Chapter I Introduction
1.7 Findings
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finally propose some modest suggestions for Taiwanese S&T workers on employment, for trans-national Taiwanese enterprises’ human resource management policies and for the Taiwanese government with respect to policies that will maximize benefits for the Taiwanese people and maintain or enhance future competitiveness of the Taiwanese enterprise.
1.7 Findings
“Globalization” has brought and continues to bring a series changes and developments with different areas of influences. Globalization is a consequence of trans-national and trans-cultural integration of human and non-human activities.46 “Countries share and distribute their resources and activities in finance, trade and capital flows with each other.
Globalization reflects technological advances that have made it easier and faster to complete international transactions - both trade and financial flows. Markets promote efficiency through competition and the division of labor.”47
With the example of Taiwan and China, the rise of the economic exchange between the two changes the situation and environment for both sides, including the operation of their respective enterprises. Taiwanese enterprises have comparative advantages over China in research and development (R&D). China has a comparative advantage over Taiwan in low-cost raw materials, land and unskilled labor. This drives both sides to cooperate with each other to jointly become more efficient and to jointly attain greater benefit from and within the global marketplace. The operations of Taiwanese enterprises have changed their employees’ working patterns, especially those of the technological professionals. Those employees play the role of a bridge between the parent companies (in Taiwan) and the
46 Al-Rodhan, op. cit., p. 3.
47 Ibid.
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subsidiaries (in China) to transfer information and to transfer skills. Since we know that Taiwan has more skilled employees and workers, this will ideally help Taiwanese enterprises succeed. Many countries establish recruiting policies to attract excellent talent domestically and from overseas. These related policies and their associated results affect everyone.
Taiwanese enterprises need to decide how to adjust their policies towards better recruiting success and employee retention. Employees now need to compete with people from around the world. This situation provides opportunities, but there can be negative consequences for unprepared individuals that are now suddenly part of a global labor marketplace. This new employment environment affects everyone. This is one of the motivating factors for conducting this research.
The author plans to conduct face-to-face in-depth interviews with different types of employees within an industry to attempt to discover the points of view of the modern global employee from different angles. The research will further try to discover hidden agendas or biases that people may not recognize and their impacts on everyone. The most important result of the research is to hopefully bring information to people for their reference and to provide a list of suggestions for consideration at the national policy level, the corporate policy level and some ideas on how to best adapt to these new realities.
Table 1.1 Questionnaire
Retention Recruiting
Push
HR:
1. What is your company's compensation or motivation system for your talents who are willing to go to China for work?
2. What percentage of the flow of the talents in your company are because of dispatching to work in Mainland
HR:
1. What is your company’s policy for recruiting professional talent? What are the differences of policies between recruiting domestic and overseas talent?
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employees who are dispatched to work in Mainland China? What is important to you about the policy? Why?Engineer:
1. What kind of factors would affect your job selection personally? domestic and overseas talents. Does it affect your employment situation in Taiwan or even overseas? Does it present opportunities or challenges to you?
Pull
HR/ Engineer:
1. Compared with other enterprises, what are your advantages with regards to retention?
2. What are your company’s policies compared with other companies’ to avoid or decrease “brain drain”?
3. In your opinion, does your company have advantages that would appeal to overseas professional talents? What are they?
Intervening Obstacles
HR:
1. What’s your company’s policy to provide a security and comfortable environment to the employees who are dispatched to work in China?
2. What is your company’s policy to accommodate the families of single or married dispatched talents?
HR:
1. As we know, every country has been conducting recruiting, have you ever had handicap with other corporations or countries when you are recruiting?
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Engineer:
1. If being dispatched to work in China, how do you manage the family, health, career plan issues and so on, to be able to accept this job? Or does your company have any policies for you to solve or overcome these issues?
2. What are the issues that need to be solved urgently when you are dispatched to work in China? And what are the factors which will decide if you remain in the assignment or not?
Engineer:
1. As every country has been recruiting talents from around the world, are there any factors that influence your job selection?
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Chapter II
Globalization in Taiwan and China
2.1 Economic Globalization
Originally, when people talked about “globalization,” it was mainly from the point-of-view of the economy.1 Economic globalization is one of the major features of the present world and it has a very important influence on the 21st century’s international economic trade patterns.2 Indeed, economics is the main power driven “globalization.”
“Economic globalization” is the main content and expression of “globalization.”3 “Economic
“globalization” is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders.4 “It is the process of increasing economic integration between countries, leading to the emergence of a global marketplace or a single world market.”5 This term sometimes also refers to the movement of people (labor) and knowledge (technology) across international borders. There are also
1 Le-Xian Fang, “The Multidimensionality of Globalization Connotation: Debate and Reflect,” Forum of World Economics & Politics, Vol. 2, 2010, p. 68.
