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Abstract

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References

Based on extensive field research in China during 2005–2010, this article aims to explore the determinants of unionization in the Chinese context. We find that managerial strategies toward union organizing and functioning have been critical in determining unionization outcomes in Chinese enterprises. While various environment pressures may impose critical constraints on these strategies, managerial industrial relations ideologies are central in shaping these strategies when environment pressures barely exist or are bearable by management. Our study makes the first effort in exploring industrial relations ideologies in China and contributes to better understanding of unionization in the Chinese workplace.

Introduction

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References

Industrial relations (IR) theorists have, for a long time, stressed the importance of environment and ideology in shaping IR processes and outcomes. In particular, the strategic choice model proposed by Kochan et al. (1986) suggests that (i) managerial strategic choices, which vary considerably within any given context, play a key role in explaining IR outcomes; (ii) environment pressures are important, but they do not strictly determine IR outcomes; and (iii) the IR values and beliefs of key decision makers are central to explaining variation in managerial strategies.

While the role of various environment forces has been widely studied in the IR literature, few empirical studies have examined how perceptions, values and beliefs of actors affect the course, structure and outcome of IR. Moreover, to date, IR ideologies outside the Western context have been largely unknown, and the arguments proposed by the strategic choice model have mainly been tested in advanced industrial economies.

Taking a grounded theory approach, this article aims to explore the determinants of unionization in Chinese enterprises.1 Although Chinese unions are not independent from the Party and extremely weak on the shop floor, they are not completely useless to workers (Chen and Chan 2004, 2010). Moreover, a high rate of unionization may possibly provide a broad platform for the development of genuine unionism in the future (Liu 2010). We argue that environment pressures and managerial IR ideologies are two key factors in shaping managerial strategies toward unions, which play a decisive role in determining unionization outcomes in Chinese enterprises. When environment pressures are deemed too high by employers, they tend to comply with the request of union establishment or functioning. When environment pressures barely exist or are deemed bearable or secondary by employers, however, managerial IR ideologies are central to shaping their union strategies. We discover five major sources of environment pressures on unionization, that is, the official trade unions, local governments/labour bureaus,2 the Party, workers, and actors of global corporate social responsibility movement. We also identify three dimensions of managerial IR ideologies that are important to unionization in Chinese enterprises: perceptions of Chinese unions, respect of labour laws and belief in the value of employee involvement. In addition, we reveal three managerial strategies toward union organizing and three toward union functioning, each shaping unionization outcomes differently.

Our findings suggest the validity of the strategic choice model in the Chinese context. With nuanced analysis of the linkages among environment pressures, managerial IR ideologies and managerial union strategies, this study also contributes to better understanding of union organizing and functioning in Chinese enterprises. Moreover, our study brings an actor-centred approach to the field of China labour studies as a valuable addition to the dominant paradigm of political economy analysis.

This study is based on extensive field research in 12 Chinese cities during 2005–2010.3 The fieldwork entailed open-ended interviews and informal talks with managers, enterprise union cadres and workers in over 100 enterprises with different ownership status. Interviews with over 60 local government and trade union officials and Chinese labour relations scholars were also conducted to triangulate our findings. While most interviews were conducted individually, some were done in groups, which is common for field research in China. The interviews on average lasted 2 hours, with some extending over 4 hours while some lasted less than 1 hour.

Union organizing in Chinese enterprises: setting the scene

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References

China has only one single, official trade union, that is, the All China Federation of Trade Unions (ACFTU). Different from its counterpart in the West, union organizing in China means setting up ACFTU branches bureaucratically at various levels, with the fundamental goal being not so much to protect workers’ rights as to strengthen the Party's social control. According to the Chinese Trade Union Law, enterprises employing more than 25 union members/employees should establish a primary union. However, given the ambiguity of the language and lack of punishment, this regulation is soft or even controversial, providing room for enterprises to avoid or circumvent it.

This article focuses on the organizing of primary unions at the enterprise level, which falls into the traditional pattern of union organizing identified by Liu (2010). In this pattern, the ACFTU assigns organizing quotas throughout its hierarchy and sets up enterprise unions by persuading employers rather than by mobilizing and organizing workers per se. To gain employers’ approval of unionization, the ACFTU often has to sacrifice many union rights by guaranteeing no collective action, reducing union dues, and allowing employers to appoint union leaders and to determine union functions. This pattern of union organizing has made managerial union strategies a key in determining unionization outcomes in Chinese enterprises.

Two recent studies have to some extent examined managerial union strategies in the Chinese context. Liu (2010) found two managerial strategies toward enterprise unions, namely suppression and co-optation. Kim (2008) discovered three approaches adopted by subsidiaries of multinational corporations toward Chinese unions: circumvention, ceremonial recognition and co-optation, as well as three different cognitive frames for Chinese unions: phantom threat, social lubricant and inert substances. While these two studies are informative, neither of them presents a complete set of union strategies or managerial IR ideologies; nor do they differ the strategies adopted by management in two different stages of unionization: before and after union establishment. Therefore, significant knowledge with regard to unionization in China is still missing.

The following sections attempt to illustrate the determinants of unionization in Chinese enterprises by developing two managerial decision trees regarding setting up unions and union functioning. We will examine managerial union strategies and corresponding unionization outcomes before and after union establishment separately. We will also explore various environment pressures on unionization and managerial IR ideologies and look into how these factors shape managerial strategies toward unions as well as their interactions.

Managerial strategies toward union organizing and functioning

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References

Our field research discovers three managerial strategies toward union organizing that directly determine whether an enterprise union can be established or not. The first strategy is ignoring, that is, management simply dismisses the legal requirement of unionization. The second is circumvention, which means management uses various practices to evade the legal requirement of unionization. Third, management may choose the compliance strategy setting up unions.

After unions are established in enterprises, however, management faces a different set of strategic choices toward union functioning that may directly determine the nature of enterprise unions, including suppression, formalization and co-optation. Suppression means that management completely controls unions and does not allow any substantial union functions. This strategy may result in unions that only exist on paper and lead to complete alienation of unions from Chinese workers. Formalization means that management allows enterprise unions to perform some traditional or legally defined functions such as providing social welfare, organizing sports and entertainment activities and concluding standardized collective contracts,4 but it makes these functions largely formalistic. As a result, although the formalized union activities may bring certain limited social welfare to workers, the most important function of unions as collective voice of workers is largely missing. Popular in many enterprises in China, this strategy may lead to marginalization of Chinese unions. Management adopting the co-optation strategy may allow unions to perform certain functions rather effectively, such as providing social welfare, organizing labour emulation and worker participation, mediating labour disputes, and communicating with workers on various employment issues, but co-opt unions to serve management interests and make them an integral part of the management system. Compared with the marginalized unions resulted from the formalization strategy, the co-opted unions, despite dominated by management, have a function of constrained voice. While some may be only able to promote workers’ autonomy and voice in the production process by involving workers in various employee participation schemes, some may speak for certain workers’ interests when mediating labour disputes, and still some may serve as a channel for workers to voice on managerial decisions that may greatly affect workers’ interests. Therefore, although the co-opted unions are more like a managerial tool than workers’ organizations, they may have certain relevance for workers, and their function of constrained voice may not be completely dismissed. Such unions with constrained voice have been studied in the literature (e.g. Chen and Chan 2010; Gallagher 2004), and recent quantitative studies have shown that unions with certain voice function are positively associated with some workers’ outcomes (Chen and Chan 2004; Lee and Liu 2011).

