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Foreign Companies Struggle With Forced Demolition Disputes

FILE - A building crumbles during a controlled demolition to make way for a new commercial center in Xi'an, Shaanxi province, China.

In late June, under the cover of night, more than 100 men dressed in black, some armed with long batons, surrounded the factory of Beijing Universal International, a Taiwanese American business located in the capital’s suburb of Dougezhuang Township.

The men first shut down the power and then climbed over the company’s walls to grab two security guards and two employees inside the building, witnesses say.

The four were quickly ordered to vacate the premise and prevented from witnessing and shooting photos or videos with their cell phones. Prodded and yelled at, the guards and employees were dragged across the street and held in a local government owned building, one guard said.

“I told them that we would listen to them and that there was no need to treat us that way and push us around. I am a free and legal Chinese citizen, not some hoodlum,” he said, recounting what happened early that morning on June 24. Speaking with VOA days after the incident, he lifted up his pants legs to reveal his skinned up knees, explaining how he was pushed to the ground.

Foreign criminal

Exactly how many bulldozers or backhoes were involved in what turned out to be an operation to demolish the facility is unclear.

In China, Foreign Companies Struggle With Forced Demolition Disputes
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What is clear is that it did not take long for the wrecking crew to turn the near 4,000 square meter facility, and all of its equipment, furniture, machinery and supplies into a pile of rubble.

“Originally, we were supposed to meet with the owner of the property and local authorities on Monday, but then more than 100 men showed up in the middle of the night” said Josephine Lee, General Manager of Beijing Universal International. “Within an hour everything was razed to the ground.”

Lee and her husband, Mick Chiu, came to China more than two decades ago in the hope that their language and cultural understanding would bring a bounty of commercial opportunities. But the demolishing of their business, Chiu said, was an unfair and harsh blow.

“I pay taxes and [employ] Chinese employees,” Chiu said. Then, “they come at 2:00 a.m. in the morning and demolish everything. It’s like hey, I am a criminal, I am a foreign criminal.”

Demolition debacle

Forced demolitions are a huge problem in China. Local authorities over-stepping their legal bounds to make land grabs in cahoots [EDS: colluding secretly] with developers are a key source of social unrest in China, said Jiang Mingan, a professor of law at Peking University.

“In the past, developers could just move in and carry out (forced) demolitions themselves with a government approval,” Jiang said. “But that is no longer the case. Now the government must sign off on the demolition first and carry out the task on its own. The government no longer can pass on the duty to developers.”

In 2001, the country passed what was widely seen as an ill-considered regulation on demolition and relocation. Some of the provisions of the regulation provided a legal footing for local governments to demolish city houses in order to accelerate urbanization projects.

After a decade of land grab controversies by local governments, forced demolition in lieu of a court order was officially banned in 2011 after China kick-started a new set of regulations to ensure all demolitions are carried out upon the consent of property owners.

The new laws, however, while well thought out have so far been poorly executed, legal experts say. And legislation alone has not been enough to stop some local governments from abusing their power.

Local governments rely heavily on land transactions to boost their revenues and that perpetuates the problem. The slowdown of the Chinese economy is adding to that pressure.

FILE - A factory floor of XCMG Group is seen in Xuzhou, Jiangsu province, China.
FILE - A factory floor of XCMG Group is seen in Xuzhou, Jiangsu province, China.

Old normal

At a top-level government meeting in late August on deepening reform, officials called for more efforts to strengthen economic property protection and building a more egalitarian legal system. So far, pronouncements and pledges have done little to change realities on the ground.

Analysts argue that really the only way to keep forced demolitions from happening is to change the country’s tax and revenue system.

Authorities are still finding ways around existing legislation to keep on bulldozing over the rights of renters, owners and businesses. Nighttime demolitions, as well as the confiscation of cellphones, detentions and in some cases even violence are common tactics.

Earlier this year, a group of rights lawyers released what they called the 2015 Annual China Demolition and Relocation Report. According to the report, more than 100 violent clashes occurred last year in connection with relocation disputes as authorities took a heavier-handed approach.

The lawyers also found that while courts had begun to admit relocation cases - something that was nearly impossible and rare in the past - legal obstacles remain.

Waiting game

VOA has been seeking comment from local officials in Beijing for weeks now in response to Beijing Universal International’s case. The two sides continue to try to resolve the dispute, but increasingly the company feels their situation is hopeless.

“My lawyer tells me that once the factory was demolished, legally there is not much else that can be done,” Chiu said.

Lee adds that the “government can stall as long as they want and it could take up to five to 10 years to get any resolution.”

Just before this story went to press, an official at the Dougezhuang Township said they were close to releasing a statement and that it was on its third draft.

And while it is common for the structures of Chinese citizens to be bulldozed over by officials and developers, it is more rare to hear about foreign owned companies getting caught up in the struggle.

Not alone

But Beijing Universal International is not alone.

Zheng Bichai, a U.S. citizen and owner of a seafood-processing factory in the southern province of Fujian returned to China in 2006, answering a call to overseas Chinese from the government to return to the country and invest.

Since then she has been operating a business in Keng Yuan Township of Lianjiang County in Fujian, purchasing the land on which her factory was built. Earlier this year, however, authorities said they wanted the land to build a water treatment plant where her business is located.

Zheng says she supports the proposal. But, before the two sides could reach an agreement on compensation, the government moved in – also under cover of the night – to demolish the factory.

“I am not saying all of the officials involved are greedy and corrupt, but there are those who are and that have treated us unfairly,” she says. “Some of the ways that this has been handled has been way too heavy-handed.”

Zheng says some authorities told her that she had to accept compensation of 1 million Chinese yuan - about $150,000 - and that regardless of what she thought, that’s the way it was going to be.

However, when news of the story was divulged by local media, officials said they had “accidentally demolished” the factory.

For months, Zheng has been working and waiting on officials to resolve the dispute. She has even agreed to lower her compensation demand from more than $2 million to around $1 million, she says.

Officials have done little but patronize her. When China was hosting the Group of 20 Nations meeting, however, she says they cozied up to her saying they would resolve the dispute. In the end, that was just a smokescreen.