With Wal-Mart unionized in China, now what?

By John Ruwitch

JINJIANG, China (Reuters) - When Wal-Mart opened supercentre No. 1035 in this town near China's coast in late 2005, the stage was set for a showdown.

The local branch of China's state-backed union took pride in having penetrated more than 90 percent of the companies within its jurisdiction, including foreign ones -- way above average.

But the world's biggest retailer -- known for shunning unions -- had fended them off since entering China in 1996.

Eight months later, the All-China Federation of Trade Unions (ACFTU), the only one allowed in the country, emerged victorious, opening its first Wal-Mart branch and triggering a tide of similar openings across the country.

Now, labor experts wonder if -- and how -- the union will leverage its foothold and newfound clout nationwide.

Critics deride the ACFTU as a sham. Over 25 years of market reform, it has been accused of putting the creation of an attractive investment environment above workers' rights.

Whether it will begin acting on behalf of China's legions of laborers or whether its aggressive membership drive is simply a way for the Communist Party to extend its reach to workers outside of state-owned enterprises, is still an open question.

"The whole debate that the trade union has to resolve internally now is: does it go for protecting workers' rights, and will that mean capital flight?" said Stephen Frost, a corporate social responsibility expert at City University of Hong Kong.