Our Party Chief here in the Hutong was talking with me about the unionization of Wal-Mart (NYSE:WMT) and Foxconn, and she brought up an interesting possibility that I had (stupidly, I now think) not considered before.
She noted that since, in fact, the unions in China are part of the government, they should be seen as an extension of the government's regulatory infrastructure. She said that the WMT unionization process will be watched with great interest. It should not come as a surprise if the government began to see unionization as a disciplinary tool against foreign-invested enterprises (and private local firms) who are seen publicly as being unfair to their workers.
"Be good to your people, or we'll unionize you."
Not that any smart boss should need that threat these days. Even in a place like China, the costs of constant labor turnover are far higher than most leaders calculate, whereas the value of building a stable workforce in terms of both efficiency and the potential for process innovation could be substantial. But we digress.
The implications of the use of forced unionization as a disciplinary tool are huge. This would compel a lot of companies to re-evaluate their human resource policies, their costs, and indeed whether or not to build a facility in China. It would also significantly alter the tactics of international labor activists in their "workers' rights in China" campaigns.
Not to mention create a gigantic opportunity for regulatory malfeasance....