Taking a stand: Trade union chairman fights back against Walmart

24 June 2014

When Huang Xingguo decided in early March 2014 to take a stand against his employer, the world’s largest retailer, Walmart, he helped initiate one of the most important labour disputes in recent Chinese history. It was probably the first time an enterprise trade union chairman had actively led and organized the membership in a sustained and determined campaign to get decent compensation.

Huang argued that Walmart had acted illegally in closing down its store in Changde, Hunan, and therefore should have to pay double the standard rate of compensation. Walmart refused and got backing from the local government and municipal trade union but Huang and the 143 mostly female employees remained defiant.

During the early stages of the dispute, Huang talked to CLB Director Han Dongfang about the background to the dispute, why he decided to take such a bold stance and the tactics used by the union and the workers to maintain solidarity.

Following the interview, Walmart did make an improved offer of an additional 3,000 yuan per worker and although some workers accepted it, several refused the offer and Huang has vowed to continue to support his colleagues right up until to the end.

Bankruptcy or retrenchment

The question at the heart of the dispute, Huang said, was what exactly prompted the closure announcement. "Under the Company Law and the Labour Law,” he said, “the only legal grounds would be that bankruptcy was imminent.” Asked to demonstrate that this was case, the company, which is closing stores elsewhere in China under a structural overhaul, did not provide supporting documentation. Huang and his union committee then argued that the closure was being undertaken for reasons of economic retrenchment. That being the case, said Huang:

There are very clear provisions in our employment contract, echoing provisions in the Labour Law, regarding termination of contract... For such layoffs, a meeting of employees has to be convened 30 days in advance, directly or through the union, and the corporate layoff proposal must be studied and reported to the labour authorities. There is a legal process to observe.

However, Walmart made the announcement on 5 March and the closure was originally scheduled for the 19 March, less than two weeks later. This, Huang said, constituted illegal termination of workers’ employment contracts. Management had offered two options to staff: relocation to another Walmart store (the nearest was over 100 kilometres away) or what was considered a substandard severance package. The union demanded a doubling of offered compensation, under a formula that was abbreviated to 2xN+1, where N is number of years of service. But management refused to accept that it had acted illegally or that compensation should be doubled.

From the first, the union demonstrated remarkable solidarity. When the company indicated that it intended to clear valuable merchandise out of the store prior to its shuttering, employees organized round-the-clock pickets to ensure there was always somebody keeping watch in the sales areas, including three-person night shifts. Moves to clear the stock were blocked by the workers, leading to conflict with security officials:

There have already been clashes ... We have been trying to prevent them from clearing out the products but they are removing them covertly. The local police and our employees were involved in physical clashes, and two of us went to hospital. The enterprise management agreed to pay the medical costs.

The ironic thing about this dispute, in Huang's view, was that the management of the Changde Walmart store was one of the most progressive in the chain.

Very often in the Walmart system, the union leaders are appointed by the store director. There is no election or any similar process. Only our store does it like this, because our bosses are very enlightened. They wanted us to be chosen through open election.

Huang, who worked as an administrative manager at the store, was unanimously elected to the post of enterprise union chairman the previous year, and had built up a great deal of goodwill and personal loyalty from the workers during his tenure. The workers approached the union spontaneously to ask for help in the dispute.

Initially, said Huang, they asked the enterprise union to appeal for help to the next level up, the Municipal Federation of Trade Unions, and the official labour authorities. But, given the high profile of Walmart and its importance as an employer across China, neither organisation was keen to get involved, so the enterprise union was on its own. It went about preparations for the campaign methodically. First, they signed a collective power of attorney to ensure that Walmart would always be dealing with a team, and not an individual representative, who could easily be steamrollered by the company at the negotiating table.

They knew the company's method is to negotiate with four or five people against one, and that their strength was inadequate, and so they asked the union to voice their demands as an organisation... we convened a full union committee to discuss things and state the union's position, and then later began to draft the mandate empowering the union.

Listing their demands

The document was signed by the workers, and a 15-point list of demands was annexed to it. The union membership was convened to vote on the list, and resolutions were passed. It was typical of Huang's approach: whenever possible, measures were submitted for worker approval. Huang and his union committee colleagues then decided to put together a special "rights team" of nine members and a three-person negotiating team.

The 15 demands mostly related to salary and benefits issues—for example, management had paid out bonuses in the form of gifts but the workers wanted cash or the bonuses included in salaries—and were mostly in line with minimum thresholds in the Labour Law. Walmart's management accepted nearly all the demands except the most important one - double compensation, along with additional payments to cover contract termination costs and associated benefits. Asked by Han why the union committee had set its sights so low, Huang explained that the store had under-performed since its opening and had always been unprofitable.

The location is problematic, and also it is underground. People in this area do not have the habit of shopping underground. Another issue may be to do with the system of management.

Because of the difficulties the store faced, said Huang, the enterprise union had always stressed cooperation in its dealings with management.

In collective wage negotiations every year, we very often supported the company with regard to the rate of wage increase, given that the store was making losses. So our demands were not very high—low to middling compared with other companies in this sector. Where others might demand ten percent a year, we would propose five percent ... as a union, we did our best to meet our responsibilities and serve as a partner to the company.

This stance, and his own chairmanship generally, Huang said, were strongly supported by the workers, even though pay at Walmart was measly, just 90 yuan above the local monthly minimum wage.

So why is everybody being so stubborn? It's because we have devoted our lives to this company, working here up to retirement. Everybody has made a personal investment, including giving up holidays and sometimes doing unpaid overtime. Everybody has dedicated themselves to the company diligently. And suddenly, overnight, they just cast us off.