Environment pressures on union organizing and functioning

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References

Environment pressures on union organizing and functioning have significantly increased in China since 2000. First and most important, the Party, due to its concern about increasing labour unrest, has strongly advocated and supported the ACFTU's organizing campaign, with the hope that official unions can counter the possible development of an independent labour movement (Chen 2010). In particular, the Party views union organizing in private-owned enterprises (POEs) and foreign-invested enterprises (FIEs) as an effective means to promote the building work of the Party and to penetrate its influence in these workplaces. Although it is still not possible for unions to be independent from the Party, union activities and functions aiming to protect workers’ legitimate rights and avoid labour conflicts are often backed up by the Party. Therefore, employers have experienced increasing pressures from the Party on union organizing and functioning.

Second, while the logic of economic development still dominates in China, the logic of labour protection is emerging, especially in some coastal areas that are experiencing serious labour shortages. Moreover, social stability, in addition to economic growth, has become another criterion for the central government's evaluation of local officials. The increasing concerns of labour protection and industrial peace have made local governments/labour bureaus provide stronger support to ACFTU's organizing campaigns by explicitly exerting pressure on employers.

Third, China's market reform has greatly challenged the ACFTU, as can be seen from its rapidly declined membership in the 1990s, severe financial and human resource (HR) crisis, and decreasing social relevance (Liu 2010). For its own survival and at the request of the Party, the ACFTU has aggressively pressured employers on setting up unions and on strengthening workplace unions’ functions.

In addition, pressures on union organizing or functioning may directly come from workers, especially through their industrial actions. In contrast to the common perception that Chinese workers are mindlessly docile, recent studies have found that Chinese workers have become more assertive and militant (Chan 2010; Lee 2007). In particular, when workers are extremely unsatisfied with management or go on strike, they may ask for their own representative unions and collective negotiation of wages. For example, in the highly publicized strike of Honda auto parts workers in Foshan in the summer of 2010, one of the major demands of the workers was to reform the existing useless enterprise union. This strike later made management allow the elected enterprise union to engage in collective bargaining, giving the workers significant wage increases in 2010 and 2011. Although without the support of formal institutions, ‘unorganized’ workers’ industrial actions have imposed great pressures on employers in shaping their IR policies and practices.

Finally, the rapid development of a global corporate social responsibility movement since the 1990s may also impose pressures on Chinese suppliers regarding union organizing and functioning as freedom of association and collective bargaining is one of the core international labour standards. Although such pressures so far have been limited, it is reported that some export-oriented enterprises have set up unions to meet the requirement of multinational companies (Pun 2005).

In short, the Party, local governments/labour bureaus, the ACFTU, workers, and global actors have all heightened their pressures on employers with regard to union organizing and functioning. As a result, between 1999 and 2010, union membership and the number of workers covered by collective contracts in China rapidly increased from 87 million to 239 million and from 42.7 million to 185 million, respectively.5

Environment pressures on union organizing or functioning play out in enterprises through employers’ evaluations. When employers believe that resisting union organizing or functioning pressures may make their business lose legitimacy or stability, they may have to comply. Three factors are important for employers to evaluate the threat of environment pressures to their business, that is, who exerts the pressure, through what means, and in what context.

Union organizing or functioning pressures from the Party, especially through its explicit order, are usually deemed by employers as a severe threat to their legitimacy, and therefore may lead to immediate compliance. All of the local ACFTU officials we interviewed emphasized the importance of Party support in union organizing. Where the local Party committees strongly push enterprises to set up unions, the unionization rate tends to be high. The authority of the Party can be seen from the following interview with a HR manager of a Taiwanese-owned enterprise in Guangzhou:

Our company didn't set up a union until 2003. The town union chairman had made several requests, but our boss just ignored them. In 2003 … the town Party committee issued a red-head file commanding all nonunionized enterprises in this town to set up unions immediately. We had no other choice but following it. (Interview, 28 July 2005)

Labour bureaus also have relatively high authority in pressing employers to set up unions or allow unions to function. Employers usually view pressures from labour bureaus, which are a government department, as a more serious threat to their legitimacy than those from the ACFTU. In addition, labour bureaus are able to impose fines on certain labour law violations and take charge of labour dispute arbitration, which may affect enterprises financially. The general manager of a private-owned, low-end labour dispatch company in Beijing told us:

It's not because we wanted a union. The Xuanwu District Labor Bureau required us to have it. To do business, we always try our best to follow the labor bureau's directions. In addition, we have experienced increasing labor disputes since the labor contract law took into effect. We have to keep a good relationship with the labor bureau, so that we may get favorable mediation or arbitration awards on our labor dispute cases. (Interview, 30 June 2010)

Union organizing or functioning pressures from the ACFTU are often deemed by employers not high enough to threaten their business legitimacy. However, when the ACFTU takes an extremely strong position by making use of its quasi government status, some enterprises especially FIEs that want to keep a good relationship with the government may choose to comply. For example, a Japanese electronics factory located in Luohuo District, Shenzhen established a union under the high pressure of the district union at the end of 2007. The HR manager explained that:

Our headquarters’ policy was union free, and we had tried our best to avoid unions despite the pressure from the district union. However, last year the district union issued ultimatum to all nonunionized enterprises in Luohuo, requiring unions be established by December 27, 2007. We didn't know what would happen if we didn't follow it. Our headquarters also seriously worried about this ultimatum. Finally, to not irritate the government, we decided to set up a union to satisfy the district union. (Interview, 28 June 2008)

In addition, the ACFTU may force employers to comply by engaging in grassroots mobilization. During Wal-Mart's organizing campaign, several reformative local ACFTU branches directly mobilized workers and set up the first batch of store unions without the permission of Wal-Mart management. Because such grassroots organizing could result in unions becoming out of control of management, Wal-Mart immediately gave in and cooperated with the ACFTU in setting up unions in the rest of its stores. Although the grassroots organizing method has been rarely used, it does give the ACFTU an additional tool when pressing employers on union organizing or functioning.

Pressures from workers on union organizing or functioning have been extremely rare in China until recently. While workers’ demands for unionization or functioning unions may be easily ignored by employers, when workers raise this demand through spontaneous strikes, especially influential strikes with involvement of local ACFTU or governments, employers often have to concede as resistance may result in serious threat to their business legitimacy. This can be best seen in the Honda strike mentioned above.

The sections above have shown the importance of two factors for employers’ assessment of the level of environment pressures on union organizing or functioning, that is, sources of pressures and methods used to exert pressures. The third factor often considered by employers is local context, that is, prevalence of union organizing or functioning in employers’ local organizational fields. If setting up unions or allowing certain union functions has become a local norm, employers may choose to comply since resistance may threaten their legitimacy. Our visit of Guanlan Town of Shenzhen found two union streets where all employers were unionized. An employer who owned a grocery store told us:

The town union asked us to set up unions. At the beginning I simply ignored this request since I didn't think a union could do any good to me. Later I found that most of businesses on this street had set up unions. They also hung up a title plate, ‘union shop,’ in front of their gates. This made me very uncomfortable. I didn't want to be different. So I agreed to become a union shop. (Interview, August 9, 2005)

Our field research finds that some enterprises choose to comply with the requests of union organizing or functioning under environment pressures, some reject these requests despite high environment pressures, and still others proactively allow union establishment or functioning without explicit pressures. Clearly, environment pressures are not the only factor that affects enterprises’ choices. In fact, when legitimacy or stability of their business is not perceived to be under serious threat of environment pressures, employers may have a set of alternative strategies toward unions, which are largely determined by managerial IR ideologies. However, this does not mean that environment pressures cease to work. Employers may always need to consider environment pressures if they do not comply. But these considerations may become secondary in managerial union-related decision-making process for two reasons. First, given the low level of environment pressures judged by employers, non-compliance may not result in any severe punishment. This is especially true for non-compliance with union functioning as union functions are not mandatory, and the ACFTU, the labour bureaus, the Party, and even global actors often care more about presence of unions than unions do. Second, employers’ union strategies determined by managerial IR ideologies may fit enterprise business philosophies or culture, or even bring enterprises direct financial gains (e.g. savings of union dues). Therefore, managerial IR ideologies become a central factor affecting managerial union strategies when environment pressures are deemed bearable.

