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Chinese Factory Employees Kidnap American Boss


Last week, Chinese workers at Specialty Medical Supplies just outside Beijing kidnapped the co-owner of the factory, an American named Chip Starnes. Barricaded in his office for several days, Starnes says he was coerced into giving “severance packages” to a hundred workers by local party officials, even though those workers weren’t going to be laid off.

The trouble started when Starnes arrived in Beijing to lay off the last 30 workers in the company’s plastics division, which Starnes was gradually closing down. The laid-off employees were given compensation packages that were “pretty nice”, he said. Other workers got wind of this deal and feared that the entire factory was being shuttered. They demanded their own severance packages, preventing Starnes from leaving the compound for days and depriving him of sleep by banging on the doors of his office and shining bright lights at him.

The Associated Press visited Starnes in captivity but buried the most important piece of information at the end of the story: Starnes plans to move the company’s plastics division to Mumbai, India. Doing business in China has become harder and more expensive in recent years, so companies and factories have uprooted their Chinese operations or overlooked China in favor of locations like India, Bangladesh and Vietnam.

Wages for Chinese manufacturing employees have increased 20 percent per year for the past decade in China, the WSJ reported in May. As a result, foreign investment declined by 3.7 percent in 2012, the first drop since the global financial crisis. Many of those jobs are moving to other Asian economies. To take one example, Lever Style used to manufacture clothes for Uniqlo, the biggest apparel chain in Asia, at three factories in China; within the next five years, Lever Style executives told the WSJ, 50 percent of its clothes will be made outside China.

These types of jobs aren’t only going to Asian countries. Some are coming back to North America. As the Economist reported in January, companies like Apple and GE that had moved their operations to China years ago are starting to “re-shore” those factories and jobs. Thirty-seven percent of manufacturing companies with yearly sales of more than $1 billion were planning or considering moving production facilities back to America from China, the Boston Consulting Group found in an April 2012 survey.

The case of poor Chip Starnes, locked in his office by his employees, shows two things: that Chinese workers are growing bolder when it comes to compensation and rights, and that places like Mumbai are increasingly attractive locations for manufacturing companies that need low-cost, low-skilled labor.

[Chinese factory image courtesy of Shutterstock]

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  • lukelea

    For an even more extreme example read SHOWDOWN AT CHANGSHA by John C. Alley.

    He was threatened with imprisonment and barely managed to get out of the inner province in which he had located his factory when he decided to shut it down.

    It is easy to forget there is no rule of law in China. Extortion is a way of life.

  • Jim__L

    So no one here actually believes in the Great China Market anymore?

    We granted China MFN status because we expected to sell them lots of our goods. (Instead, we got Wal-Mart collaborating with them to sell us lots of their goods.) Still, there was still hope that Chinese workers, once affluent, would have more money to spend and make the Great China Market a reality.

    Now, are we simply abandoning the country, once it looks like labor is cheaper elsewhere? If MFN could lead to advantages for our export market, then we should be sticking with China, to the point that their workers become more affluent; if it wasn’t a good idea, we should be striking down MFN.

    This is a policy cluster-fail.

    • Corlyss

      We can’t do anything tough with China for two reasons:
      1. This administration doesn’t believe in toughness with anyone but Republicans.
      2. The Chinese own our debt.
      It’s a stork-frog conundrum.

      • Jim__L

        If the Chinese expect that debt to be repaid, doesn’t that give us leverage? If you owe the bank $200 and you can’t pay, you have a problem. If you owe the bank $2T and you can’t pay, the bank has a problem.

        • Corlyss

          That’s the theory.

          All the Chinese would have to do is stop buying our paper. Instant financial collapse. It’s the Mutually Assured Destruction scenario. There’s been as much discussion of the options as there were about nuclear face-offs, brinksmanship, and disarmament in the 50s and 60s.

          • Jim__L

            I thought the Chinese had stopped buying our paper, or so much of it, and the Fed was picking up the slack by buying it — effectively printing money to finance our debt.

          • Corlyss

            No, the Chinese have not stopped buying our bonds. They buy to depress the value of their currency. The Fed is buying additional bonds that it authorized as QE.

          • Jim__L

            It’s ironic that we keep branding the Chinese “currency manipulators” when one way they do so is financing our debts…

            I can’t help but wonder how much healthier our export sector might be if we had a balanced budget.

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