investigations are known in advanced and all
necessary preparations are undertaken. Even employees know what they have to say in
order not to be fired.
Nevertheless, it is as necessary as fair to grant a partial congratulation to WalMart in this camp. Since 2004 Wal-Mart employs more than 100 auditors who annually
inspect every supplier's factory. In a single year, the company suspended deals with about
400 suppliers and 72 factories were blacklisted for employing children under China's
legal working age of 16.12
As I said, it is a partial congratulation, since examples like the one which has been
studied are too numerous. 400 suppliers have been punished and probably they will work
toward a better applying of labour right and labour laws, however we shouldn't forget that
Wal-Mart works with 10.000 suppliers. Are there another 9.600 suppliers who respect
labour conditions?
In conclusion a Washington Post reporter has stated: “It is hard to determine if
Wal-Mart truly doesn’t see the real situation or if they intentionally don’t see the real
situation”13
11
Wal-Mart Approves unions in China. BBC News, November 23, 2004.
Washington Post Foreign Service. By Peter S. Goodman and Philip P. Pan
13
Washington Post Foreign Service. By Peter S. Goodman and Philip P. Pan
12
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Lack of information from Wal-Mart.
Every company that has been accused of lacking of human and labour rights in a
developing country passes through five stages in its Corporate Social Responsibility.
Nike would be the best example, since they were accused of working with suppliers who
employed children, its first movement was to separate itself from its suppliers' policies
(phase 1). Later on Nike began supervising and inspecting its suppliers (with clear
results) meanwhile they made sure that those actions were known by the public (phase 2).
Nowadays the company has turned in an intensive policy toward its Corporate Social
Responsibility (... phase 5)
Wal-Mart is between phase 1 and 2. The company doesn't consider necessary to
provide any information about its supplier's working conditions but it has introduced an
inspection system. The likely trend and its effects will be explained in my conclusion.
CONCLUSION.
Main conclusion, and factor that should be taken into consideration before to
study a legal issue in China, is the lack of implementation. There have been an admirable
effort in order to provide legal regulation, especially in the labour market, but those
regulations are understood as a recommendations rather than mandatory conditions.
Therefore, clients, consumers, media, public opinion, will have an irreplaceable
role. Nike reached the level 5 of Corporate Social Responsibility just after an intensive
campaign against them, mainly in US. So far, Wal-Mart has focused on returning
dividends to its stakeholders, mainly because Chinese Government, Chinese society and
global consumers haven't push as hard as it would be necessary.
PERSPECTIVATION
There have been two main points that have been impossible to develop: Working
conditions in Wal-Mart supermarkets and Sam's club and Union System. The later is one
of the most important issues within Chinese labour law; therefore I will include many
references about it in my bibliography.
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BIBLIOGRAPHY

Blood & Exhaustion. Behind Bargain Toys Made in China for Wal-Mart and
Dollar General. December 2005. China Labor Watch and National Labor
Committee

China fact Sheet. March 2008. Wal-Mart.
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China threatens action against multinationals for refusal to set up trade unions.
2004.China Labor Watch
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Chinese Workers Pay for Wal-Mart’s Low Prices. 2004. Washington Post Foreign
Service. Peter S. Goodman and Philip P. Pan
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Is Wal-Mart Good for America? 2004. Sam Hornblower.
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Labour Law of the People’s Republic of China. 1994. National People’s Congress
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Supporting Wal-Mart. 2007. Melissa??
http://paradoxish.blogspot.com/2007/06/supporting-walmart.html
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The Dark Side of Wal-Mart’s Low Prices: Suppliers Seriously Violate Labor
Law. 2004. China News Week.
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Trade Union Law of the People’s Republic of China. 1992. National People’s
Congress
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Wal-Mart approves unions in China. 2004. BBC News.¨

Wal-Mart’s ‘China Price’. Posted 2005, printed 2008. Joshua Holland.
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Wal-Mart Chinese website. http://www.walmartchina.com/english/walmart/wminchina.htm

Wal-Mart global website. http://walmartstores.com/

Wal-Mart the high cost of low price (Documentary film). 2005. Robert
Greenwald.

When will we have Free Unions in China? (Online video of speech). 2007. Han
Dongfang
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