It should be noted that employers who have different tolerance of environment pressures may assess the same union organizing or functioning pressure differently, as either bearable or unbearable. Two factors may affect employers’ tolerance of environment pressures. The first is employers’ capability of alleviating environment pressures. Employers who are important for the economy or who have good relationships with government usually are able to reduce union organizing or functioning pressures exerted on them and therefore have high tolerance. A good example is Wal-Mart. Before its unionization in 2006, Wal-Mart had been targeted by the ACFTU for several years. Despite ACFTU's tremendous pressures, Wal-Mart, as an influential employer in China, was able to remain union-free. Second, employers’ tolerance of environment pressures may also be affected by their IR ideologies, which will be discussed below.

Managerial IR ideologies

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References

In the IR literature, managerial IR ideology has for a long time been identified as a key variable in shaping IR practices. Fox (1966) identified two major managerial IR ideologies: unitary and pluralist. Godard (1997) found that managerial IR ideologies varied along three separate dimensions: beliefs about unions, beliefs about the effectiveness of employee involvement schemes and beliefs about the extent to which workers should be given participatory rights in the workplace. However, little research has been done to examine how these managerial IR ideologies form or what factors influence these ideologies. A notable exception is Poole et al. (2005), who found that macrolevel political and economic transformations in the UK had significantly influenced British managers’ IR attitudes and behaviour. Another exception is Geare et al. (2006), who found significant associations between certain organizational characteristics, individual characteristics and experience, and New Zealand managers’ ideological preferences.

With a couple of exceptions, empirical studies on the relationship between managerial IR ideologies and IR practices have been very rare. The most important work to date is Godard's (1997) study of Canadian managers, in which he found that managerial IR ideologies were significantly associated with IR policies and practices even after controlling for the context variables. In addition, Geare et al. (2006, 2009) found that New Zealand managers’ unitarist IR values and beliefs were significantly and positively correlated with the use of high commitment management practices.

Our extensive interviews with managers in various types of enterprises in China identify three dimensions of managerial IR ideologies: perceptions of Chinese unions, respect of labour laws and belief in the value of employee involvement. These dimensions capture significant aspects of managerial perceptions and beliefs about the other IR actors, namely unions, government, and workers, and are important in shaping managerial strategies toward union organizing and functioning.

Perceptions of Chinese Trade Unions

Our field research finds that management has different perceptions of Chinese unions, as threat of business, useless bureaucracy, political necessity or operational input. While the first perception is commonly seen elsewhere, the rest are closely related to the nature of Chinese unions that has been briefly reviewed earlier. First, because Chinese unions, especially those at the enterprise level, are often useful to neither workers nor management, many employers simply perceive unions as useless bureaucracy. Second, the perception of unions as political necessity comes from the fact that in an authoritarian Party-State, it is often politically imperative or beneficial to have or to support the Party-led unions as well as their activities. Finally, some employers may perceive unions as operational input that may bring both financial cost and benefit. This perception results from two features of Chinese unions. First, a major function of Chinese unions is to promote production, through activities such as organizing labour emulation and technological innovation, providing social welfare to motivate workers and resolving workplace labour disputes to ensure proper production, which may generate financial gains for enterprises. Second, unionized employers in China need to pay two per cent of total wage bills as union dues, which are not trivial costs for many employers. However, because unions’ role of promoting production is often very weak, some employers may, to a large extent, simply view unions as operational cost.

Respect of Labour Laws

The second dimension of managerial IR ideologies that is relevant to unionization in the Chinese context is respect of labour laws. The authoritarian nature of the Chinese political regime, China's low labour cost-based economic development model, and the lack of the tradition of rule of law in the Chinese society have all contributed to extremely weak enforcement of labour laws. Our field research has found that while some employers have high awareness of labour law compliance, others often ignore labour regulations.

Belief in the Value of Employee Involvement

The third dimension of managerial IR ideologies is belief in the value of employee involvement. In the planned economy, worker participation and involvement, which was consistent with the socialist ideology, were highly valued in the Chinese workplace. Because of the economic reform, however, Taylorist work organization has gradually dominated, and various forms of worker participation have either disappeared or greatly declined (Walder 1986). As a result, many employers simply dismiss the value of employee involvement. However, those employers who have realized the importance of human capital to corporate success are keen to adopt various employee involvement schemes.

It should be noted that not all managers in an enterprise share the same managerial IR ideologies. A Chinese HR manager in a FIE may perceive unions as useless bureaucracy, but the foreign general manager may view unions as business threat due to his/her home country experience. Similarly, respect of labour laws may be high for a HR manager who is aware of the importance of labour law compliance, but it is low for a line manager whose priority is on meeting production quotas. Moreover, even individual managers may have mixed IR ideologies. A manager may perceive unions as political necessity but at the same time think that they are business threat, useless bureaucracy, or operational input. Given the possible co-existence of multiple managerial IR ideologies in an enterprise, our analysis in this article focuses on dominant managerial IR ideologies to avoid complexities.

It is also worth noting that the managerial IR ideologies described above vary across enterprises. In particular, ownership seems to be significantly related to all dimensions of managerial IR ideologies. We coded our qualitative case studies (107 cases, with missing data because our interviews were not structured) and cross-tabulated ownership status and managerial IR ideologies. As Table 1 shows, each of the three dimensions of managerial IR ideologies is significantly associated with ownership. However, caution should be taken when comparing managerial IR ideologies of any two types of enterprise ownership because our sample is small and non-random.

Table 1. Ownership and Managerial Industrial Relations Ideologies
Perceptions of unions Belief in the value of employee involvement Respect of labour laws
n (%) n (%) n (%)
Business threat Useless bureaucracy Political necessity Operational input Low High Low High
  1. ** p < 0.01; *** p < 0.001.

  2. FIE, foreign-invested enterprise; HTMOE, Hong Kong, Taiwan, and Macao-owned enterprise; POE, private-owned enterprise; SOE, state-owned enterprise.

FIE8 (32.0)6 (25.0)6 (20.7)4 (13.8)9 (16.1)10 (47.6)2 (5.1)21 (38.9)
HTMOE6 (24.0)5 (20.8)0 (0.0)5 (17.2)10 (17.9)0 (0.0)13 (33.3)2 (3.7)
POE11 (44.0)13 (54.2)5 (17.2)20 (69.0)31 (55.4)7 (33.3)24 (61.5)16 (29.6)
SOE0 (0.0)0 (0.0)18 (62.1)0 (0.0)6 (10.7)4 (19.0)0 (0.0)15 (27.8)
Total2524292956213954
Chi-square65.818*** 12.228** 38.956***

Then, why do enterprises with different ownership have different managerial IR ideologies? To answer this question, we need a closer look at managerial IR ideologies of the three major types of enterprise ownership.

