The movement of highly skilled workers across borders is becoming commonplace in the world's developing nations, including those in East Asia. Back in the days of martial law and the KMT-CPC standoff, highly educated young Taiwanese used study in the US as a springboard to working and establishing families there. Recently deceased economic planner Chao Yao-tong argued vociferously against this "National Taiwan University to the United States" career track on the grounds that this kind of brain drain was disastrous for Taiwan, a developing nation that badly needed these people to help it progress.

But times change. US manufacturing slumped in the mid 1980s, and many of the Taiwanese who had remained in the US after completing graduate school found themselves middle-aged and bumping up against the glass ceiling. Taiwan, however, was undergoing industrial transformation and upgrading, and was well positioned to make use of this overseas talent pool. Information technology and electronics professionals began coming home looking for entrepreneurial opportunities and jobs. Among them was Morris Chang, who left his position as president of General Instrument Corporation to become the head of the Industrial Technology Research Institute in 1985, before going on to found Taiwan Semiconductor. Returning professionals like Chang laid the foundation on which Taiwan's high-tech industry arose.

The mobility of highly skilled professionals increases the need for communication skills. Fluent English is crucial in multilingual settings. The photo shows a scene at the China Import and Export Fair.

Going to China?

The Asian battle for skilled personnel arises out of the seesawing regional and extra-regional "zero-sum" economic conflict, but has become more heated.

All of Asia has been advancing rapidly for the last decade. Mainland China, India, wealthy Middle-Eastern nations like Dubai that badly want to modernize... all are making bold plans for the future. Anxious about their lack of highly educated, experienced homegrown talent with the ability to handle major responsibilities, their governments and private sectors are offering professionals fat paychecks and seemingly limitless opportunities.

But it isn't just Asian demand creating tightness in the "supply" of skilled professionals. In recent years, major European, American, and Japanese corporations like Intel, Microsoft, and Carrefour have begun using Asia, especially China, as a base of operations for their purchasing, manufacturing, R&D and sales activities. These companies need the assistance of highly skilled local professionals to carry out their plans, further intensifying the fight for personnel.

"Supply and demand are out of balance in Asia, particularly with regard to management and technology personnel," Professor Bert J. Lim, president of Taiwanese thinktank the World Economics Society and director of the society's Lim Institute for Public Policy Study, has written. Duke University estimates that in 2005, India and China graduated 350,000 and 600,000 new engineers respectively, versus only 70,000 in the US. Lim says the problem is that even though China and India are creating huge numbers of new engineers, these young engineers haven't spent enough time honing their skills in modern manufacturing environments and are unprepared for international competition.

Lim says that many corporations have taken to heart the lessons of Microsoft's legal battle with Google over the latter's hiring of Microsoft vice president Lee Kai-fu. Firms are abandoning their go-it-alone attitude and are now addressing personnel shortages by cooperating to host events like job fairs. "They even come to gentlemen's agreements not to poach employees," he adds.

Working in the semiconductor business, one of Taiwan's strongest industries, is no cakewalk. Cleanroom employees are bundled up in so much gear it is very inconvenient even to get to the restroom. Now that stock grants have been effectively eliminated from compensation packages, is it going to become harder for Taiwan to recruit workers?

Personnel "deficits"

In the ongoing Asian competition for personnel, top-end Taiwanese have some advantage over their counterparts in mainland China, Korea, Singapore, and Hong Kong because they typically combine their ability to speak both Mandarin and English with a solid foundation in manufacturing or management.

The fact that Toshiba visited Taiwan twice in late 2007 to recruit recent graduates of technical colleges and graduate schools, then flew applicants that met its initial criteria to Japan for interviews, indicates just how in demand Taiwanese workers are. It went on to start those it hired at salaries equivalent to roughly NT$59,000 per month. In a further testament to Taiwanese workers' reputation for being highly skilled and good value for money, Singaporean tech companies came calling in May and August of 2008, hosting job fairs in the Hsinchu Science-Based Industrial Park. Media headlines about the events blared, "10,000 Asian Jobs-Only Taiwanese Need Apply."

But what's good for individual Taiwanese may not be so good for the nation as a whole. It's great that everyone has such a high opinion of Taiwanese workers, but if there is to be a healthy balance, Taiwanese firms must be able to similarly recruit skilled foreign nationals, especially the kind of top-flight professionals capable of working in the international arena.

In Asia's ongoing contest for skilled workers, is Taiwan an importer or exporter of talent? Is it possible that our professionals might win while our nation loses?

