US Factory Boss Held Hostage by Workers in Beijing

[News_Editor]

Workers on strike blocking the entrance gate of Hi-P International factory yell slogans during a protest in Shanghai on Dec. 2, 2011. (Photo: Reuters / Carlos Barria)

BEIJING An American executive said he has been held hostage for four days at his medical supply plant in Beijing by scores of workers demanding severance packages like those given to 30 co-workers in a phased-out department.

Chip Starnes, 42, a co-owner of Coral Springs, Florida-based Specialty Medical Supplies, said local officials had visited the 10-year-old plant on the capital's outskirts and coerced him into signing agreements Saturday to meet the worker's demands even though he sought to make clear that the remaining 100 workers weren't being laid off.

The workers were expecting wire transfers by Tuesday, he said, adding that about 80 of them had been blocking every exit around the clock and depriving him of sleep by shining bright lights and banging on windows of his office. He declined to clarify the amount, saying he wanted to keep it confidential.

"I feel like a trapped animal," Starnes told The Associated Press on Monday from his first-floor office window, while holding onto the window's bars. "I think it's inhumane what is going on right now. I have been in this area for 10 years and created a lot of jobs and I would never have thought in my wildest imagination something like this would happen."

Workers inside the compound, a pair of two-story buildings behind gates and hedges in the Huairou district of the northeastern Beijing suburbs, repeatedly declined requests for comment, saying they did not want to talk to foreign media.

It is not rare in China for managers to be held by workers demanding back pay or other benefits, often from their Chinese owners, though occasionally also involving foreign bosses.

The labor action reflects growing uneasiness among workers about their jobs amid China's slowing economic growth and the sense that growing labor costs make the country less attractive for some foreign-owned factories. The account about local officials coercing Starnes to meet worker's demands, if true, reflects how officials typically consider stifling unrest to be a priority.

Huairou district and Qiaozi township governments declined to comment.

A local police spokesman said police were at the scene to maintain order. Four uniformed police and about a dozen other men who declined to identify themselves were standing across the road from the plant.

"As far as I know, there was a labor dispute between the workers and the company management and the dispute is being solved," said spokesman Zhao Lu of the Huairou Public Security Bureau. “I am not sure about the details of the solution, but I can guarantee the personal safety of the manager.â€

Representatives from the US Embassy stood outside the gate much of the day, and eventually were let in. US Embassy spokesman Nolan Barkhouse said the two sides were on the verge of an agreement and that Starnes would have access to his attorneys. It was unclear what agreement might be reached, and subsequent attempts to contact Starnes were not immediately successful.

Starnes said the company had gradually been winding down its plastics division, planning to move it to Mumbai, India. He arrived in Beijing last Tuesday to lay off the last 30 people. Some had been working there for up to nine years, so their compensation packages were “pretty nice,†he said.

Some of the workers in the other divisions got wind of this, and, coupled with rumors that the whole plant was moving to India, started demanding similar severance packages on Friday.

Christian Murck, president of the American Chamber of Commerce in China, said he wasn't familiar with Starnes' case, but that such hostage-taking was "not a major problem" for the foreign business community.

"It happened more often say 15 years ago than today, but it still happens from time to time," he said. "It rarely leads to personal harm to the managers involved, but there are cases when it has in years past."

Source: Irrawaddy.org

[Publicus]

The CCP's state owned economy and systems of finance are being strained by increasing social unrest and the flight of both foreign and domestic capital and wealth as the structural problems of the CCP's economic model falters. Foreign direct investment is being hit particularly hard as the PRC government overtaxes privately owned firms to support the unprofitable state owned and operated CCP firms that dominate the PRC economy.

On the Gini Coefficient, the CCP-PRC has well surpassed the reading at which great social unrest occurs. Look for a lot more trouble and social disorder in the CCP-PRC, even as this year goes forward.

China’s Bo Signals Wealth Gap Breached Unrest Trigger Point

http://www.bloomberg.com/news/2012-03-09/china-s-gini-coefficient-exceeds-trigger-for-unrest-chongqing-s-bo-says.html

Foreign Investors Should Be Aware of Labor Strike Tactics in China -

See more at: http://www.china-briefing.com/news/2011/11/29/watch-out-for-china%E2%80%99s-flaring-labor-unrest.html#sthash.m5QcP5D0.dpuf

From the article: A growing number of laid-off factory workers will hurt China’s social stability, an essential factor that will eventually impact business operations in the country. “Massive factory layoffs will lead to increased protests and social turmoil in China’s urban and rural areas, spurred on especially by those laid-off factory workers and other migrant laborers particularly marginalized by society,” warned Li Qiang, founder of the U.S.-based labor advocacy group China Labor Watch.

PRC state owned corporations don't allow strikes by workers and pay outrageously high salaries in comparison to privately owned corporations. The foreign owned private companies have it the toughest because strikes against them are allowed by the CCP. Worse, state owned corporations pay so much and produce so little that they are not profitable. The money to operate state owned firms comes from taxing the profits of the private sector of the economy, which is significantly foreign owned and operated.

Which is why foreign investors and money has been fleeing the PRC in increasing amounts during recent years. The preference is to return to the US or go back home to Canada, or to relocate to other developing countries which still have low labor costs, such as Vietnam.

