US businessman Chip Starnes stands behind the bars of his office window after being held hostage for five days over a labor dispute at his Specialty Medical Supplies factory in Huairou district, Beijing on Tuesday. Photo: AFP

The workers who have held their American boss captive for a fifth day on Tuesday in a factory in suburban Beijing said the move was due to fears of being laid off and that the company owes them salary.

Chip Starnes, the 42-year-old hostage and co-owner of Florida-based Specialty Medical Supplies (SMS), said workers had misunderstood, adding that it is wrong information that SMS intends to close the entire factory in China.

"The wrong information got out, saying that we would shut down the entire manufactory and business in China, which is a rumor. We're only going to move the injection molding division to Mumbai, India, but the other division will stay in Beijing," Starnes said Tuesday. 

SMS gave those who don't want to switch to the other division severance packages, but some who have already transferred are also claiming it.

However, some workers who have been stationed in the factory since the dispute surfaced disagreed. Some claimed the factory owes them two months salary, an accusation Starnes and two Chinese managers denied, while others said the poor business in recent years has kept their salaries low, fueling their fear of being dismissed.

"We see machines being packed up, even trees from the yard have been sold, all signs that the plant would be shut down. We want the factory to pay our salary back and we can't let this American flee," a worker surnamed Lu, who has been with the factory for seven years, told the Global Times. 

Starnes has been trapped in the factory since Friday, though there has been no physical dispute, nor have workers confiscated his passport.

The situation was quite intense in the first two nights. But now everyone is calming down and ready for making progress in negotiation with the help of a local workers' union, he said.

Starnes told the Global Times he is allowed to walk within the factory grounds, accept media interviews and has three meals, including fruit, every day provided by local authorities. Representatives from the US embassy also checked on him on Monday.