Exodus to the land of opportunity

The
emergence of China as a global trader has had a massive impact on Taiwan, where
keeping home-grown talent at home is becoming increasingly difficult as
high-fliers see more chance of progressing on the Chinese mainland. Brent
Hannon reports

The
drift towards China

With
Taiwan’s unemployment hitting monthly highs of more than 5 per cent and a
sluggish economy that has yet to bounce back, an increasing number of Taiwanese
are looking across the Taiwan Strait to China for possible employment. In a survey
released in July by the Chinese-language Cheers magazine, more than half of the
11,000 Taiwan residents polled expressed a willingness to work in China.

Money
first began to flow from Taiwan to China in 1987, and with the investment came
a migration of workers. The trickle turned into a flood, as the early toy,
garment and bike manufacturers were later joined in China by Taiwan’s high-tech
companies.

Today,
more than 40,000 Taiwanese companies have invested about £30.4bn in China, and
every day, it seems, another company announces a move to the mainland. Some
half a million Taiwanese live in China on a semi-permanent basis, and the
process has accelerated sharply in the past two years. Investment in China by
Taiwanese companies jumped 40 per cent in the first half of this year, and
nearly two million people travel from Taiwan to the mainland each year.

The
growing lure of China as a place of employment has pros and cons for Taiwanese
companies. For those with operations in China, it is easier and less expensive
to staff their mainland businesses with Taiwanese employees. But for other
companies, the migration to China has become a big problem as it is difficult
for them to keep their top personnel in Taiwan, and hard to replace them when
they leave.

Talent
heads across the strait

“The
problem is quite serious, for example now I’m looking for some good marketing
managers, but a lot of young talent wants to be in China," says Don Chen,
head of human resources at Novartis (Taiwan). "Most marketing managers in
China, especially in high-tech companies, are from Taiwan. It’s the same with
advertising executives."

Although
the unemployment rate in Taiwan is at a record high of more than 5 per cent,
most of the jobless are unskilled labourers. The high-tech industry has a
shortfall of high-tech talent; according to one estimate, 16,000 high-tech jobs
are currently unfilled in Taiwan. The same situation exists in China – most of
the country’s 100 million unemployed are labourers, and the growing pool of
white collar workers is quickly absorbed by the booming economy.

Because
more Taiwanese are willing to work in China, wages have fallen. Less than 10
years ago, a posting to the mainland was considered so undesirable that
companies usually doubled an employee’s salary and offered other perks and
bonuses as incentive. Now, such employees – usually managers of branch offices
or factories – are lucky to get one and a half times their normal salary, and
bonuses such as paid housing and education for offspring are fast disappearing.

Wage
discrepancies between the two sides of the strait are shrinking, as salaries in
China are rising an estimated 15-20 per cent annually, while Taiwanese are
willing to work in China for less money than before.

Despite
the reduced salaries and benefits, many Taiwanese are still keen to work in
China. “It’s not just about money," explains Chen. "In Taiwan right
now, there is not as much opportunity. Some see bigger opportunities in China.
Five to 10 years ago nobody wanted to move there, but now, they all think
working in China is a good thing."

Money
is not the motivator

What
can companies do to keep their best and brightest employees from moving to
China? Many Taiwanese companies have operations in China, and one option is to
move employees within the company.

"We
have 600 people doing sales and marketing in China, we have a research and
development centre there that is growing very quickly, and we still have
manufacturing facilities there," says Jerry Wang vice-president of BenQ
(formerly Acer Communications & Multimedia), a £1.9bn company with 10,100
employees. "If anyone wants to go there, they are welcome.”

Raising
salaries is another option, and most of Taiwan’s high-tech companies offer
stock options and other bonuses to keep staff in Taiwan, but money isn’t the
main reason people move to China, says Wang. A more important factor is
opportunity.

"When
employees leave the company it is not normally about money," he says.
"The money is a kind of trigger, but it’s not the main reason they leave.
If someone offers higher pay to an employee, they will ask themselves, ‘Am I
doing well here? Am I respected? Do I have an opportunity to grow’?. If not,
the money may trigger them into leaving. If yes, they will stay."

Stemming
the flow

The
Taiwan Government is trying to stem the flow of talent to China, by offering
incentives to companies in Taiwan, and by trying to limit the flow of
investment there. The Mainland Affairs Council has placed restrictions against
Taiwanese citizens taking jobs in China, but many continue to travel across the
Taiwan Strait in search of better jobs.

Chen
thinks it would help if the Government opened direct cross-strait flights from
Taiwan to China, which are currently banned. All people travelling to China
must transit in a third destination, usually Hong Kong, Japan or Macau.

"In
Taiwan we have good communications channels, and we can easily link to China by
Internet or by video conferencing, and when necessary travel by aircraft,"
says Chen. "But the problem is that we cannot fly directly to China. If
that opens up, not so many people would have to move to China. Policy-wise,
that is something the Government could do."

Websites

http://www.mac.gov.tw/english/Welcome.html
The official Mainland Affairs Council website, with explanations and background
about the organisation.

http://portal.gio.gov.tw/gio/
Taiwan’s Government Information Office site, with official government
pronouncements, speech texts, and links to other government departments.

http://www.taiwanheadlines.com
A portal site that catalogues and displays the important business and political
news of the day. It contains links to local newspapers and magazines

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