June 26, 2013 / 10:37 AM / 7 years ago

U.S. employer held captive in China factory keeps his hopes up

BEIJING (Reuters) - A U.S. businessman held captive by about 100 workers in a Beijing factory said on Wednesday he was hopeful of a resolution to a row about pay in the next day or two.

Factory workers stand in a factory where Chip Starnes, president of Florida-based Speciality Medical Supplies, is being held captive on the outskirts of Beijing June 26, 2013. REUTERS/Kim Kyung-Hoon

Chip Starnes, president of the Florida-based Specialty Medical Supplies, said from behind his barred office window that the workers were demanding severance packages identical to those offered to 30 recently laid off employees - even though there weren’t going to be any more layoffs.

The six-day-old stand-off in the suburb of Huairou, not far from sections of the Great Wall, has highlighted one of the lesser known risks of doing business in China, where the level of trust between workers and managers is low and faith in the legal system is weak.

“I’m hoping we can come to some sort of agreement here today or tomorrow, or something like that,” Starnes told Reuters by telephone from inside the plant, which produces alcohol pads and plastic blood lancets for diabetics.

Talks between Starnes’s lawyers and the workers were under way, though Chu Lixiang, head of the Huairou labor union’s rights and interests department, told reporters at the factory it would take time to reach a deal.

“As of now, we are still in the process of solving this. There is no new news nor any result that has come about yet,” Chu said.

Angry employees holding employers captive is not uncommon in China, according to consultants and lawyers. Detailed figures are difficult to obtain, but the cases often arise out of a mix of mistrust, mismanagement and desperation.

The U.S. State Department’s consular information sheet on China notes cases of civil business disputes in which U.S. citizens have been prevented from leaving the country for months or years, been harassed or intimidated by “debt collectors” or physically detained as leverage.

Charles Scholz, managing director of Big Bear Safety & Security Management, said illegal detentions typically happened in the construction and manufacturing sectors.

He described a case in which a manufacturer in Suzhou, near Shanghai, had completed 80 percent of the work contracted to it, but the foreign partner cancelled the contract after a quality dispute and told the contractor to leave the site. The Chinese partner claimed it was still owed 20 million yuan ($3.25 million) and refused.

“They locked in the foreign general manager and three of his clients as well as 60 of the staff, blockaded them into a factory for three days... they wouldn’t let them leave,” said Scholz.

Starnes flew to China last Tuesday and his detention by the workers started on Friday. Asked if he had any inkling that something like this might happen while moving part of his China operation to India, Starnes replied: “No. Zero.”

Kevin Jones, a Shanghai-based partner at the U.S. law firm Faegre Baker Daniels, said companies laying off staff in China should consider simple steps to mitigate risk, like making the announcement on neutral ground, and splitting up employees.

“Any time you have a reduction in the force you have the potential that it could end up like this,” he said.

Police are loath to wade into business disputes and tend to keep their distance as long as things remain peaceful.

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The workers’ demands in Huairou followed rumors that the entire plant was being closed after the company’s plastic injection molding division began a move to India to lower production costs. Starnes has said no more layoffs were planned.

U.S. officials in Beijing met Starnes on Monday and confirmed that he had not been physically harmed, U.S. embassy spokesman Nolan Barkhouse said.

“The embassy and the U.S. government have maintained regular contact with Mr. Starnes and we are aware that he remains safe and that he has had personal contact with his attorneys,” Barkhouse said.

Reporting by John Ruwitch in SHANGHAI, Reuters TV and Michael Martina in BEIJING; Editing by Nick Macfie

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