State-Owned Enterprises (SOEs) and Managerial IR Ideologies

Because of the Party-State's political control of their operation, state-owned enterprises (SOEs) usually view unions as political necessity. As a vice general manager of a SOE in Guangzhou said:

Unions are a political must for SOEs … Our company was established in 2002. The union was set up at the same time. I think it's very natural for a SOE to have a union. (Interview, August 4, 2005)

SOEs also tend to have high respect for labour laws given their state ownership, although they may muddle through some regulations that may incur high labour costs, such as the regulations on the use of temporary workers and overtime. As the HR manager of a SOE in Hangzhou explained:

As a SOE, we've tried our best to comply with labor laws. However … we cannot afford double wages for overtime as required by the labor law. Currently we only pay a worker dozens of Yuan [the Chinese currency] for overtime per month. As I know, the majority POEs don't pay overtime compensation at all. (Interview, June 17, 2008)

SOEs used to emphasize the value of employee involvement in the planned economy, but since the economic reform, their belief in employee involvement has dramatically lowered due to the popularity of Taylorist work organization and the declined social and political status of workers. Nonetheless, in SOEs where the socialist tradition of worker participation is still to some extent alive, the belief in employee involvement is relatively high. The following words from a production manager in a SOE in Xuzhou are typical:

Worker participation in production is a tradition of our enterprise. For example, we have voluntary, off-line quality improvement groups for many years. Workers especially skilled workers love such participation, which is also very helpful for our production. Actually a lot of our production cost savings have come from workers’ small technical innovations and improvement. This is a socialist tradition, but it's good, so we have kept it. (Interview, December 16, 2006)

Foreign Enterprises and Managerial IR Ideologies

Foreign enterprises (including FIEs, Hong Kong, Taiwan, and Macao-owned enterprises (HTMOEs) and their joint ventures) have diverse perceptions of Chinese unions that can be largely attributed to their concern of government/public relations, their country of origin and experience in home or other countries, and institutional features of Chinese unions. First, foreign enterprises that want to have a good relationship with Chinese government may perceive unions as political necessity, as ‘unions in China are a part of the government’ and ‘cooperative with unions is important for public relations of foreign business’ (interview with an HR manager in an American firm in Beijing, June 6, 2010).

Second, the close relationship between Chinese unions and the Party/government, however, may also make some foreign enterprises view Chinese unions as business threat. This is particularly due to a worry that unions may become the Party's tool of political or even economic control in foreign enterprises. A Taiwanese employer in Dongguan told us:

Unions will never be our partner as their propaganda says. True, unions may help doing some welfare work and mobilizing workers. But don't forget, they are under the Party's leadership. After unions are established, Party branches will come. Our business secrets will be exposed to the Party. It's really scary. (Interview, June 8, 2006)

In addition, foreign enterprises that are anti-union or perceive unions as business threat in their home country or other countries may simply extend their adversarial attitude toward unions to their operations in China, as can be seen from the following words of the HR vice president of an Australian company in Beijing:

Our CEO is an American, and most board members are Australians. They hate unions. As Chinese, we know that Chinese unions are not harmful to enterprises. We have explained to them that Chinese unions are different. But they insist on avoiding unionization, perhaps due to their perception of Western unions. You know, unions in both the USA and Australia are very strong. (Interview, July 1, 2010)

Third, given the extreme weakness of Chinese enterprise unions, some foreign enterprises, especially those from countries where labour movements have been weak or lacked autonomy, may simply view Chinese unions as useless bureaucracy required by the Chinese government. Our interview with an HR manager of a Japanese firm in Dalian is telling:

With regard to unionization, we really don't care. We consulted our company lawyer. He said that we'd better have a union because unionization is a legal requirement in China. But he also assured us that unions were useless. We therefore set up a union because we always follow the laws. I'm actually the union chairman. It's just an empty title, no use at all. (Interview, June 17, 2005)

Fourth, due to the two institutional features of Chinese unions mentioned earlier, some foreign enterprises may perceive Chinese unions as operational input that may generate both financial cost and benefit. Similar to making decisions on other operational input, these foreign enterprises tend to do a cost–benefit analysis when it comes to unionization. While a few large foreign enterprises may believe that productivity gains generated by unionization more than offset the cost of union dues, those competing on low labour costs may find the reverse. An HR manager of an American company in Shanghai told us frankly:

I know unions in China do help promoting production, especially in SOEs and large enterprises. But we also need to pay union dues. So setting up a union has both cost and benefit, just like buying a machine. The problem is that the productivity gains from unions are often too limited … Our company has strict cost control. As to unionization, our only concern is the cost of union dues. It's too much. (interview, June 17, 2010).

As to respect of labour laws, the second dimension of managerial IR ideologies, foreign enterprises are divided by their country of origin. Among all types of enterprises, FIEs from Western countries, where there are strong legal traditions and developed legal systems, tend to have the highest level respect of labour laws. The following words of the general manager of a Sino–Germany company in Changchun are typical:

Our company strictly follows the labor laws. Compliance to laws is our basic principle of operation, no matter where we are, in Germany, in China, or in other countries. I've asked our HR manager to keep a close eye on any labor regulation changes and make sure that our labor practices are legal. (Interview, July 7, 2008)

HTMOEs, due to relatively weak legal traditions at home, often have very low respect of labour laws. Some HTMOEs may simply ignore the labour laws given their extremely weak enforcement; some may falsify records to cope with possible inspections of labour bureaus; and some would rather pay a small amount of fines for labour law violations or deal with labour dispute cases in court rather than comply with labour laws. The disrespect of labour laws of these enterprises can be reflected from the words of a migrant worker who worked in a Taiwanese enterprise in Shenzhen:

I don't think labor laws can really help us. Our boss isn't afraid of it at all. One of my colleagues went to the labor inspection station to lodge a complaint on unpaid overtime compensation. The official there did call our boss about it. However, he [the boss] denied it and said that his records didn't show that my colleague had worked overtime. Then that official could do nothing to help my colleague. Later, my colleague was fired. Our boss said to all of us: “if you want to go to the labor bureau to sue me, go ahead. I'll pay a small amount of fines in the worst case; but you'll lose your job.” (Interview, August 1, 2005)

Foreign enterprises are also divided by their country of origin on belief in the value of employee involvement. Because of the profound influence of the human capital theory in the West, a large number of Western FIEs appreciate the value of employee involvement and advocate high-involvement work systems. For example, a Sino–American joint venture in Shanghai has adopted many American high-involvement work practices such as self-managed teams, cross-functional training and employee empowerment. In addition, the union in this company has not only dealt with social welfare issues to motivate the workers but also organized offline worker groups to engage in small innovation or improvement. As the HR manager of this company said:

Our company targets the high end market. Our core competency lies in our employees. Therefore, the goal of our management is to ensure that everyone can maximally play his/her potential and that employees who have made contributions must be rewarded. (Interview, June 27, 2008)

HMTOEs, under the influence of paternalistic culture, tend to dismiss the value of employee involvement. This is particularly true for those in low-end, labour intensive industries where Taylorist work organization excludes workers’ participation. In fact, in our sample, none of the HMTOEs have high belief in the value of employee involvement (see Table 1).

POEs and Managerial IR Ideologies

POEs also have diverse perceptions of unions, which are caused by their concern of corporate public profiles or government relations, their paternalistic management style, employer personal experience, and institutional features of Chinese unions. First, similar to some foreign enterprises, POEs that are highly concerned with their corporate profiles or government relations may perceive unions as political necessity.