2 Wei-Ping Huang, “The Study of the New Pattern of International Trade and Cross-Strait Economic Trade Cooperation under the Conditions of Economic Globalization,” Forum of Globalization and Cross-Strait Exchange, 2006, p. 20,
http://webcache.googleusercontent.com/search?q=cache:d8Ha_H7gsdMJ:ct100.chihlee.edu.tw/ezfiles/11/101 1/img/107/paper1-11.doc+&cd=1&hl=zh-TW&ct=clnk&gl=tw
3 Le-Xian Fang, op. cit., p. 68.
4 IMF, “Globalization: A Brief Overview,” May 2008, http://www.imf.org/external/np/exr/ib/2008/053008.htm
5 Tim, Riley, Year 12 Economics (Tim Riley Publications Press, 2005), p. 9.
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broader cultural, political, and environmental dimensions of globalization.”6
Nobel laureate Joseph E. Stiglitz defines economic globalization as “the closer integration of the countries and peoples of the world which has been brought about by the enormous reduction of costs of transportation and communication,7 and the breaking down of artificial barriers to the flows of goods, services, capital, knowledge, and (to a lesser extent) people across borders.” 8 “Economic globalization is the increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, service, technology and capital. 9 “Economic globalization promotes the international division of labor and in cross-border cooperation on IT design, production, and management.”10 If we were to offer a summary, economic globalization would be the “integration of national economies in the international economy through trade, direct foreign investment (by corporations and multinationals), short-term capital flows, international flows of workers and humanity generally, and flows of technology.”11
2.2 Economic Globalization and the World
Economic Globalization is much related to the global countries’ integration of what is ultimately the result of world development of productive forces. “And the driving force is that pursuit profit and gain competitive advantage and strives for economic development.”12
6 IMF, op. cit., “Globalization: A Brief Overview,” http://www.imf.org/external/np/exr/ib/2008/053008.htm
7 J. E. Stiglitz, Globalization and Its Discontents (New York: W.W. Norton and Co. Press, 2002), p. 9.
Wei-Ping Huang, op. cit., p. 20.
8 J. E. Stiglitz, op. cit., p. 9.
9 Rakesh Mohan, Joshi, International Business (New Delhi and New York: Oxford University Press, 2009), p. 4; Wei-Ping Huang, op. cit., p. 20.
10 Tse-Kang Leng, “Economic Globalization and IT Talent Flows across the Taiwan Strait,” Asian Survey, Vol. XLII, 2002, p. 249.
11 J. Bhagwati, In Defense of Globalization (UK: Oxford University Press, 2009), p. 103.
12 Fu-Lin Pan and Ling-Xia Wu, “Proceedings of the 2010 International Symposium -Technical Innovation of
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What this has been bringing to the world are “the globalization of production activities, the gradual formation of world’s multilateral trading system, the increasing integration of countries’ finances, the investment activities of corporations throughout the world, the flourishing development of multinational corporations and the globalization, the multimedia network over the world characterized by globalization and individual.”13 The impacts of economic globalization to trans-national management include the interdependence of national economies; the reinforcement and emergence of concepts to facilitate trade power, trans-national management systems, optimization and adjusting their respective economies to become more closely linked with businesses becoming active participants. Trade theory and the theory of international investment companies gradually become more integrated.14
Economic globalization creates opportunities for trans-national management, but at the same time, it also has some negative effects. The acceleration of economic opening between countries strengthens the linkages between those national economies, but it also increases business cycle instability risks and the risks accompanying foreign investment and business environment uncertainty. For instance, the opportunities and challenges of coexistence with Chinese enterprises and the resulting imbalances of economic development can be aggravated. Enterprises will face greater competition and stress. To China, trans-national management is an important step to greater participation in globalization, but is also a way to avoid the associated disadvantages.15
Economic globalization also forms another global division system. Since World War II, the global economy has been developing rapidly; the globalization of trade leads to enterprises from around the world to be always expanding outward. To break the trading
Industrial Transformation and Structural Adjustment,” Analysis of Transnational Management of Chinese Enterprises under the Background of Economic Globalization, 2010, p. 481.