Corporations have long mobilized capital and technology in the global battle to expand their businesses. Now, top-flight professionals have also begun treating the whole world as an arena for the furtherance of their careers. In the background photo, harried workers make their way through a busy subway station in Hong Kong.

Working for Chinese bosses

On the question of "imports," the Council of Labor Affairs reports that the number of foreign professionals working in Taiwan has continued to grow. It reached a record high of 30,815 in June 2007, and stood at 29,306 in July of this year. But even with this growth, Taiwan lags far behind other nations in the rate at which it attracts talented people from abroad.

A study by McKinsey and Company shows that foreign managers comprise an average of 11% of the upper management at the world's 100 largest firms, versus 5% at the 100 largest US firms, 4% at Korean firms, 3% at Chinese and Indian firms, and just 2% at Taiwanese firms. The technology industry, Taiwan's most globalized, was the only local industry to have an average rate as high as 4% at its 100 largest firms. But even this figure was far below the average at the world's largest 100 companies, which suggests that Taiwanese firms are having trouble attracting top-flight international professionals.

Worse, Taiwan is also hemorrhaging home-grown talent.

An estimated 1.5 million Taiwanese work or run their own business in China. Chiu Wen-jen, marketing director of 104 Job Bank, says that many of the Taiwanese senior managers working in China are quite happy to work for Chinese companies. "It's becoming more and more common for Taiwanese to work for mainland Chinese," says Wen, who recently saw four coworkers hired away by the Chinese business portal Alibaba.

With the world's top professionals gathering in locations like Silicon Valley, Bangalore, Beijing's Zhongguancun, and the Suzhou-Singapore Industrial Park, Taiwan needs to take action. The photo shows a tech-industry building in Silicon Valley.

What about salaries?

What are Taiwan's strengths and weaknesses in this waxing war for personnel?

A 2008 measure requiring Taiwanese high-tech companies to expense employee bonuses has made local tech industry salaries less competitive with those abroad and spurred Singaporean corporations to make their recent recruiting trips to Taiwan.

During Taiwan's tech boom, workers at companies in the Hsinchu heart of Taiwan's tech industry came to be known as the "tech aristocracy" for the large stock grants they received in their compensation packages. Employees' incomes rose in proportion to their company's stock price. And it wasn't just senior management receiving hefty allotments of stock-ordinary workers also got used to seeking out those employers that gave the most generous stock grants.

But in January 2008 the government began requiring companies to expense their stock grants, the idea being to improve the accuracy of corporate financial reports. Equities analysts expect the measure to lower reported earnings. "Companies now thought to earn NT$5 per share may only have NT$0.5 per share left after the change," says one.

With the implementation of the bonus-expensing system, companies can no longer issue huge amounts of new stock that dilute the stakes of outside shareholders, without damaging their earnings numbers and causing their stock prices to fall. This shouldn't be a problem for well-run companies like Taiwan Semiconductor and MediaTek, but could result in much smaller bonuses to employees at less well-run companies.

Bob Tsao, chairman emeritus of United Microelectronics, says that stock grants have been a very important part of employee compensation packages. He argues that expensing them will increase costs, while also making it harder for Taiwanese companies to retain personnel in the face of poaching by foreign firms. In Taiwan on a recruiting trip, Kwong Dim-lee, the executive director of Singapore's Institute of Microelectronics, put it bluntly: money talks. Singapore has the advantage of being able to offer higher salaries.

In recent years, large numbers of Taiwanese professionals have gone to work in Hong Kong (left) and Singapore (right), which are both largely ethnically Chinese and have levels of socioeconomic development comparable to Taiwan's. Many of these workers have, in turn, gone on to jobs in mainland China.

Going where the money is

Taiwanese salaries can't match those in Japan and Singapore. Taiwan also offers employees fewer opportunities to bring their talents fully into play because its firms and society are less internationalized, and its domestic market is very small.

Huang Shao-lin has, over the course of his career, founded DigitalWall.com, headed Sina.com, worked as an assistant marketing manager at TaiwanMobile, and served as a sales manager for Vibo. In 2006, he left Taiwan to work for a mainland Chinese website called 51.com, in part because he was looking for bigger challenges.

"The Internet business model relies on turning visitors into cash," says Huang. "When you compare Taiwan's Internet sector to China's, where sites frequently have tens of millions or even upward of 100 million members, Taiwan just doesn't measure up. Venture capitalists have no interest in investing in Taiwan, and young Taiwanese companies have a hard time holding themselves together. They accumulate staff and experience very slowly, making it very hard for them to take their businesses to the next level."