Second, POEs with paternalistic management style may perceive unions as threat of business. As a private employer in Wenzhou said:

I don't need a union. I founded the company. I treat the workers like my family members and they are dependent on me for living. What's the purpose to have a union? Do they want to challenge me?” (Interview, June 16, 2008)

In addition, a few POEs’ perception of unions as business threat may come from their memory of the militancy of workers rebel groups during the Cultural Revolution, which can be understood from the following words of a private employer in Taizhou:

I don't like any workers’ organizations. They are destructive forces. During the Cultural Revolution, many factories were paralyzed by those workers’ rebel groups. In nature, unions are not fundamentally different from those workers’ rebel groups. (Interview, June 13, 2006)

Third, a large number of POEs may view unions as useless bureaucracy due to either their lack of knowledge of or experience with unions or the extreme weakness of Chinese unions at the enterprise level. For these POEs, unions are simply a remnant of the planned economy whose existence is not much of their concern. An administrative manager of a POE in Shanghai told us:

We do have a union. It was set up when the enterprise was owned by the village. It's just a remnant of socialism; no use at all; and nobody here cares about it. (Interview, June 26, 2008)

Fourth, the two institutional features of Chinese unions (two per cent enterprise wage bills as union dues and union function of promoting production) also make some POEs view unions as operational input. Most of these POEs compete on low labour costs. Therefore, like their counterparts in the foreign sector, they may believe that cost of unionization is much more than its benefit.

With regard to respect of labour laws, POEs except a few who value their public profiles usually have poor records of labour law compliance. POEs’ low respect of labour laws is rooted in China's political, social and cultural traditions that emphasize ‘rule of people’ and ‘connections’ (guanxi), and the weak labour law enforcement discussed earlier further makes labour law violations universal among POEs. The following words of a general manager of a POE in Xuzhou are telling:

As I know, no POEs in the local industry follow labor laws well. Laws may be important for those who think they are important. But laws are made by people. In China people and guanxi is most important. People can change laws. As long as I can maintain a good relationship with the labor bureau, we're fine. (Interview, January 10, 2007)

Most POEs, except those in high-end, capital or knowledge intensive industries, tend to have low belief in the value of employee involvement. This is to a large extent caused by POEs’ paternalistic management style that dismisses workers’ know-how. As a private employer in Foshan said:

Workers’ participation? No, we don't need it. I know how to get orders, our managers and engineers know how to produce, what do workers know? Nothing! Their participation can only be bad help (bang dao mang)! (Interview, August 10, 2005)

Firm Size, Location, Sector and Managerial IR Ideologies

In addition to ownership, firm size, location, sector or nature of production are important factors shaping managerial IR ideologies. However, these factors are highly correlated with ownership as well as with each other, which makes us unable to draw sound statistical conclusions from our small and non-random sample of enterprises. Moreover, in contrast to ownership that is significantly related to all of the three dimensions of managerial IR ideologies, these factors, if examined separately, seem to be only correlated with the second and third dimensions. The following section will therefore attempt to examine the independent effects of these factors on managerial IR ideologies using our qualitative interviews.

First, firm size seems to be related to managerial respect of labour laws. Other things equal, large enterprises, because they are more likely to be exposed to the public and subjected to various inspections, tend to have higher respect of labour laws than small ones. For example, while most HTMOEs have low respect of labour laws, a large Hong Kongese invested enterprise in Shanghai had complied with various labour laws very well. The vice general manager told us:

We are too large, which makes us a frequent target of various government inspections such as those on environment, labor, and safety. Moreover, nowadays Chinese media is very interested in the scandals of large enterprises. Therefore, we must be very careful. This is particularly true for labor laws. If we have a big strike caused by our violation of labor laws, settlement will be very troublesome. And that will also be very bad for our enterprise's profile. (Interview, July 2, 2008)

Second, firm location also matters for managerial respect of labour laws as China's fragmented legal authoritarianism has led to uneven labour law enforcement across regions (Lee 2007). Where enforcement is stricter, local enterprises tend to have higher respect of labour laws. Our field research finds that in general, labour law compliance is better in Yangtze River Delta than in Pearl River Delta. As an official of the Shenzhen labour bureau said:

Generally speaking, enterprises in Shanghai have stronger awareness of labor law compliance than those in Guangdong. This is related to the big social environment. In fact almost all government policies and legal regulations have been better enforced in Shanghai than here. Enterprises are certainly subject to the influence of big social environment. (Interview, June 25, 2008)

Finally, firm sector or nature of production seems to have a correlation with managerial belief in the value of employee involvement. Enterprises in high-end, capital or knowledge-intensive industries often have high belief in the value of employee involvement due to the critical importance of human capital for these enterprises’ success. A founder of a biotech firm in Shanghai told us:

Everyone here is encouraged to participate. Our success depends on our employees’ creativity. Without their active participation, innovation will be dead. Every high-tech company knows it. (Interview, June 14, 2010)

Enterprises in low-end, labour intensive industries, however, tend to dismiss the value of workers’ participation as they often adopt Taylorist work organization, which does not need workers to think, and their workers often have very low skills.

In sum, managerial IR ideologies vary across different types of enterprise. Our analysis above has revealed the complicated relationships between managerial IR ideologies and their enterprise-level determinants including ownership, size, location and sector, and explained why a specific type of enterprises tends to have specific managerial IR ideologies. Given the multidimensional, multi-item nature of managerial IR ideologies and high correlations between their enterprise-level determinants, future research needs to further test the relationships that we found with carefully designed, large-scale surveys.

Managerial IR ideologies and strategies toward union organizing and functioning

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References

This section will examine the linkages among (dominant) managerial IR ideologies, strategies toward and outcomes of union organizing and functioning when environment pressures do not prevent employers from making choices. Our field research suggests that, among the three dimensions of managerial IR ideologies, perceptions of unions shape managerial responses to union organizing in the first place. In particular, when employers perceive unions as political necessity, they may simply take the compliance strategy setting up unions.

Case 1 E was a Sino-German auto parts joint venture located in Changchun, the labor and personnel system of which was highly localized with a basic principle of following the Chinese labor laws. In 1997, one year after E's establishment, a union was established with the support of the German management. As the general manager said: ‘For a joint venture like us, setting up a union was firstly a political task.’ (Interview, July 1, 2008)

However, perceptions of unions alone cannot fully determine managerial strategies toward union organizing. When alternative managerial strategies exist given a specific perception of unions, the other two dimensions may come into play. Managerial respect of labour laws is important in that unionization is a legal requirement in China. For employers who view unions as business threat or useless bureaucracy, low respect of labour laws may lead to their ignoring of unionization, while high respect may make them choose the strategy of compliance or circumvention.

Case 2 A was a POE in Shenzhen producing counterfeits of small electronics. Our interviews with the workers revealed many labor law violations such as no labor contracts and illegal overtime. Because A was registered in another city, the local ACFTU did not have A's information and therefore had not pressured the employer regarding setting up a union. When asked whether he had a plan for unionization, the employer said: “No. I don't like unions. The workers will make more troubles if they have an organization. It's already very difficult to manage them.” (Interview, June 13, 2007) Obviously, the employer viewed unions as threat of his business. Moreover, the violations of many labor regulations in A indicated the employer's very low respect of labor laws. As a result, unionization was simply ignored in A.