13 Ibid.
14 Ibid.
15 Ibid.
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barriers between countries, there has been the emergence of various regional and international economic organizations, such as the European Union (“EU”), the North American Free Trade Area (“NAFTA”), the Asia Pacific economic cooperation and the emerging Trans-Pacific Strategic Economic Partnership Agreement (“TPP”). Thus every country’s dependence on foreign trade must decrease. Trans-national cooperation along inter-enterprise and investment pattern lines will decide industry’s competitiveness.16 The global economic manufacturing system has resulted in an “OEM basement” in South-East Asia, especially China.17
As part of the process of globalization, enterprises can divide manufacturing processes to choose the most appropriate countries or areas to conduct manufacturing which leads to even more extreme competition between enterprises.18 The competition doesn’t only occur between countries and enterprises, but also between workers. Workers make up the group which is ultimately the most affected and make the most sacrifices under this arrangement.19 Under this economic globalization, capital flows across borders freely, which brings more choices to enterprise and capital owners. Therefore, enterprises or capital owners can choose to manufacture in the areas which have low costs of manpower coupled with low trading barriers. In fits and starts and unevenly it ultimately further develops the economy and creates more aggregate employment opportunities.20
16 Cheng-Tai Huang, “Under the Globalization, Cross-Strait Economic and Trade Policy and Taiwan’s Competitiveness,” 2001, http://old.npf.org.tw/PUBLICATION/TE/090/TE-R-090-015.htm
17 Tsu-Lung Chou, “Economic Flows across Strait, Globalization and Restructuring Imagination of Taiwan’s Economic Areas,” 2006, p. 5,
http://web.ntpu.edu.tw/~choutl/Referred%20paper-chinese/Referred%20paper-Economic%20flows.pdf
18 Alice Lin, “The Effects of Economic Globalization on Workers’ Rights in Taiwan, 2000-2008,” 2009, http://www.npf.org.tw/post/2/6323
19 Shih-Wei Pan, “Economic Globalization and Union’s Movement- Taiwan Experience (Not Finalized),” 2008, http://www.npf.org.tw/post/2/6323
20 Alice Lin, op. cit., “The Effects of Economic Globalization on Workers’ Rights in Taiwan, 2000-2008,”
http://www.npf.org.tw/printfriendly/6323
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Table 2.1 States Dependence on Foreign Trade
Unit: % Year
Country 1970 1980 1998
Whole world 28 39 45
U.S.A 11 17 25
British 45 43 55
France 31 36 51
Italy - 39 51
Canada 43 45 81
Australia - 26 43
Japan 20 25 23
Korea 37 63 94
Taiwan 40 95 96
Singapore - 370 306
Hong Kong 181 147 255
Thailand - 49 83
Indonesia 43 42 103
Philippines - 33 139
India - 11 25
Brazil - 19 18
Note: Dependence on foreign trade＝（Export＋Import）/ GDP.
Source: Council for Economic Planning and Development, Taiwan Statistical Data Book.
2.3 Economic Globalization and Taiwan
Two of the mainly external forces to affect Taiwan’s development are globalization and the cross-strait political and economical relations.21 The trend of economic globalization promotes regional economic integration in East Asia. Taiwan’s main national business model and policies are export-oriented and Taiwan has been aggressively committed to internationalization and economic liberalization, which strengthens economic and trade relations between partners and industrial division (specialization). The result is interdependence between cross–strait partners. Over past few years, cross-strait political relations have been tense and seemed to not ease, which leads to concerns of marginalization on economic aspects, especially since Taiwan wasn’t allowed to join the FTA (Free Trade
21 Tsu-Lung Chou, op. cit., p. 2.
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Agreement).22
With the trend of globalization, the biggest and most direct effect on industry is the Taiwanese industrial investments in China which further causes more outward-facing tendencies in Taiwanese industry. The effects on Taiwan’s economy include “capital drain”
and “industry hollowing-out.” This hollowing-out of industry leads to: 1) structural imbalance of the labor market in Taiwan;23 2) A new Taiwanese trans-national industry economic network connection and development model. The Taiwanese manufacturing system has expanded to South-East Asia and China via this trans-national production network;24 3) A new global labor division that has created and sustains Taiwan’s primary model of
“Receiving orders in Taiwan and producing overseas.”25
Ultimately, this has led to structural imbalances in the labor market in Taiwan. During the process of the hollowing-out of industry, the original mass employed population have been released from labor-intensive subcontractors and haven’t been completely reabsorbed, due to the changed needs for basic levels of manpower in emerging industry. Unskilled labor has had the most difficulty finding new employment or switching jobs.26
The Taiwanese manufacturing system expands to South-East Asia and China via the trans-national production network. Since 1987, the social, economic and political environment has been changing; local production costs have been increasing in Taiwan which makes Taiwanese enterprises continue to move more of their manufacturing lines to South-East Asia and China. Simultaneously, the low cost of Chinese real-estate, together with
22 Ai Wei, “The Strategic Choice of Cross-Strait Economic and Trade Relations under the Economic Globalization,” Haixiainfo, Vol. 217, No. Jan., 2009, p. 8, http://www.haixiainfo.com.tw/217-7409.html
23 Cheng-Tai Huang, op. cit., “Under the Globalization, Cross-Strait Economic and Trade Policy and Taiwan’s Competitiveness,” http://old.npf.org.tw/PUBLICATION/TE/090/TE-R-090-015.htm
