A lot of CEOs get taken hostage in China


It's a story to give an American manufacturing executive nightmares: He arrives at his Beijing factory to lay off 30 people, and instead is taken prisoner by his employees while they demand compensation.

That's what happened to Charles Starnes, a co-owner of Coral Gables, Fla.-based Specialty Medical Supplies, who visited the factory last week to wind down the company's plastics division and move it to Mumbai. What exactly the workers wanted is a matter of some dispute.

Starnes told the Associated Press that they expected higher wages and severance packages, and brought local government officials to back them up. A union representative said they were just asking for unpaid wages before the factory shut down. Either way, it made for striking imagery, with photos of Starnes trapped behind bars.

“I feel like a trapped animal,” Starnes told the AP on Monday. “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.”

The situation remains unresolved, according to the U.S. Embassy in Beijing, which has been monitoring events and declined to give more information out of privacy concerns. Specialty Medical Supplies did not return calls for comment. [UPDATE, 6:12 p.m. - A company representative released this statement: "We are actively working with Beijing authorities to get him out to safe ground and, although making progress and keeping communication going, he remains held against his will."]

But this isn't an unusual occurrence in China. Lacking any other recourse for abuses, workers will sometimes act against managers when they're on site. In January, for example, the staff of an electronics manufacturer in Shanghai went on strike and locked 18 managers inside a room to protest harsh rules imposed by new management, according to the Epoch Times. Usually, it doesn't make for international headlines.

"This has been occurring for a long time," said Li Quiang, with the advocacy group China Labor Watch, through a translator. "Workers do this because bosses have a history of just running off, and workers know this, so they trap them in, and say 'we're not going to let you run, you're going to pay us.'"

They also do it because it works, he says, when official legal procedures are unreliable. Think of it like the Chinese equivalent of lodging a complaint with the National Labor Relations Board.

"The reasons it's effective is because workers are really threatening the one thing the government cares most about, other than economic benefit, and that's stability," Quiang says. "The government will become concerned, and when workers are demanding compensation the government might force the company to give economic reparations. By using this method, the workers are bringing in the strongest agent of change."

Worries about factories abruptly closing have been magnified in recent years, as rising wages have pushed manufacturing to different places within China — from the higher-cost cities to the country's vast interior — as well as to countries like Cambodia and Vietnam. Foreign investment in China actually fell by 3.7 percent from 2011 to 2012, the first and only time since the global recession-induced dip in 2009.

Specialty Medical Supplies' sector, the medical device industry, has been something of a bright spot. With strong domestic demand driven by an aging Chinese population, it's expected to grow by more than 10 percent per year through 2017, according to the research firm IbisWorld. It's also the kind of manufacturing that development experts advise maturing economies to foster, as low-skilled work migrates to less advanced countries.

But companies still shift jobs around for their own reasons, whether it be to get closer to a client or take advantage of a business partnership. And despite the government's attempts to educate workers on their rights, the specifics of how much severance they're entitled to is often unclear. That leads workers to take action even when they're not sure what's going on, in what University of Michigan Prof. Linda Lim calls the "grapevine effect."

"Very often, things get misrepresented," Lim says. "It's possible they were taking a preemptive strike, because so many other owners have left and left people in the lurch … the company needn't have done anything wrong."

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.
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