Case 3 B was a US paper products company operating in Beijing, which largely followed China's labor regulations. The local ACFTU had visited B urging it to set up a union. However, by June 2008, B was still union free. According to a HR manager, “it's mainly because our US headquarters hates unions. It views unions as our enemy. And we haven't felt real pressure from the district union yet as they only visited us once” (Interview, June 1, 2008) Despite B's perception of unions as its threat, it did not want to openly confront the legal requirement of unionization since following the Chinese laws is one of its major operation principles. After consulting with a labor lawyer, B adopted a circumvention strategy by claiming that it would set up a union if the workers made this request. The workers had not raised this demand, however.

Case 4 Located in Foshan City, C was a private furnisher in which violations of labor regulations such as not giving labor contracts to junior workers and not paying overtime compensation were common. By 2005, the employer had not faced real pressures from the local ACFTU with regard to unionization. He explained to us that, “unions in our country are a part of the government. They are useless to enterprises. Even for workers, I don't think they are useful at all. In fact, setting up a union is not a problem for me. I just don't want to go through the troublesome procedures. It's a waste of time.” (Interview, August 10, 2005) Clearly, unions are perceived as useless bureaucracy by this Employer. Considering further the poor labor law compliance, it is not surprising to see the employer's ignorance of unionization.

Case 5 Established in Shenzhen in 2002, D was a POE producing sweaters. An administrative manager of D told us that her company was going to establish a union very soon. However, this decision was made not because of external pressures, but due to the employer's increased awareness of the importance of labor law compliance. “Frankly, our boss doesn't think unions have any use. Neither do the workers. For our boss, it doesn't matter whether we have a union or not. In fact, he didn't decide to set up a union until recently. I think this is because the social environment has changed since the enforcement of the labor contract law this January. Now it seems that if enterprises don't follow the labor laws, there may be some consequences. Our boss realized this after he attended several seminars on the labor contract law. Since this January, we have changed some labor management practices. The next step is to set up a union.” (Interview, June 25, 2008) Therefore, although the employer of D still perceived unions as useless, his increasing respect of labor laws had made him choose the compliance strategy.

Belief in the value of employee involvement is relevant for union organizing because a major function of Chinese unions is to motivate workers and promote worker participation through social welfare activities and labour emulation. For employers who perceive unions as operational input, if they appreciate the value of employee involvement, they may think that such input is well worth it and therefore set up unions to motivate workers and improve efficiency. Conversely, the employers may choose the strategy of ignoring or circumvention depending on the degree of their respect of labour laws.

Case 6 Located in a suburb of Shanghai, H was a POE engaging in primarily the printing business. Like many other POEs, H viewed unions as operational input. Given the cost of union dues payment, H did not establish a union until 1998 when the top management realized the value of employee involvement and the role that a union could play in this respect. A vice general manager of H told us: ‘By 1998, we had grown into a large share holding company and our profits had increasingly come from high end products. Competition in this industry had also become more and more fierce and high turnover of skilled employees had become a challenge for every enterprise. We found that active employee participation and high employee commitment were key to our innovation and productivity improvement. We therefore decided to establish a union to help us motivate and involve the workers, for example, through providing welfare and organizing technical innovation activities. The union has done a great job. So our spending on the union is well worth it.’ (Interview, July 3, 2008) Clearly, although H's management still perceived unions as operational input, the increased managerial appreciation of the value of employee involvement had changed the managerial union strategy from ignoring to compliance.

Case 7 F was a POE in Xuzhou producing machinery parts for local assembly factories. The workers did not have labor contracts, operated in unsafe environment, and worked extremely long hours without overtime compensation. When asked whether there was a union and whether the district union has imposed any pressure on unionization, the employer, who used to be a middle level manager of a large SOE, said that, “we don't have a union. I received a notice [from the district union] on setting up a union early this year. I just ignored it. I know what unions do since I have worked in an SOE. I don't oppose unions. The problem is that I have to pay union dues. This is a big cost. If unions can help me increase profits rather than costs, I'll definitely have one. But, can they? … The district union has asked all enterprises to set up a union. Not many enterprises have followed. You know, unions don't have real power.” (Interview, December 21, 2006) In addition, the employer totally dismissed the value of employee involvement. “Look at those workers. They're farmers! The highest degree they have is a high school diploma. How can I count on them to come up new ideas or improve productivity? I don't need their involvement. I'll thank God if they can do their own jobs well!” (Interview, December 21, 2006) Clearly, the employer's choice of ignorance of unionization was determined by his perception of unions as operational input, low belief in the value of employee involvement, and low respect of labor laws.

Case 8 G was a Hong Kongese-owned electronics factory in Guangzhou, which had high awareness of labor laws and paid great attention to labor law compliance or circumvention. To circumvent the legal requirement of unionization, G established an employee committee which consisted of about 10 employee representatives who were recommended by their managers. By August 2005, this management controlled employee committee had been effective in avoiding unionization. According to the HR manager, G viewed unions as largely operational cost and it was due to a purely economic concern that G had not set up a union — ‘having a union could only incur cost of union dues while bringing nothing good to the company.’ Establishing an employee committee, however, “didn't cost the company anything.” (Interview, August 4, 2005) Moreover, employee involvement was not appreciated by the management. A production manager told us that, “we've advanced production lines. The workers only need to do routine jobs. Employee participation isn't necessary here.” (Interview, August 4, 2005) Given its relatively high respect of labor laws, G therefore chose a circumvention strategy toward union organizing.

Figure 1 outlines the linkages among dominant managerial IR ideologies, strategies toward union organizing and unionization outcomes. The number of cases in our sample that correspond to each linkage is noted, which provides clear support for our model. In addition, although our sample is not a random one, cross-tabulations of the three dimensions of managerial IR ideologies and unionization outcomes under the condition of bearable environment pressures provide further support for the significant roles of managerial IR ideologies in shaping union-organizing outcomes. As Table 2 indicates, existence of enterprise unions varies significantly across different managerial perceptions of unions, belief in the value of employee involvement, and respect of labour laws.

figure

Figure 1. A Decision Tree of Setting up Unions in Chinese Enterprises.

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Table 2. Managerial Industrial Relations Ideologies and Union Organizing Outcomes under Bearable Environment Pressures
Perceptions of unions Belief in the value of employee involvement Respect of labour laws
Business threat Useless bureaucracy Political necessity Operational input Low High Low High
  1. *** p < 0.001.

Union establishment0 (0.0)8 (53.3)29 (100.0)6 (31.6)11 (30.6)18 (90.0)0 (0.0)34 (68.0)
Total1815291936202250
Chi-square49.526*** 18.196*** 28.345***

After unions are established, if there are few environment pressures on union functioning or those pressures are bearable, managerial perceptions of unions will shape their strategies toward union functioning in the first place. Specifically, when management perceives unions as business threat, enterprise unions may be completely suppressed without any substantial functions.

Case 9 I was a Taiwanese-owned company in Guangzhou producing watches and clock accessories for exports. With a view that unions were a threat of management authority, the employer did not set up a union until the town Party committee imposed high pressure on him. However, the workers were completely ignorant of the union's existence. The HR manager was appointed by the employer as the union chairman, and all union members were middle level managers. Moreover, because of lack of pressures on union functioning and the employer's hostility to unions, the employer took a suppression strategy disallowing any substantial union functions. As a result, the union only existed on paper. As the union chairman admitted, “we have few union members. Workers don't want to join it since they need to pay membership fees. The company establishes this union just for dealing with some paperwork required by the town government and union.” (Interview, July 29, 2005)

When management perceives unions as useless bureaucracy, various union functions may be formalized, providing no more than limited social welfare to workers.

