Business had been good, even great. But by early 2008, the lighting manufacturer realized his factory in China was heading for failure. The collapse of the U.S. housing market had devastated demand for his lamps and fixtures sold at American retailers. Costs kept rising in Dongguan, the southern city where he had expanded his operations. So the 43-year-old boss quietly slipped out of China, leaving behind $100,000 to cover the final month’s rent and salary for his 400- plus workers. Suppliers were left unpaid. Lucky he left early. As word spread about the factory’s closure, furious employees streamed onto the nearby street, a narrow passage lined with Internet bars and outdoor pool tables. Suppliers drove up in blue moving trucks, blocked the gate, and sent in hired thugs to grab computers, cables, machinery—anything of value. Unable to find the boss, the gang roughed up the company’s lawyer and held him hostage for much of the day. “It was a new factory and looked like a gold mine. They were going to take everything out,” says the boss, a European who has been in hiding in Taiwan for almost a year. Order was restored only after the landlord called in five truckloads of police to protect his property. And suppliers who arrived too late were out of luck. Xiao Xiaosan, a maker of metal parts for lamps, says he is owed $76,000. Although he rushed to the factory on the day of the closing, he doubts he’ll ever see his money. “It’s impossible for me to find the owner outside of China,” he says.

Questions 

1. Why are some factory owners in China going into hiding? 

2. Do you think their behavior is ethical or unethical? 

3. What ethical obligations do factory owners have toward their employees? 

4. What ethical obligations do factory owners have toward suppliers?