Dr. Eileen Otis, an associate professor of sociology of U Oregon, presents the story of worker rights in the Chinese division of Walmart, a tale that reflects the shady labor practices foisted onto workers in the name of cutting costs.
Walmart is in no uncertain terms a titan of industry; it is the world's largest company by revenue, pulling in a whopping 514 billion dollars last year. As Dr. Otis put it, China has become “the world’s shopping mall” rather than the world’s factory, and Walmart was eager to capitalize on its wealthy service economy after saturating the US market. Walmart entered the Chinese market in 1996, opening its first store in Shenzhen. In China, especially during that time period, retail work was seen as low status work, and Walmart put great effort into acclimating Chinese workers to a Western model of retail and customer service. Conditions were great for employees. One of the first few stores Walmart opened had over 8,000 applicants show up to compete for 80 positions. As Dr. Otis notes, workers she interviewed spoke “wistfully” about their time working for the company in this era. Wages were 20 percent higher than the average. The job came with all federally mandated benefits. There were ample promotion opportunities and the positions offered paid training. And Walmart provided a culture that was extremely appealing. It used an egalitarian model: managers were called by their first names, they “coached” instead of reprimanded, employees were taught of the “inverted pyramid” of management with supervisors at the bottom supporting the workers. Employees felt that this culture was well married to practice. They generally enjoyed the work and felt they were treated very well.
But Walmart began to run into financial issues. The central procurement model that made its US stores so successful did not work very well with the smaller scale and greater diversity of China. Workers unionized in 2006. Its stores in Korea and Germany began to fail, and when a new CEO was appointed to manage Walmart China, he mandated cost-cutting to try and save his branch. Employee wages fell to the point where second jobs were necessary, and staff layoffs were so deep that remaining employees often had to skip drinking water or using the restroom to do the work that fell to them. And, worst of all, a new “Comprehensive Work Hours System” was put into place in 2016, shifting work schedules from fixed to flexible. This new system was impossible to plan around. This new system was not allowed without consent under China’s strong 2008 labor reforms, and managers resorted to shady tactics to get employees to sign off on this unfair system. Workers were gathered into training meetings and essentially duped into signing legal contracts allowing Walmart to put the CWHS into place.
Dr. Otis categorizes employee reactions into two categories, non-informed consent, and informed non-consent. Non-informed consent refers to employees who signed the contracts without knowing what they were. Often times, they were directly lied to about the waiver’s content by managers, or simply did not have the time and energy to read them due to exhausting schedules. Workers who practiced informed non-consent were aware of the waiver’s contents and chose not to sign. These individuals were bullied by management for their actions. One greeter, who had been employed solely in that position for a decade, was suddenly moved to a cash register for a day and received several “coaching” sessions (i.e. reprimands) for her mistakes. Another customer service representative who refused to sign also received multiple “coachings” in the weeks following her refusal after going eight years without a single one. And while the company’s practices were without a doubt underhanded and arguably in violation of Chinese law, the uniquely bureaucratic legalist system of the PRC meant that there was little enforcement to these strong laws.
Walmart’s fall from grace in China from a sought after and loved employer to an underhanded and abusive one holds important lessons about corporate culture. Corporate culture serves as branding: employees who work in a positive company are happy, and the visibility of both culture and employee satisfaction are good for consumer marketing. Walmart China executed their branding very well for years. Employees loved the company, loved the culture, and felt that management was very consistent in their practice as it related to the egalitarianism they preached. But corporate culture, meant to control and normalize worker actions and attitudes (for better or for worse) also can a huge liability to a company. When discrepancies arise between the culture and the firms’ actions, that culture becomes the basis for moral outrage