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TFI Daily News

World News for World Changers

Jun 27

Standoff Drags On for U.S. Businessman Held Hostage by Employees in China

By Dan Levin, NY Times, June 25, 2013

BEIJING—An American business executive being held hostage by employees at his medical supply plant in Beijing spent a fifth day on Tuesday in a surreal standoff that has highlighted the dearth of legal protections in China for foreign investors and workers.

On Tuesday afternoon, the executive, Chip Starnes, 42, a founder and president of Specialty Medical Supplies, was kept out of sight, with local government officials insisting that he was merely busy with his lawyers in negotiations.

The dispute, which has drawn a throng of police officers, Chinese reporters and American diplomats to the factory in Huairou, began when the company, which is based in Coral Springs, Fla., and manufactures medical goods like lancets and insulin syringes, closed its injection molding division and gave roughly 30 employees what Mr. Starnes described in a telephone interview on Tuesday night as a generous severance package. But rumors soon spread that Mr. Starnes was planning to close the entire plant and flee without paying the rest of the work force, which happens often in China.

Although he explained that the remaining workers were not being laid off, the remaining 100 employees barricaded the exits on Friday and stopped him from leaving until he agreed to give them compensation identical to that given to the laid-off employees, a sum he contends would bankrupt the company.

Since then he has been trapped within the factory grounds, occasionally appearing at the barred window of his office looking haggard and in the same clothes he has worn since Friday. Over the weekend, local officials coerced him into signing contracts that met some of the workers’ demands, even as employees kept him awake with bright lights and loud noises.

In the interview, Mr. Starnes bemoaned his fate, saying local officials were pressing him to provide lavish compensation to workers who were not scheduled to be laid off. “The union just wants to do anything that will calm the people,” he said. “They are asking me to commit business suicide.”

Workers paint a starkly different picture of a company that has not paid its employees in weeks as news spread that Specialty Medical was relocating some operations to India.

Mr. Starnes rejected the accusations of unpaid wages. “That’s ridiculous,” he said, citing the payroll schedule. “They were all paid on Monday.” The factory was producing goods until the workers went rogue, he added.

Western business executives say foreign companies are especially vulnerable to the strong-arm tactics of employees who have little faith in the Chinese legal system.

One business executive in Beijing described how workers at his company got wind of an impending closure and took managers hostage even before plans for compensation had been made public.

"It’s easy in China to agitate around a foreign employer," said the executive, who asked that his identity and his company’s be kept secret because he still does business in China. "This society is accustomed to using tools of mass mobilization, and when a spark erupts in the wrong place, things can quickly get out of control."

Diplomats say they are relatively helpless when a foreign business owner is embroiled in such disputes. Officials from the American Embassy visited Mr. Starnes on Monday, but could do little more than check on his welfare and make sure that he had access to his lawyers.

In the meantime, Mr. Starnes is unsure how the dispute can be resolved in a way that convinces his employees to come back to work. “They hear a rumor and there’s a big payday possibly, they’ll stick together,” he said.