24 Tsu-Lung Chou, op. cit., p. 4.
25 Tsu-Lung Chou, op. cit., p. 5.
26 Cheng-Tai, Huang, op. cit., “Under the Globalization, Cross-Strait Economic and Trade Policy and Taiwan’s Competitiveness,” http://old.npf.org.tw/PUBLICATION/TE/090/TE-R-090-015.htm
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low-cost labor create a closed loop of value to Taiwanese manufacturers.27
In this trend of more globalization, Taiwan has some advantages that can’t be easily replicated by other countries, since: 1) Taiwan and China have the same culture and come from the same ethnicity, the international trans-national enterprise is not as easy for others to enter and negotiate investments in the Chinese market; 2) Technological development in the United States relies on cooperation with Taiwan on technology, brand marketing and production experiments; 3) Most private Taiwanese enterprises invest in and can apply China’s huge market and work force to promote and change their own industrial structure.28
As an effect of the “hollowing-out” of industry, more and more Taiwanese citizens travel to China for work.29 The Taiwanese government’s policy of paying attention to technology and belittling traditional industry, for instance the food industry, the textile industry, and so on is becoming serious enough that traditional industries have been moving to China and domestic unemployment problems are even further exacerbated.30 People who travel to China for work mostly have high educations, which accounts for 58% of that traffic.
Most of them work on Electronic Parts and Components Manufacturing, Leather, Communication Equipment Manufacturing, Computers, Electronic and Optical Products Manufacturing and the like. These industries all have major Taiwanese enterprises that invest in China. The Electronic Parts and Components Manufacturing is the main industry to make these changes at a large scale. We can’t ignore Chinese influences on Taiwanese talent (workers).31 As many Taiwanese industries continue to hollow-out domestically and hire and
27 Ping-Lung Hsin, “The Impact of Taiwanese Labor Market from Globalization,” p. 5, www.cy.gov.tw/dl.asp?fileName=0113010254471
28 Ping-Lung Hsin, op. cit., “The Impact of Taiwanese Labor Market from Globalization,” p. 10, www.cy.gov.tw/dl.asp?fileName=0113010254471
29 Ping-Lung, Hsin, op. cit., “The Impact of Taiwanese Labor Market from Globalization,” p. 11, www.cy.gov.tw/dl.asp?fileName=0113010254471
30 Ping-Lung Hsin, op. cit., “The Impact of Taiwanese Labor Market from Globalization,” p. 13, www.cy.gov.tw/dl.asp?fileName=0113010254471
31 Ping-Lung Hsin, op. cit., “The Impact of Taiwanese Labor Market from Globalization,” p. 10,
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expanding in China, the Taiwanese people have fewer opportunities to work in Taiwan, but more employment opportunities to work in China.32
Globalization works through economic, financial and/or professional specialization in industries that can be operated effectively through the Internet. For those enterprises in this kind of situation, globalization is accelerated for competitive reasons within the affected industry. In Taiwan, the following are the forces and characteristics apparent in this situation.
1) Marketing risk is enhanced and growing: Taiwan grows more dependent on foreign trade, which thus means increasingly Taiwan will face more and more local single markets, while the traditional markets shrink through global competition.
2) Loss of competitiveness and marginalization: in order to continuously pursue higher profits, enterprises must move to other countries that have lower labor costs, lower land costs and lower raw material costs. Since the resources and enterprises become seriously hollow-out, and as capital flows outward, Taiwan has fewer domestic resources and loses the energy or power for re-development of these capabilities. Eventually when Taiwan is replaced or excelled by other countries’ advantages, the issues resulting from this marginalization will become apparent.
3) Industries are hollowing-out: the employment (especially in the unskilled labor) market domestically is shrinking and the problems of unemployment grow more and more severe.
4) Present industries will be impacted, when with globally trading commodities, Taiwanese are competing with one another. Commodities originating from different areas usually don’t make a large difference on end-use price, but there will often be differences in production
4) Present industries will be impacted, when with globally trading commodities, Taiwanese are competing with one another. Commodities originating from different areas usually don’t make a large difference on end-use price, but there will often be differences in production