Wal-Mart Embraces Unions … in China!

One of the keys to Wal-Mart's low cost structure -- besides taking out the hammer with suppliers -- has been to deliver low levels of customer service backed by a low wage workforce, especially in comparison to competitor Costco (which is also cheap, but pays for quality and usually gets it when it comes to store staffing). According to Asia Times, Wal-Mart has backtracked on its North American strategy of containing unions at all costs in China, preferring to embrace them rather than confront them head on. This is an interesting signpost for those looking at the future of labor costs in China. There's no doubt that the rise of unions certainly improves working conditions for laborers in emerging markets. But at the same time, their emergence should also introduce an ever rising wage structure, at least in theory. And perhaps more important, while I doubt that card carrying Chinese laborers will ever make more on a purchasing power basis than their brothers in Detroit -- who during the union hey day probably made more as a group than China's GDP at the time -- their rise should ultimately fuel a growing middle class throughout the region.

Jason Busch

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