US Boss: China Workers Holding Me Hostage in My Factory

An American businessman in China says workers at his medical supply factory are holding him hostage in a dispute over money.

Chip Starnes said Tuesday his employees have refused to let him leave since Friday because of a spat over severance pay.

He said large groups of staff follow him around the site in a remote Beijing suburb, blocking all the exits if he tries to escape.

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"I have been here a long time," the 42-year-old Starnes said in an interview from inside the factory. "I am not being physically abused or anything like that. The first couple of days were very tough. There was more mental stuff going on."

Mark Ralston | AFP | Getty Images

U.S. businessman Chip Starnes stands behind the bars of his office window in Huairou, China, on June 25, 2013. He says he has been held hostage for five days over a wage dispute.

"I need to go back to my hotel. I need to take a shower. I need to change my clothes. I need to do some necessary things to come back professionally and work this out," he added.

Starnes said that the local Chinese authorities had done little to help him and the workers had the backing of local unions.

"This is just the way they want to resolve an issue," he said. "I just thought I would have a little more support from the outside, from local government."

Starnes claimed that the problems began when he laid off 35 people and paid them severance packages.

Jealous of the large lump sums they received, the remaining workers demanded they get the same amount, even though they still had jobs.

"All the workers who have jobs want full severances," Starnes said.

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He added the majority of employees had been with the company for most, if not all, of its time in China and he had no intention of moving the business.

"Our position is very secure here," he said, though he admitted that he should probably have made what was happening clearer to his employees.

"China is still a great place," he said, but added, "being stuck in here isn't the way I do business."

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Chi Lixiang, the head of Communist Party-controlled Union Rights Department, laughed at suggestions that Starnes was a hostage.

"What do you mean holding him hostage? … Our representatives said already that they are all female employees so how can they hold a well-built man hostage? You must be joking," he said.

—By CNBC's Eunice Yoon. Follow here on Twitter @eyoonCNBC. NBC's Le Li and Henry Austin contributed to this report.