China union stymies Wal-Mart restructuring plan

China’s government-run trade union has blocked a plan by Wal-Mart, the world’s largest retailer, to restructure its China-based management, state press reported Monday.

“Three mid-level executives came to my office this morning and told me the plan was shelved and they have resumed their work,” Xinhua news agency quoted Yang Fengzhi, a union official in northeast China, as saying.

The managers in Jilin province, who earlier had been told they would be laid off, were asked to return to work after the union stepped in, the report said.

Wal-Mart officials however said they were still in the process of explaining the restructuring plan to employees and the union, Xinhua said.

On April 10, Wal-Mart said it needed to slash mid-level executives in an effort to adapt to “the changeable market situation,” but company excecutives refused to say how many people would lose their jobs.

Wal-Mart entered China in 1996 and employs more than 50,000 people in the country. The retailer only allows trade unions to operate in its China stores.

Under the restructuring plan, affected employees were encouraged to move to other locations or face demotion or dismissal, Xinhua said.

The US discount titan’s global net income fell to 3.79 billion dollars in the three months ended January 31, a 7.7% drop from 4.01 billion dollars a year earlier. It did not release China-specific figures.

Retailers in China are beginning to feel the pinch of the global downturn.

Sales growth weakened in the first two months of this year to 15.2%, compared with 21.6% for all of 2008 as consumers continue to lack the confidence to spend, according to the latest official data.

 

Category: China