US businessman held in Chinese factory freed as pay dispute is resolved

Medical supplies plant co-owner says deal reached with workers over redundancy money

Chip Starnes: workers said  dispute was over outstanding pay and that some had not been paid for two months. Photograph: Kim Kyung-Hoon/Reuters

Chip Starnes: workers said dispute was over outstanding pay and that some had not been paid for two months. Photograph: Kim Kyung-Hoon/Reuters

Fri, Jun 28, 2013, 01:00


The American head of a medical supply plant in Beijing has been freed after spending five days trapped in his office, after a pay dispute was resolved with the Chinese workers who had been detaining him at the company’s Beijing plant.

Chip Starnes, who is co-owner of US company Speciality Medical Supplies, said he had been held hostage by dozens of workers demanding redundancy packages like those given to 30 co-workers in a shuttered section of the plant.

The workers said the dispute was over outstanding pay and that some had not been paid for two months.

Mr Starnes said a deal was reached overnight to pay the scores of workers who had demanded severance packages similar to those given to redundant employees in a phased-out division, even though the company said the 100 workers not affected by the redundancy plan were not being sacked.

Mr Starnes’s situation is indicative of broader changes taking place in China today.

Rising inflation and production costs means that the years of China as the world’s factory are probably numbered, certainly at the lower end of the manufacturing scale. Many overseas companies are looking elsewhere for cheap production, such as Bangladesh, Cambodia and Vietnam.

The factory is located at Jinyurui Science and Technology Park in Qiaozi township, near Huairou in the outskirts of Beijing and overlooked by mountains. The park was quiet yesterday. A woman at the entrance gate said Mr Starnes had left before a scheduled news conference.

“The workers and the bosses have reached an agreement and everyone is happy,” she said. “All 100 workers have got their redundancy and have quit. The factory is not operating right now, but when things go back to normal, if these people want to work here again, they can apply again.”

Two workers walked out with their things and said they had received compensation but did not reveal how much.

“I won’t be coming back here to work. I haven’t slept for a while,” one said.

There had been strong rumours circling that Specialty Medical Supplies was considering moving to India and this, combined with the attractive package on offer for those being laid off, prompted Mr Starnes being taken hostage.