Labor: Employers in China must be prepared to engage in collective bargaining

China’s only official union, the ACFTU, has undergone a campaign for the past several years to get foreign-invested companies to unionize.

Work stoppages and strikes in China are becoming more frequent as employees use industrial action to demand negotiations with management over a variety of issues. In many instances, industrial action is sparked by demands related to compensation. However, employees are increasingly using industrial action as leverage to negotiate a wider range of issues. For example, following the recent announcement that India’s Apollo Tyres would acquire Cooper Tire & Rubber Company, the employees at Cooper’s subsidiary in China went on strike. The action was largely due to the fact that they didn’t want to work for an Indian company.

In an attempt to curtail employee unrest, China’s only official union, the All-China Federation of Trade Unions (ACFTU), has undergone a campaign for the past several years to get foreign-invested companies to unionize. Local ACFTU officials have been visiting companies within their jurisdiction to put pressure on management to set up unions. If a company is uncooperative or appears to be taking too long to get a union established, the ACFTU will often circumvent management and reach out to the company’s employees to encourage them to unionize. In some locations, the tax authorities collect and hold labor union dues (2 percent of payroll) in escrow until companies establish a union.

Contributing Author

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Kevin Jones

Kevin L. Jones is a partner with Faegre Baker Daniels. Based in Shanghai, he chairs the firm’s labor and employment practice in China. He can...

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