MCLC: factory standoff

[Denton, Kirk]

MCLC LIST
From: kirk (denton.2 at osu.edu)
Subject: factory standoff
***********************************************************

Source: NYT (6/2/13):
http://www.nytimes.com/2013/06/26/world/asia/standoff-drags-on-for-us-busin
essman-held-hostage-by-employees-in-china.html

Standoff in China Drags On for U.S. Man Held by Workers
By DAN LEVIN

BEIJING — An American business executive being held hostage by employees
at his medical supply plant on the outskirts of the capital 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.

The executive, Chip Starnes, 42, a founder and president of Specialty
Medical Supplies, was kept out of sight Tuesday afternoon, 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 American diplomats to the factory, began when the company,
which is based in Coral Springs, Fla., 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.

The division, which manufactured medical goods like lancets and insulin
syringes, is being moved to India. But rumors soon spread that Mr. Starnes
was planning to close the entire plant and flee without paying the rest of
the workers, which happens often in China.

Although he explained that the remaining workers were not being laid off,
about 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 moving
some operations to India. “We have been given an i.o.u. for two months and
all assembly lines have stopped,” said one manager, who gave only his
surname, Wang. “We went without work. What were we going to do?”

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 right up until the workers went rogue, he
added.

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.

In February, a factory owner in south China’s Guangxi Autonomous Region
was kidnapped from a hotel by two contractors who claimed that he owed
them $618,000. A month earlier, a migrant worker in Shandong Province
stabbed the relatives of a construction contractor, killing the man’s
5-year-old nephew, over what news reports said was a $245 debt. In
December, 14 women died in a fire at a bra factory in Guangzhou, which the
police determined had been set by a worker upset over $490 in unpaid wages.

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 closing and took managers hostage even before plans
for compensation had been made public.

He said the crisis was defused by the local government, backed by the
police, although officers sided with the workers.

“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 United States 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 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.

Patrick Zuo and Shi Da contributed research.