Ethical Dilemma: In China, factory people often work long hours with low pay. Some factories lack heating or air-conditioning, and employees may work with hazardous materials. Workers may be fired if they complain. However, a growing labor union movement is taking hold in China. Despite management resistance, firms such as Tesco and Walmart are being forced to allow Chinese workers to unionize. Unions demand better working conditions and higher wages, and occasionally they go on strike. Management at some MNEs has prevented the workforce from unionizing. Other MNEs are establishing operations in Eastern Europe and Latin America, where labor unions are relatively weak.

The Chinese government worries that unionization is hurting inward FDI by scaring foreign companies away from China. Suppose you work for Tesco or Walmart in China. Is it acceptable for your firm to prevent its workers from forming a union? What factors should management consider when determining the appropriateness and role of unions? To whom is your firm accountable—its employees or its shareholders? Can companies reach a fair compromise with workers? Analyze this dilemma by using the ethical framework in Chapter 4.

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