Setting up branches of the Chinese Communist Party (CPC) within overseas-funded companies will help improve relations between labour and management, observers said.

The comments come shortly after Wal-Mart, the US retailing giant, opened a CPC branch at its Chinese headquarters in this southern city on Friday.

"The CPC branch will focus its efforts on improving the communications between the employer and the employees, providing mediation when disputes arise and helping employees in need, which will be good for the company," Liu Lin, a professor of Party construction at the Shenzhen Party School, told China Daily yesterday.

She said the employees would have no way to address potential problems if were not for the Party branch.

She added that the Party would help the company avoid mass walk-outs or other forms of industrial action.

She noted that Foxconn, a Taiwan-funded manufacturer that employs more than 100,000 workers in Shenzhen, had also set up a CPC branch a few years ago.

"(Setting up a Party branch) has by no means hindered the development of that company. On the contrary, it has been performing better and employee morale is strong," Liu said.

Given Wal-Mart's strong presence in the retail industry, Liu said the move could serve as an example for other foreign-funded companies and improve the Party's image.

Wal-Mart has been accused by critics in the United States of depriving American workers of their rights.

Zhang Dinghuai, a professor at the Academy of Contemporary Chinese Politics of Shenzhen University, echoed Liu's comments.

"The CPC's goal is to develop the economy, which is in line with any company's development strategy," Zhang said.

"Party members who act as model workers will inspire their colleagues to do a better job."

Dong Yuguo, spokesman for Wal-Mart China, said the company welcomed the opening of the CPC branch.

"We surely support (the move). We have had this attitude since the trade union was established. Both will be good for the development of Wal-Mart in China," Dong told China Daily.

Wal-Mart founded its first trade union in Jinjiang, East China's Fujian Province, in July. Since then at least 60 more Wal-Mart outlets in China have set up trade unions, which now claim more than 6,000 members, according to the All-China Federation of Trade Unions.

Guo Xiaohui, from the human resources department of Wal-Mart China, was selected the first Party secretary of the CPC branch at Wal-Mart's China headquarters.

Wal-Mart opened its first Party branch in the northeast city Shenyang.

Source: China Daily