Nor can online businesses adopt the model of Taiwanese manufacturers, which treat China as a market or manufacturing base while keeping their headquarters in Taiwan.

"With the exception of i-Part, few Taiwanese Internet companies have had much success in the mainland," says Huang. "Part of the reason is that the mainland's Internet sector is more developed than Taiwan's, and has poured a lot of money into marketing over the years. The Taiwanese just can't compete. Another part is that cultural barriers matter on the Internet, and the industry is very dependent on domestic demand for goods. If you transplant a site, you have to learn about your new market and your users' culture all over again."

The small market also places limits on salary growth, especially for salespeople, whose compensation is tied to their sales performance. Their incomes are effectively limited by the size of the markets they sell to.

From this standpoint, the advantage of the mainland's 1.3-billion-person market is plain. Singapore and Hong Kong are regional financial centers that have bound themselves tightly to the Southeast Asian and mainland Chinese markets, using transnational operations to extend their reach. Taiwanese who go to work for large conglomerates in those locations naturally make a great deal of money.

In recent years, large numbers of Taiwanese professionals have gone to work in Hong Kong (left) and Singapore (right), which are both largely ethnically Chinese and have levels of socioeconomic development comparable to Taiwan's. Many of these workers have, in turn, gone on to jobs in mainland China.

Taiwan as springboard

A National Sun Yat-sen University business school graduate who now works for Siemens in Shanghai as a Greater China sales manager offers up his own experience as an example.

When he finished his MBA, he went to work for a Siemens distributor in Taipei's Neihu District. He was a real go-getter, and Siemens hired him to work in its Singapore offices after three years in Neihu. In Singapore, he went to work doing marketing in the Southeast and South Asia regions, regularly flying to the Philippines, Indonesia, and India, and earning twice what he had in Taipei.

More than three years later, Siemens moved him to Shanghai. There, he earns compensation commensurate with the US$60 million in annual sales he wrings from his territory. At just 35, he is making as much as a vice president at one of Taiwan's listed companies.

"If I'd stayed in the Taiwan market, I'd never have generated these kinds of numbers," he says. Though his English was then only so-so and he'd never been to Singapore before Siemens transferred him, he figured he was young and had nothing to lose, so he went for it.

But he offers a reminder to others considering the same path-Singapore's government keeps Singaporean society on a short leash and offers its white collar workers few legal protections, choosing instead to resolve differences through a process of "amicable communication." But employers can lay off workers at any time. "When they need you, they use you. When they don't, they dump you." The upside is that staff with Singaporean experience are highly sought after in China. Though mainland workers are skilled, they have little loyalty and readily jump from company to company. Not surprisingly, foreign investors don't trust them.

Dustie Yang, a PR director for a foreign venture in mainland China who previously worked in the Taiwanese news media and for Ogilvy Public Relations, says that the pay packages on offer in the Taiwanese market are not competitive. As a result, young Taiwanese take their first job here, then go to mainland China in search of better opportunities once they've accumulated a few skills and some experience.

It is increasingly clear that young workers are using Taiwan as a springboard, and, for the exceptionally talented, it's only becoming easier to move on to jobs in mainland China that pay phenomenally well. Over the long term, this trend is going to hinder the efforts of Taiwanese firms to transform and upgrade their operations.

About the only thing we can hope for is that these wandering professionals become homesick for the living environment and cultural atmosphere they enjoyed in Taiwan. "Most Taiwanese don't plan to stay in China permanently," says Yang. But it remains to be seen whether these professionals will use China as a training ground to hone their skills, or simply settle there.

Taiwan's pop music, public relations, financial, and technology industries all still lead their mainland Chinese counterparts. For many professionals, the preferred route to advancement is to acquire experience at a job in Taiwan, then move on to greener pastures in China. The photo shows Dustie Yang, the PR director of a foreign venture in China.

Money luring scholars, too

In academia-the largest incubator of highly skilled workers-regulatory constraints mean that knowledgeable scholars frequently have no room to develop. As a result, they too have become the target of East Asian recruiting efforts.

As everyone knows, Taiwan's top universities, which include National Taiwan University, National Cheng Kung University, National Tsing Hua University, and National Chiao Tung University, are all public schools. As a result, their personnel assignments and salary schedules vary by less than 20% from those of the civil service. So, for example, the "legally mandated" salary for a university president is only about NT$140,000 per month. The figure can be increased slightly by supplementing the salary with some discretionary funds, but it still falls far short of the typical NT$700-800,000 per month salary of a university president in Hong Kong.