Case 10 Located in Shenzhen, J was a subsidiary of a large POE in the IT industry. Because its headquarters had a union covering all subsidiaries, J only had a manager in charge of union work part-time. According to the general manager, ‘unions in our country are basically useless. They are different from unions in the West. However, we have to have it according to the law.’ (Interview, June 26, 2008) When asked what the union had done, the HR manager could only tell the company's New Year parties co-organized by the union and a couple of movie tickets given to employees in the name of the union. Clearly, because J's management perceived unions as useless bureaucracy, a formalization strategy toward union functioning was adopted. As a result, the company union was marginalized, performing only limited welfare activities.

When management perceives unions as political necessity, enterprise unions may be co-opted by management becoming a managerial tool with constrained voice.

Case 11 K was a Sino-Japanese joint venture producing electronics products. According to K's union chairman, at the beginning the Japanese management worried that unions would be adversarial and challenge managerial authority. However, thanks to the dominant managerial perception of unions as political necessity for doing business in China, a union was set up soon after K's establishment in 1992 and co-opted by K's management as the union chairman was appointed by the Chinese partner (a SOE) and he was also the top manager of the Chinese side. Moreover, the goal of K's union, as emphasized by the union chairman, was to maintain stable labor-management relations rather than to solely protect workers’ rights. Despite its embededness in K's managerial structure, the union had done a good job in providing social welfare to the workers which was comparable to that of the best SOEs including generous maternity benefits and paid annual leaves. In addition, when K encountered a business downturn in 1998, the union actively mobilized workers to raise suggestions to improve productivity and management, which deeply impressed the Japanese management who later made such activity a monthly routine. When the city had serious flooding in 1999, the union again mobilized the workers to protect the factory and achieved 90% attendance rate during the flooding period, which again impressed the Japanese management. These union activities had gradually changed the Japanese management's (secondary) perception of unions as business threat to operational input that might benefit production, which contributed to the relative success of another union activity, collective consultation on behalf of the workers. Since 1994, the union had actively engaged in collective consultation with the Japanese management especially on wage issues, and the agreed annual wage increases had usually been higher than those initially proposed by management. For example, during the wage consultation in 2008, management proposed an annual wage increase of 5%. After collecting workers’ opinions and conducting extensive research, the union proposed 8% annual wage increase and finally persuaded the Japanese management by showing local government wage policies and wage increase guidelines, increase of local minimal wages, average wages in different types of local enterprises, local CPI, and K's own financial, productivity and wage data over years. Although wage increase of 8% was not impressive given the high inflation, the increase would have been lower without the union's great efforts. The union's collective consultation had also served as a mechanism to resolve workers’ collective grievance. For example, K's workers used to work 8 hours and 20 minutes a day to compensate for the two 10-minute breaks. After receiving workers’ complaints, the union suggested the Japanese management to change the working time to 8 hours. However, because the labor law is not clear on whether work breaks are counted as normal working time, the suggestion was rejected as the Japanese management insisted that the working time was legal. The union didn't give up but consulted with legal experts and various government policies and legal interpretations. Finally the union showed the Japanese management that the extra 20 minutes working time was actually illegal, which made the latter change the working time to 8 hours, write it in the collective contracts, and compensate the workers for their extra 20-minute work in the past years. In sum, due to the dominant perception of unions as political necessity, K's management took a co-optation strategy toward union functioning. Although K's union was largely a managerial tool for efficiency and stability, it did have certain constrained voice that had to some extent protected workers’ rights.

However, managerial perceptions of unions alone cannot fully determine their strategies. When management perceives unions as operational input, managerial belief in the value of employee involvement comes into play. When this belief is low, management may simply allow some formalistic union functions such as providing social welfare and organizing entertainment and sports activities. When this belief is high, management may require unions to actively perform certain functions such as providing substantial social welfare to motivate workers, organizing labour emulation and technological innovation activities to involve workers in production, and mediating labour disputes to maintain proper production order.

Case 12 L was a mid-sized POE in Xuzhou, producing extractors mainly for the low end Chinese market. It was established in 1992 as a SOE, but later restructured into a POE in 2001. When asked whether there was a union, the general manager said: “I wish we didn't have a union. Unions aren't trouble makers in our country, but having a union needs to pay union dues, just like paying taxes, while brings no benefits to companies. However, the union was established when our company was a SOE. When the company was restructured, we were required to keep it.” (Interview, July 6, 2007) Moreover, the general manager seemed to dismiss the value of employee involvement: “For manufacturing companies like us, employee discipline is more important than autonomy. I wouldn't say there are no gains from employee participation, but they're very limited. Frankly, our production doesn't need the workers to think much. What we need is their professional spirit and responsibility.” (Interview, July 6, 2007) Clearly, although L's management viewed unions as operational input or cost, it had to retain a union for a historical reason. However, because the management had low belief in the value of employee involvement, a formalization strategy toward union functioning had been adopted leading to the marginalization of the union. The union only had a part-time chairman, who was L's HR manager. According to the union chairman, the major function of the union was providing some social welfare. Interviews with over 20 employees of L revealed that the union had only organized a basketball game and gave the workers two free movie tickets in the past three years.

Case 13 Located in Wenzhou, M was a POE producing medical packaging machines. The owner of M did not agree to establish a union until he realized that the economic gains of having a union more than offset the cost of union dues, a response based on the perception of unions as operational input. As said by the chairman of M's union, “during the transition from a labor intensive small workshop to a mid-sized, high-tech company, we had increasingly realized that our core competency lied on a highly skilled and committed workforce. In particular, employee participation has played a key role in our new product development. The best way to motivate and involve workers is to set up a union, because it's in a better position than management to communicate with workers.” (Interview, August 12, 2006) Indeed, the union in M had three major functions: providing social welfare and training to employees, involving employees in technological innovation activities, and dealing with employee grievance. Moreover, M's union had become a channel for workers to voice their grievance. For example, M's workers used to receive normal compensation for overtime in weekends, which violated the double pay regulation of the labor law. After receiving some workers’ complaint, M's union chairman immediately communicated with the boss and persuaded the boss to comply with the legal regulation. Certainly, all of these union activities served not so much the workers’ interest as that of the business, and collective bargaining, the key union activity in protecting workers’ interest, was missing. Nonetheless, M's union activities, especially its function of constrained voice, still had relevance to workers. In fact, several workers we interviewed were satisfied with the union. In short, while M's management perceived unions as operational input, its high belief in the value of employee involvement determined the union establishment and the managerial strategy of co-optation toward union functioning. As a result, M's union became an effective tool of management with a function of constrained voice, but not a genuine workers’ organization.

The cases above illustrate the linkages between dominant managerial IR ideologies and union strategies when environment pressures do not prevent management from making choices. Although different managerial IR ideologies may co-exist in an enterprise, it is the dominant ones that shape managerial union strategies. This can be best seen in case 11 in which K's dominant managerial perception of unions as political necessity made it choose to set up and co-opt the enterprise union despite the initial, secondary concern of unions as business threat.

It is also worth noting that managerial IR ideologies may change over time due to environment changes or new IR experience especially experience with unions, which may lead to changes in strategies toward union organizing or functioning. In case 5, the environment changes resulted from China's labour law reform significantly increased the employer's respect of labour laws, which changed his strategy toward union organizing from ignoring to compliance. In case 13, changes in technological environment reversed the employer's belief in the value of employee involvement, which led to his choices of establishing and co-opting of the enterprise union. In case 11, the Japanese management initially had a secondary perception of unions as business threat. However, after the enterprise union was established, activities of the union in mobilizing the workers in the interest of the company had deeply impressed the Japanese management and changed their secondary perception of unions from business threat to operational input.

