Plant in China becomes prison for American businessman

  • Article by: DAN LEVIN , New York Times
  • Updated: June 26, 2013 - 12:49 AM

Workers at a medical supply company’s plant in China are holding an American executive hostage.

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Starnes said Chinese officials are pressuring him to pay off workers, which he says would bankrupt his company.

– 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.

“He is completely free within the factory; it’s just that he has stuff to do,” said Chu Lixiang, an official with the government-run labor union in Huairou, a district of Beijing.

The dispute, which has drawn a throng of police officers, Chinese reporters and U.S. 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 Starnes described in a telephone interview Tuesday night as a generous severance package. But rumors soon spread that Starnes was planning to close the entire plant and flee without paying the rest of the workforce, which happens often in China.

Although he explained that the remaining workers were not being laid off, the remaining 100 employees barricaded the exits 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 says 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.

In the interview, Starnes bemoaned his fate, saying local officials were pressing him to provide lavish compensation to workers who were not scheduled to be laid off. “They are asking me to commit business suicide,” he said.

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. “We have been given an IOU for two months and all assembly lines have stopped,” said one manager, who would only give his surname, Wang.

Starnes rejected the accusations of unpaid wages.

China often favors economic development over labor rights, leaving workers with little recourse to resolve salary disputes. Sometimes, those who feel cheated turn to intimidation or violence.

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.

Diplomats say they are relatively helpless when a foreign business owner is embroiled in such disputes. Officials from the U.S. Embassy visited Starnes on Monday but could do little more than check on his welfare.

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

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  • A worker looked out from a door at the Specialty Medical Supplies plant on the outskirts of Beijing where Chip Starnes, founder and president of the Florida-based company, is being held hostage. Sometimes Chinese workers who feel cheated turn to intimidation or violence.

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