The notion of being held hostage by a company or workers over a debt dispute isn’t unfamiliar to the Chinese. But for many non-Chinese operating in China, it’s a totally foreign concept. With the recent news that a US executive from Florida is being held hostage by factory workers in Beijing, it’s worth brushing up on how to navigate such a scenario. Here are some wise words from Dan Harris, a lawyer who advises foreign firms on operating in China, on how to prevent turning tiffs with Chinese business partners or workers into a hostage crisis:
First, don’t go to China if you need to fire workers, close a facility, or if you will owe any money. Instead, get all of your foreign staff out of China before letting the Chinese firm know about it. Then do all negotiations from your home country. Also, when closing an office in China be sure to notify the local tax bureau who will do an audit to see what your firm owes in taxes. Not paying this can give local authorities reason to hold your staff.
If you do travel to China, consider using a bodyguard. Disputes between foreigners and their Chinese partners or workers don’t often turn violent, but yelling and shoving to show one is serious isn’t unusual, writes Shaun Rein, director of China Market Research, which advises firms in China. (Traditional advice from security experts is to not raise your voice or point at people, which can escalate conflicts.) Moreover, don’t agree to meet in the factory or your partner’s hometown. Harris recommends a public place like a hotel lobby in a major Chinese city.
Given how central guanxi, or relationships, are to doing business in China, avoid relying solely on legal documents to settle conflicts. Find someone you trust, who also has a personal relationship with your Chinese partner who can mediate disputes, according to Rein. Pulling out a contract could give your partners the impression you are trying to hoodwink them. ”Use relationships rather than legalese whenever possible to solve problems,” he writes.
Still, in some cases, evoking law can be helpful. Harris says suing the person who claims you owe them should help your case in the event you are held hostage. (You should carry the lawsuit with you at all times while in China.) With the lawsuit in hand, it may be easier to persuade government authorities that you are being held in retaliation for the lawsuit, not because you owe money.