Figure 2 outlines the linkages between dominant managerial IR ideologies, strategies toward union functioning and union-functioning outcomes. The number of cases in our sample that correspond to each linkage is noted, which provides clear support for our model. Cross-tabulations of the dimensions of managerial IR ideologies and outcomes of union functioning under the condition of bearable environment pressures further suggest significant correlations between managerial perceptions of unions and belief in the value of employee involvement and the nature of enterprise unions (see Table 3).

figure

Figure 2. A Decision Tree of Union Functioning in Chinese Enterprises.

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Table 3. Managerial Industrial Relations Ideologies and Union Functioning Outcomes under Bearable Environment Pressures
Perceptions of unions Belief in the value of employee involvement
n (%) n (%)
Business threat Useless bureaucracy Political necessity Operational input Low High
  1. *** p < 0.001.

Paper unions5 (100.0)0 (0.0)0 (0.0)0 (0.0)5 (20.0)0 (0.0)
Marginalized unions0 (0.0)14 (100.0)0 (0.0)7 (53.8)13 (52.0)2 (11.1)
A managerial tool with constrained voice0 (0.0)0 (0.0)29 (100.0)6 (46.2)7 (28.0)16 (88.9)
Total51429132518
Chi-square106.985*** 15.869***

Interactions between environment pressures and managerial IR ideologies

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References

The sections above have examined the independent effects of environment pressures and managerial IR ideologies on managerial union strategies as well as union organizing and functioning outcomes. However, environment and ideological factors are closely correlated. First, China's political, economic and social environment may have important impacts on the formation of certain managerial IR ideologies. For instance, China's communist regime and its control of unions, on the one hand, have helped forming the perception of unions as political necessity. On the other hand, for POEs or FIEs that are cautious about penetration of the Party into their workplaces, the close relationship between the Party and unions may make them develop the perception of unions as business threat. In addition, the dominance of low-end, labour-intensive industries in China has led to employers’ generally low belief in the value of employee involvement. However, when employers face a new economic and technological context that demands a highly committed workforce, they may view employee input critical to their business success (see cases 6 and 13). Finally, China's authoritarian regime and lack of the tradition of rule of law have contributed to extremely low respect of labour laws among employers especially in POEs. However, Chinese workers have become increasingly awareness of their legal rights, especially since the labour law reform in 2007. As a result, employers’ respect of labour laws has heightened, which can be seen from case 5.

Second, interactions between environment pressures and managerial IR ideologies may have significant impacts on managerial choices of union strategies and therefore union organizing or functioning outcomes. First, employers with the same IR ideology may choose different union strategies under different levels of environment pressures. For instance, when environment pressures on union organizing are low, employers who perceive unions as business threat may choose to ignore or circumvent unionization; when environment pressures are high, however, those employers may have to comply to maintain their business legitimacy or stability. Second, employers with different IR ideologies may tolerate environment pressures on union organizing or functioning to different degrees. As a result, they may assess the same pressure as either bearable or unbearable and therefore adopt different union strategies. For instance, employers with a perception of unions as business threat can usually tolerate higher levels of environment pressures than those who perceive unions as useless bureaucracy or organizational input. This can be clearly seen from the comparison of the responses of two private employers to the same union organizing pressure. Located in Luohu District, Shenzhen, both of the employers received an ultimatum from the district union ordering them to set up a union by the end of 2007. Neither of them knew what would happen if they did not comply. Finally, while one employer who perceived unions as useless bureaucracy became unionized by the deadline, the other employer with a strong perception of unions as business threat decided to take the risk and continued to ignore the request of the district union.

Given the purpose of this study and space limit, our analysis of the relationships between environment and ideological factors is brief and tentative. Future research needs to shed more light on the effects of political, economic and social factors on IR ideologies and unionization outcomes, as well as to test the interaction effects of environment pressures and managerial IR ideologies using quantitative survey data.

Conclusion

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References

This article examines the roles of environment pressures and managerial IR ideologies in union organizing and functioning in Chinese enterprises. Our findings support the three propositions of the strategic choice theory mentioned at the beginning. An implication of our study is that it is important to focus on both environment factors and IR ideologies when studying Chinese employment relations.

To the best of our knowledge, this article makes the first attempt in exploring IR ideologies in the Chinese context, which has tremendous cultural and institutional differences from the West. Indeed, we have found three unique managerial perceptions of unions, that is, as political necessity, useless bureaucracy, or operational input, which are mainly caused by the unique features of Chinese unions. Given the purpose of this article, however, we have only explored managerial IR ideologies related to unionization. More aspects of managerial IR ideologies and IR ideologies of other actors need to be explored by future research.

The two managerial decision trees on union organizing and functioning developed in this article not only contribute to better understanding of unionization in Chinese enterprises but also provide a useful tool for future study of Chinese employment relations. For example, research that aims to examine factors influencing workplace IR outcomes may need to take into account managerial IR ideologies, treating them as independent variables, control variables or moderators.

While the focus of this article is on managerial perceptions and responses, our study does have significant implications for the Chinese labour movement. In particular, with the knowledge of various managerial tactics towards unionization, appropriate policies, regulations and practices may be developed by the government, the official unions and the workers to promote the effectiveness of unionization in the workplace. In addition, special education programmes may be developed to influence managerial IR beliefs, values and attitudes, which will have a positive impact on the workplace IR outcomes in the long run.

Finally, our findings indicate a fundamental problem of unionization in Chinese enterprises, that is, lack of workers’ voice and participation. However, as mentioned earlier, spontaneous workers’ industrial actions have been escalating in China, and there has been increasing workers’ demand for representative unions. Therefore, the evolution of the Chinese labour movement might develop certain bottom-up, grassroots organizing in the future, which would add workers’ or unions’ IR ideologies and strategies into the equation for determining unionization in Chinese enterprises.

Acknowledgements

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References

This project is financially sponsored by the East Asia Program (2005, 2006), the International Programs of the ILR School (2005), and the Center for Advanced Human Resource Studies (2006, 2008) at Cornell University. The authors thank the comments of three anonymous reviewers that have substantially improved this article, as well as the comments of the participants of the 25th Employment Research Unit conference at Cardiff Business School.

Notes
  1. 1

    In recent years some new forms of unionization, that is, union associations at the regional level, have emerged in China. However, they are not examined in this article. For details about these union associations, see Liu (2010).

  2. 2

    The new name is bureaus of human resources and social security.

  3. 3

    The 12 cities are Beijing, Shanghai, Shenzhen, Hangzhou, Wenzhou, Taizhou, Guangzhou, Dongguan, Foshan, Xuzhou, Dalian and Changchun.

  4. 4

    Standardized collective contracts refer to the sample contracts designed by municipal labour bureaus, which basically repeat the labour and employment conditions already stipulated by the labour laws.

  5. 5

    The data come from ACFTU's statistics.

References

  1. Top of page
  2. Abstract
  3. Introduction
  4. Union organizing in Chinese enterprises: setting the scene
  5. Managerial strategies toward union organizing and functioning
  6. Environment pressures on union organizing and functioning
  7. Managerial IR ideologies
  8. Managerial IR ideologies and strategies toward union organizing and functioning
  9. Interactions between environment pressures and managerial IR ideologies
  10. Conclusion
  11. Acknowledgements
  12. References
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