Remuneration at universities in Singapore and Hong Kong is generally 2.5-3.5 times that in Taiwan. Senior teaching faculty there can make as much as NT$10 million per year. That kind of money is hard to resist, with the result that growing numbers of Taiwanese scholars are taking positions in Singapore and Hong Kong.

Though professorial salaries in mainland China aren't necessarily as high as those in Taiwan, the mainland does offer the top people in "crucial fields" very generous salaries, as well as "family allowances" of more than NT$1 million, and support for their research. Not surprisingly, many academics are choosing to accept offers from mainland China.

Hua Wei, a professor of classical Chinese theater, has taught at the University of California, Berkeley and the Universty of Chicago. In 1994, she became a research fellow with Academia Sinica's Institute of Chinese Literature and Philosophy. But when her daughter had trouble adapting to Taiwanese middle school, she gave up her position at the institute. In 2007, she was offered a high-paying job with the Chinese University of Hong Kong and brought her child there.

Hua says that because Hong Kong's academia is relatively weak in the humanities and classical Chinese theater isn't a very popular research subject, she has the opportunity to really stand out by training new scholars and guiding research. The only thing is that Hong Kong's academic community places a great deal of emphasis on evaluations. "Faculty are only 'service providers,'" she says, admitting that she's going to have to get used to it.

Georgette Wang, who was dean of the School of Communications at Hong Kong Baptist University for four years, has her own views in this regard. Wang says that Hong Kong's academia has been heavily influenced by business management theory and places a great deal of emphasis on competitiveness. While such a model might be effective in the tech and business fields, Wang doesn't believe that it necessarily lends itself to the development of sociology and the humanities.

Hong Kong uses a variety of evaluative indices to manage its universities, including number of articles published in international journals, number of foreign students, the fruits of partnerships with industry, and even the positions and salaries of graduates.

"A so-called 'professional' is simply someone who cranks out papers," says Wang. "Anything that differs from mainstream market values is discouraged." She says that's one of the reasons she left Hong Kong last year for a teaching position with Taiwan's National Chengchi University.

A shortage of skilled professionals in Asia and Taiwan's relatively low salaries are making it difficult for the island to recruit top talent. In recent years, Taiwan's academic community has been appealing to its top students to return to Taiwan where they can use skills acquired through study and work abroad to further the island's development. The photo shows an outdoor break area at Chi Mei Optoelectronics in the Southern Taiwan Science Park.

Which home?

Hong Kong isn't only poaching from Taiwanese schools: it has also recruited top Taiwanese talent working in other nations, including Nobel laureate and National Cheng Kung University graduate Paul Chu, who has become president of the Hong Kong University of Science and Technology, and noted biomedical engineer and NTU graduate Chang Hsin-kang, who was hired as president of City University of Hong Kong.

Offers of fat paychecks from other Asian institutions are affecting local efforts to recruit scholars from the international arena as well. Academia Sinica's efforts this year to recruit four outstanding Taiwanese scholars currently working in the US ultimately yielded only one new hire. The other three went to institutions in China, Hong Kong, and Singapore. Clearly, we cannot continue to ignore the weakness of Taiwan's position in the battle for talented people.

Wong Chi-huey, president of Academia Sinica, argues that his institution's position in the competition for personnel is weakened by Taiwan's excessive legal constraints, poor salaries, and insufficient internationalization. He also worries that Taiwan will be negatively affected by decreasing numbers of Taiwanese going abroad to pursue advanced degrees as the overseas well of talent from which it draws dries up.

But Wong also notes that while China, Hong Kong, and Singapore are our greatest competitors for personnel, most prospective hires choose to remain in the US rather than return to Asia at all. East Asia's political, living, and legislative environments, not to mention its compensation packages, still lag far behind those available at top-tier international institutions.

Win-win situation

In this era of globalization, perhaps the best way to rate professionals with skill and drive is to look at how much in demand they are in the international marketplace. But such people are fundamental to our nation's development. To address Taiwan's relative weakness in the battle for top talent, the government is in the process of rolling out a number of measures aimed at ensuring that we do not lose our long-term competitiveness. (See the accompanying articles.)

Skilled professionals are not bound by national borders. In the final analysis, the only way to keep them here is to develop a more prosperous nation, a better quality of life, and a more open and diverse society. The battle for skilled workers is a battle for comprehensive national power. Taiwan must break with convention and cut to the chase.