No help from higher-level unions

Despite the strong case demonstrated by the store trade union, the local trade union federation in Changde offered little support, quite the opposite in fact. Said Huang:

The Municipal Federation of Trade Unions said that compensation did not come under their remit for interpretation; that was a matter for the labour inspectorate… The head of the Municipal Federation of Trade Unions rights organisation told me, ‘we are supporting you with your campaign. We certainly can help you.’ But he had a small request. He said, ‘We hope you take care to ensure that no damage is done to the investment environment of Changde. We do not want any harm done to Changde's image, so you should not talk to outside media. I agreed to that, I undertook that I would not contact outside media.

Having extracted this commitment from Huang, the Municipal Federation of Unions urged the store union to “make concessions" and avoid digging their heels in. As for the self-gagging pledge, this was hardly meaningful, Huang said, because the store trade union had already made its position clear on social media. Huang would not directly contact potentially friendly media platforms such as Focus Report, Southern Weekend or Southern Metropolis Daily, but: “If journalists come to us to ask about employee rights issues, we will tell them the truth."

In the past, Huang had good relations with the higher-level unions and had received training from them.

As a union executive, I participated in the Hunan Provincial Federation of Trade Unions' seven-day course for union leaders and later in a training organised by Changde city and my local district.

The store trade union is financed by the company, which normally contributes a sum equal to one percent of employee wages, to which is added an expenses allowance from the higher union organisation, plus the union membership dues. The monthly union expenses paid by the higher level union amounts to over 3,000 yuan, Huang said, and payments are made on time. Although Huang expects the cost of organizing and supporting workers during and after the industrial action to be far in excess of the union expense allowance, his union committee had not yet applied for help from higher levels; nor was any financial help being offered.

The municipal union’s legal affairs department did introduce Huang to several lawyers but they all eventually proved unwilling to back him.

In the beginning, they supported our claims for compensation but later—I do not know what happened, but after the government stepped in, the lawyers changed their position.

Government role

Although this dispute was relatively small in scale, the nearly unprecedented activism of the trade union drew a huge amount of media attention, both in China and even overseas. It wasn't long before the government stepped in.

Two coordination meetings were convened… The government did not accept my viewpoint and claimed that the closure was lawful.   … At one meeting I told the leaders of the district and municipal labour authorities that the legal provisions on 30 days’ notice were very clear, even a junior high school student could understand them… They said, 'if you are a high school student, we are university lecturers, and our conclusion is what counts.'

Huang said transcripts had been made of all these exchanges.

Huang could have easily avoided this role. At the beginning of the dispute, he was offered an attractive package at another Walmart store in Yiyang but he stuck at it despite the considerable risk. He was told during negotiations with government officials that:

The closure is lawful, and the employees, although they are vulnerable group, cannot go and obstruct the company's relocation. They told me, 'If you don't respect the relevant laws, if you make a fuss, at any time they can arrest you. You're the leader, you cannot escape responsibility.' I said that I willingly assumed responsibility.

The underlying motivation for Huang was a sense that loyal workers were not being treated with respect. It was this realisation, he said, that ultimately made him turn down the Yiyang post.

Despite the attention and praise Huang attracted for his conduct during the dispute, he said he found the whole experience of campaigning against his employer painful and admitted that a lot would have to change if China’s workers and trade union were to have a really effective voice in the future:

In this society, we cannot get things done. The government does not give us the support we need... I will give you a very simple example. Right now, the government is emphasising food safety. If you buy supermarket food that has passed its sell-by date, the police can demand tenfold-compensation, and so can ordinary customers. The government also can get in on the act, and ask the company to pay a penalty of between 50,000 to 80,000 yuan. I have been involved in a lot of major food safety scandals, I had responsibility in this area, and I know the state has great power to impose sanctions. So why cannot it do anything about Labour Law violations? Why is it so difficult to enforce worker rights? When the situation is actually very simple?

Although Walmart in my opinion is a compliant company, during these events, things went off the rails. Why did we have so many conflicts and clashes?  Management resorted to underhand methods. For example, before giving notice about the store closure, they sent a lot of police into the sales area. The employees were very fearful and felt pressured. A union committee member went to the departments to borrow some work clothes. They borrowed 15 sets and sealed them in a box. As a result of this, the management called in the police. The union was accused of stealing and distributing 80 uniforms so outsiders could come in and cause trouble. This kind of tactic is dirty. I would not want to work in this kind of company again.

After talking with Han Dongfang more about the potential importance of the dispute in China’s workers movement, Huang agreed to accept legal advice and support from a law firm in Guangdong and the next day the head of law firm travelled up to Changde for a very productive meeting with Huang and the workers.

Han suggested that in order to get a good deal, the workers might consider scaling back their key demand, to, say, 150 per cent compensation instead of 200 percent but Huang was adamant: “They have violated procedures. Tinkering with compensation levels later does not alter that original violation.”

The case eventually went to arbitration but, at the same time, the local authorities in Changde persuaded Walmart to improve its compensation offer. The government then put immense pressure on the workers to accept the deal. The Financial Times reported that on 12 June:

Neighbourhood committee cadres visited the homes of 69 Walmart employees who remain locked in an arbitration case with their former employer in Changde, a small city in China’s Hunan province. The neighbourhood officials, who enforce Chinese Communist party diktats at street level, carried pictures of the workers and conveyed a simple message to them and their families: do not interfere in Walmart’s removal of goods from the store, which closed in March, and accept the retailer’s enhanced settlement offer of 3,000 yuan each for ‘legal fees’ incurred during the three-month dispute.

This interview with Huang Xingguo was first broadcast on Radio Free Asia's 劳工通讯 in nine episodes in April and May 2014.

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