Wal-Mart is to allow workers at all of its Chinese stores to become members of trade unions.
Wal-Mart says Chinese workers are free to form unions
The US retailer said it would work with the state-sanctioned All-China Federation of Trade Unions (ACFTU) on representation for its 28,000 staff.
The move came after workers at five stores chose to set up union branches.
All unions must be affiliated to the ACFTU, which is not independent and which critics say does not campaign for better pay and working conditions.
The government-approved body is regarded more as an intermediary and channel of communication between managers and workers.
Wal-Mart maintains that it is not opposed to unionisation, but unions operate in few of its US and international stores and critics claim the world's largest retailer is hostile to worker representation.
Workers have formed unions at stores in Quanzhou, Shenzhen and Nanjing in the past two weeks, putting pressure on Wal-Mart to reach an agreement with the ACFTU.
Wal-Mart says it is not opposed to its Chinese workers being represented but Beijing has warned the company not to discriminate against workers who form individual unions.
"Our mutual aim is to establish grassroots unions within each Wal-Mart store throughout China," Wal-Mart said in a statement.
The retailer will now seek discussions with the ACFTU - which has 150,000 members in China - on how to co-operate effectively.
According to the ACFTU, about 25% of foreign-owned firms operating in China have official labour unions.
Wal-Mart opened its first Chinese store in 1996 and recently revealed plans to hire a further 150,000 workers in the country.