China's state-controlled union has targeted some of the world's largest investment banks in a recruitment drive that will see the multinationals have to pay a 2 per cent payroll tax to fund labour activities.

Union officials in Beijing's financial district summoned representatives of multinational investment banks to a meeting last month at which they were encouraged to establish union chapters. The banks included Goldman Sachs, JPMorgan, Morgan Stanley and UBS.

There's a big financial incentive for them to go after the investment banks,” said an executive familiar with the targeting of the banks by the All China Federation of Trade Unions, the country's sole legal union.

ACFTU officials and investment bank executives declined to comment on the drive, which has also affected foreign companies in Suzhou, near Shanghai, and Shenzhen, bordering Hong Kong. “We've seen a lot of companies get a push.” said Jonathan Isaacs, a lawyer with Baker & McKenzie.

“They are actually telling us [to establish union chapters], not asking us,” said one foreign executive in Suzhou. “The feeling from everyone was – we just got a 2 per cent tax.”

As in previous campaigns targetting foreign companies, including against Walmart in 2006, the union has focused on negotiating with management rather than employees. The union's approach gives companies a chance to control in-house activities by selecting the chapters' members and leaders.

“In Europe or America, having a union is like having a [rival] manager in the company,” said a government official. “Here a union is to help the company be more productive.”