In the news: Executive held hostage, US law firms expand and mutual funds open up

Workers confine executive and demand severance package

Chip Starnes, founder and president of Specialty Medical Supplies is being held hostage by employees in Beijing. The dispute began after 30 employees had been offered severance packages because the company moved part of its operations to India. The remaining 100 workers barricaded the exits believing they would also be laid-off and demanding severance packages.

Starnes said the workers created noises throughout the night and shone bright lights into his eyes to deprive him of sleep. The US executive says there are no plans to dismiss the remaining employees. However, the workers have claimed they have not been paid for two months, a point Starnes refutes.

Source: The Age

Entrapment and sleep deprivation make this story sound like something from the Cultural Revolution. Wages are rising, especially in developed parts of the country and this has caused companies to re-evaluate whether China is the best place for them to do business. Workers are scared and there are plenty of stories out there of foreign companies shutting up shop without paying wages or severance. Who knows if Starnes is telling the truth or the workers, but this should be a warning to all foreign companies to think about how they deal with dismissals.

Blog: China Law Blog

Analysis: Financial Times