The Ballad of Chip Starnes

Managers in China must learn from the expensive, horrible lessons of others.

Last week China-based international managers received yet another lesson in realcommerz. An American owner of a Chinese factory in the Beijing area was imprisoned in his offices for the better part of a week by employees demanding “severance pay” – in spite of never having been fired . This came as a bit of a shock to post-Patriot Act Americans, who at about the same time were reading about a chalk-on-sidewalk graffitist facing a 13 year prison term for challenging the authority of Bank of America in the same media that 8 year old girls use to draw hopscotch boards.

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Starnes was eventually released after ponying up something like $300,000 in severance and salary to his captors. Jeff Olson, the graffiti protestor who was denied a 1st Amendment defense before his trial even began, also went free after a jury acquitted him of the 13 misdemeanor charges. It was a weird and lawless week all over – and while that silly, expensive and scary miscarriage of justice in California was wholly pointless – we international types can learn a few valuable lessons from the “Harrow in Huairou”.
Three takeaways from the Chip Starnes ordeal.

1. Chip kept talking about business all through the conflict. He was pure pro – he kept his eyes on the prize and didn’t get all girly about “freedom” and “truth” and “human decency”. Sure the charges were a trumped up pile of horse hockey, it was more than likely pure extortion and he was publically humiliated on two continents. Chip kept the narrative centered on “hiring back many of the same workers” throughout his ordeal. He understood that Westerners manage conflict by looking back to the cause – Chinese resolve it by looking forward to the next deal.

2. Chinese public opinion was largely on the side of the hostage-takers/demonstrators. Several Chinese people I spoke with maintained that he owed back wages and planned on shuttering the entire factory – they were sympathetic to the Chinese workers (or at least unsympathetic to the foreign owner). Remember the ChinaSolved cross-culture warning: don’t waste time looking for common ground in China– plan on building bridges.  Just bear in mind that they will be toll bridges – toll bridges manned by people that don’t necessarily like you much.

3. There was no recourse. Neither the Chinese nor the US government lifted a finger to help. Public opinion meant nothing – it may have actually worked against him (at least on the China side). Chip was on his own – he never got to plead his case, received no legal protection, and wasn’t rescued by anyone. He paid out the nose to get free – and the official government trade union was facilitating the negotiation. Listen well and learn from the Ballad of Chip Starnes – assume nothing, cover your butt whenever possible, and don’t expect help from anyone.

Now back in the suburban safety of Coral Springs, Fla Starnes is a bit more candid. You can see his CNBC interview where he gives some very qualified warnings against making new investments in China. But his main point was the one you should take away with you – for many of us doing business in China is not optional, so you have to figure out how to maximize your opportunities while controlling your risk as best you can.

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