Analysis: China factory unrest flares as global economy slows

http://www.reuters.com/article/2011/11/25/us-china-factory-strikes-idUSTRE7AO04C20111125

From the article:

Were inflation not so acute, some striking workers at the Leader Sporting factory in Songgang, near Shenzhen city, said they wouldn't have fought back as hard over work-linked bonuses that they say mysteriously disappeared from recent pay cheques.

"I don't eat meat to save money now," said a 38-year-old mother of two at the plant, which makes sports goods for U.S.-brand K2 skates. "I just buy vegetables, oil and rice," she told Reuters beside a dusty highway where dozens of others gathered.

"Every little thing matters to us ... We can't afford to be passive anymore," piped up another worker surnamed Liu, as others nodded and pledged to strike again the following day.

People and Funds Surge Out of China:

Chinese snapping up real estate in US, Canada, Australia, and UK

http://www.chinagaze.com/2012/11/29/why-capital-flow-out-in-china/

Edited June 26, 2013 by Publicus

[F430murci]

I saw him interviewed yesterday while holed up in an office. He tried to climb over a fence and they stopped him and had encircled him outside the office.

He had an amazingly good attitude about the situation and was laughing when interviewed.

They let him go today.

Stuff like this and the Apple incident are going to result in American companies closing shop and reopening in other countries. Perhaps Thailand could benefit from this in the future.

[F430murci]

This is actually an interesting story. Squak Box had short interview with him. He is pretty much gagged by China holding a whole lot of his money at present time.

Guy was trying to close operations and head back to US. Only intended to be a short term project. They held him hostage and blackmailed him for severance pay!

He is back in states and China still has lots of his money. If he speaks out against China, China will keep his money. This type of lunacy will have serious consequences. US companies are going to start looking elsewhere.

[Publicus]

The gravy days of the PRC are already gone. Failing PRC economic growth continues to be unable to keep up with the demand for jobs.

Because of the one child policy, by 2020 there won't be enough workers available anyway to fill the dwindling number of new jobs being created. This includes all categories of workers, the university or college educated, the skilled or unskilled labor force.

The PRC needs an annual growth rate of 9% to sustain itself. That growth is now down to the mid 7% and falling, soon to enter the 6% territory. Most global economists see a growth rate of 5% by the end of 2014. That's a recipe for massive social unrest in a country that already is experiencing increasing social unrest. The CIA says the number of unreported incidents of social unrest last year exceeded 100,000 with only more to come.

Foreign investors are fleeing the PRC, have been for the past three years or so. This is an irreversible trend.

Foreign investment flees China

http://www.asianews.it/index.php?l=en&art=15524&size=A

[Sing_Sling]

I don't blame the workers for wanting to ensure that he didn't close shop and hightail it out - he has form.

China will still attract more and more manufacturers, India will not - if you don't know the reasons then you don't know Indian society, taxation law nor labour laws

Thailand benefit? Maybe from companies whose CEO thinks with his appendage.

My sister-in-law is the GM of a large Korean clothing manufacturer - she has moved production to China slowly but surely over the last ten years - though now she is looking at Indon and Vietnam

Edited June 29, 2013 by Sing_Sling

[Publicus]

I don't blame the workers for wanting to ensure that he didn't close shop and hightail it out - he has form.

China will still attract more and more manufacturers, India will not - if you don't know the reasons then you don't know Indian society, taxation law nor labour laws

Thailand benefit? Maybe from companies whose CEO thinks with his appendage.

My sister-in-law is the GM of a large Korean clothing manufacturer - she has moved production to China slowly but surely over the last ten years - though now she is looking at Indon and Vietnam

Yes, India and the PRC are basket cases, each for a different reason.

While India still has an Old World hierarchy, it is socially loose and disorganized, its economics are chaotic and its politics and government are incompetent and thoroughly corrupt to the core.

The PRC is a CCP dictatorship of 21st century fascism with Chinese characteristics. The state owned economy, which is what it remains to be, is inefficient and wasteful, incompetent and corrupt. As in the case of 1990s Japan, there is gross over investment in real estate which has created a huge property bubble which, when it bursts, will be the Second Big Bang. Present interbank interest rates are approaching 20% and banks have stopped lending for the next few months - possibly longer - as they try to keep their cash to use to pay other banks.

Thailand is just as socially loose and disorganized as is India with the added factor of being on the brink of political chaos at any given moment. The corruption is almost as bad as India and the PRC. Thais have had a philosophy of be poor and happy for so long they still don't know what to do with money, so they keep stealing it

Over here Greece looks relatively good - at least its problems are much, much smaller than these amazing places over here.

[Sing_Sling]

^ Excellent post, thanks

I am far more worried about a Chinese economic crisis than a US crisis, in particular the dependence by many on China not only as a supplier of manufactured goods but also as an investor and purchaser of materials

Edited June 29, 2013 by Sing_Sling

[F430murci]

Sing sling:

I thought the issue that wanted severance packages according to interviews I saw. Not issue of paying for work performed. At least what I heard. Maybe different stories floating around though.

[Sing_Sling]

Sing sling:

I thought the issue that wanted severance packages according to interviews I saw. Not issue of paying for work performed. At least what I heard. Maybe different stories floating around though.

No, no - you are quite correct. It is about severance, the workers' worry that the guy will close shop, like he did previously, and get out