The Bulletin

In China, business risks include becoming a hostage

Posting in Finance

The story of Chip Barnes, the American executive who was held hostage for six days by workers at a plant in China, isn't as uncommon as an outsider might expect -- or hope -- it to be.

Chinese workers are taking increasingly drastic action to resolve labor disputes as stories of runaway bosses have spread, causing widespread unease. An economic slowdown in China has only amplified those fears.

In the case of Barnes, it appears those fears were unfounded. Barnes was at the plant to lay off 30 workers (who were given severance pay) in its phased-out plastics division. Other workers at Barnes' medical supply plant mistakenly believed he was there to shut the entire factory down, so they made a preemptive strike and took their boss captive. Barnes was released Thursday after paying off workers who demanded severance packages similar to ones given to laid-off co-workers, reported the Washington Post.

It's unclear just how many employers have packed up and left without paying workers. An investigation by the Economic Information Daily, a newspaper published by the state-owned Xinhua news agency, found more than 400 bosses ran away from bankrupt factories in China's Zhejiang province in 2008, according to WSJ's China Real Time Report blog.

Even though China criminalized the non-payment of wages in 2011, there has been an upswing in cases in the past year of companies uprooting and moving shops overnight, according to labor rights group China Labor Bulletin.

Workers have used the hostage tactic to resolve other labor disputes. Earlier this year, Japanese and Chinese managers at Shanghai Shinmei Electric Co. were held hostage by 1,000 workers who claimed work rules for 2-minute bathroom breaks were too harsh.

Photo: Flickr user jurvetson

— By on June 28, 2013, 3:29 AM PST

Kirsten Korosec

Contributing Editor

Kirsten Korosec has written for Technology Review, Marketing News, The Hill, BNET and Bloomberg News. She holds a degree from Northwestern University's Medill School of Journalism. She is based in Tucson, Arizona. Follow her on Twitter. Disclosure