The co-founder of Specialty Medical Supplies has been held since Friday in his factory on the outskirts of Beijing, as about 80 employees are refusing to let him go until they get severance packages

Updated June 24, 2013, 8:44 p.m. ET

Chinese Workers Hold Executive Captive in Office

By LAURIE BURKITT

Entreprenuer Chip Starnes says he has been held since Friday.

BEIJING—The co-founder of Florida-based Specialty Medical Supplies has been held since Friday in the executive quarters of his factory on the outskirts of Beijing, he said. About 80 of his 110 employees are blocking doors and locking gates, refusing to let the 42-year-old entrepreneur go until they get severance packages, according to Chip Starnes, the co-founder.

“What they don’t understand is that they aren’t losing their jobs,” he said. He said his workers have misunderstood his intentions to move part of his manufacturing operations to India and instead believed he was closing up the entire shop.Speaking on Monday from behind the bars of a window of the 10-year-old factory that makes alcohol pads and diabetes equipment, Mr. Starnes apologized for his fatigue. He said during the first few nights of his entrapment that employees treated him like a prisoner of war, depriving him of sleep by making jarring noises and shining bright lights in his eyes. There are no guns, however, and Mr. Starnes said that he hasn’t been physically harmed in any way.

“Rumors spread fast,” said Mr. Starnes, adding he still plans to run the factory in Beijing’s northeastern district of Huairou and needs more than 100 employees on staff to continue to make the alcohol pads. The production of diabetes testing equipment will be moved to Mumbai. “After 10 years in China, I never would have imagined this would have happened,” he added.

Workers within the manufacturing compound declined to comment, saying from behind a locked gate that they didn’t want to talk to the media. They are, however, not blocking the window from which Mr. Starnes speaks to the media.

A spokesman for the local public security bureau, or police, said officials have already moved to defuse the problem at the plant by ensuring that the two sides are negotiating and ensuring that Mr. Starnes is fed and safe. A person answering the phones at Specialty Medical in Coral Springs, Fla., said the company was “more than aware of the situation” but declined to comment further. Mr. Starnes’s confinement was reported earlier Monday by the Associated Press.

Work disputes are fairly common in China, and their causes depend on individual circumstances. It is unclear how often executives are held hostage. But in general, worker disputes are on the rise in China amid concerns about slowing growth. Earlier this month, the labor group China Labour Bulletin said it recorded 201 cases of labor disputes, including strikes, in China in the first four months of the year. That was almost the number of cases in the same period last year.

Foreign companies are by no means immune, adding to the risks that go along with the promise of China’s vast market and capable workforce. Three years ago, workers at parts factories in southern China used by Honda Motor Co. went on strike, affecting production.

On a visit to Specialty Medical’s facility in an industrial, though quiet, suburban part of the city, the facility’s front gate was locked and blocked by cars, while a handful of workers clustered nearby. “If I can just make it over that fence and past the people guarding it, then I’ll be free,” Mr. Starnes said.

He added that he was hoping to find someone who can get him a ladder and open the window so that he can jump out.

Mr. Starnes said authorities had been bringing him three hot meals a day, though he described it as “mostly General Tso’s chicken.” Still, he said some local officials and the workers’ group coerced him into signing some Chinese contracts he couldn’t read to agree to workers’ demands. Mr. Starnes said he stopped short of signing all the documents to meet workers’ demands, saying that he was fearful that he would be causing the company to go under by doing so.

Mr. Starnes said he called the U.S. Embassy for help over the weekend, fearful that tensions were mounting and that Chinese officials weren’t going to free him. “Unfortunately, this situation is a civil dispute, so there’s little I can do but wait it out,” said Mr. Starnes. He said he believes that as time passes, it will be easier to settle the dispute. The U.S. Embassy was unavailable for comment at press time.

Sunday night, one of the employees brought him a cot so that he wouldn’t have to sleep on the floor, Mr. Starnes said.

Despite becoming a prisoner on his own payroll, Mr. Starnes said he’s willing to stick it out in China and even a few more weeks in the confines of his office. “Thankfully when I built the place, I put a toilet in it,” he said.