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A South Korean citizen has become the first foreigner in Shanghai to be punished by a court for failing to pay his employees.
The Qingpu District People"s Court said on Wednesday that it had sentenced Hong Ki, 65, to five months in prison and fined him 40,000 yuan ($6,000).
Hong operates Mingxin Clothing (Shanghai) Co, which produces women"s apparel for the South Korean market, the court said.
On Feb 7, Chinese New Year"s Eve, Mingxin"s 158 employees lost contact with Hong, who had returned to South Korea. He owed the employees a total of 608,000 yuan in salaries for the previous month.
Chinese New Year is usually a time when people bring home their earnings from the past year and reunite with family members.
On Aug 18, police intercepted Hong when he returned to China in Dalian, Liaoning province. He was "looking for new orders", the court said.
Hong told the court he regretted his actions and paid the wages owed plus additional compensation, which amounted to 3.58 million yuan, but in September authorities decided to prosecute anyway.
Hong said during the court hearing that business was ideal at the company until June last year when the number of orders plummeted and the capital chain broke down.
"I didn"t want the employees to lose contact with me but I lost my passport and mobile phone so I could not get in touch with them," Hong said during the hearing, according to a statement from the court.
The prosecutors did not buy his explanation.
"His intention to avoid paying the employees was quite obvious. He was away from China for six months while clearly knowing that he owed money to the workers," prosecutor Zhang Changming said.
Zhang said the case also served to deter any employer-Chinese or foreign-from defaulting on wages as the Chinese Spring Festival approaches.
"Expats who do business in China must strictly obey the laws and regulations of the country and can never dodge legal sanctions by claiming that they do not have a full understanding of the local laws," he said.
Yin Weimin, minister of human resources and social security, said this month that governments at all levels should "thoroughly check" any wages that may be in arrears as the Chinese Spring Festival approaches, and set a deadline for employers to clear up the situation.
"Those who disregard the deadline for paying wages for no reason should be severely punished and put on a national blacklist," he said.
Blacklisted employers could face punishments from up to 30 government departments, with sanctions including limited purchasing and bidding ability, loss of government financial support and exclusion from favorable tax policies.