CEO of American Medical Device Company Held Hostage in ChinaCEO of American Medical Device Company Held Hostage in China

Chip Starnes is being held captive by workers at Specialty Medical Devices’ Beijing factory who are demanding severance packages.

UPDATE: The New York Times reports that the American boss has finally left the plant after agreeing to a payout. 

Charles “Chip” Starnes, the CEO of a Florida-based medical device manufacturer, has been held hostage at his company’s factory outside Beijing since June 21. His captors are his own employees.

The trouble started after Starnes’s company, Specialty Medical Devices (Coral Gables), granted severance packages to around 30 workers laid off from its injection molding division, the New York Times reports. The company decided to move the division to Mumbai to take advantage of lower labor costs and the relative strength of the dollar versus the rupee, Starnes told Bloomberg.

Though Starnes said Specialty Medical Devices planned to close only its injection molding division in China, the move ignited rumors that the entire factory there would be shuttered. Angry employees responded by trapping the CEO in the factory and demanding they be paid severance packages too.

“They want to get that, plus they want to go back to work, and that’s where the breakdown is happening,” Starnes said in a phone interview with Bloomberg. “…It would completely have been committing business suicide, what they were asking me to do.”

One worker at the factory told reporters she hadn’t been paid in two months, according to the Associated Press. Starnes has denied that claim. A local union official speaking on behalf of the factory employees told AP that the workers want the wages they allege have been denied as well as a “reasonable” severance before leaving their jobs.

Starnes told Bloomberg that workers ransacked his office and kept him awake Saturday night by banging on the doors and glass of the factory. Since then, he said, conditions have improved.

While Starnes has been negotiating with local labor unions, Chinese authorities have remained outside the factory gates, he said. Starnes told Bloomberg he’s been in constant contact with the U.S. embassy, whose representatives have visited to bring medicine and check on his condition. However, the matter is classified as a “civil dispute,” so the U.S. government’s involvement is limited, he said.

Business Insider interviewed Starnes’s younger brother, who said Specialty Medical Devices has had a presence in China for 10 years and that Starnes has visited its facility there about four times per year during that time.

This isn’t the first instance of Chinese workers holding a business executive hostage. Still, Starnes remains hopeful that Specialty Medical Devices won’t have to pull its operations out of the country.

“I think at the end of the day, I will have adequate staff and employees to continue on,” he told Bloomberg.

Does this episode make you think twice about doing business in China? 

—Jamie Hartford