AmCham arrow Publications arrow Topics Archive arrow Topics Archive 2007 arrow Vol.37- No.2 arrow Commentary: The Human Resource Side of Globalization
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The Human Resource Side of Globalization

A recent discussion with Clyde Prestowitz, president of the Economic Strategy Institute in Washington, D.C., brought to mind the old adage: "If you don't start right, you don't end right." Prestowitz, who has extensive experience in international business and as a U.S. government official, was in Taiwan to see first-hand how Taiwan - which did so well during the "Asian tiger" period of earlier decades - is managing in the current era of globalization. He was also in town to check on sales of the Chinese-language version of his most recent book, Three Billion New Capitalists (Basic Books, 2005), which gives government and business policymakers cogent insights into the challenges and opportunities of globalization.

Over several days in Taiwan speaking with government officials and business leaders, Prestowitz inquired whether Taiwan was taking the right steps to meet the intense competition building through Asia as so many economies in the region rush to embrace globalization. It's a good question - and it triggered memory of the old adage because back in the 1980s the Taiwan government definitely did "start right" when it set up the Hsinchu Science Park and backed the idea of TSMC (Taiwan Semiconductor Manufacturing Co.) founder Morris Chang to create a chip "foundry" - a well-equipped plant able to produce multiple products for various customers, thereby relieving those companies of the burden of huge investments in fabrication facilities and allowing them instead to focus resources on designing new and better chips. That business model has proved to be a huge success, as the robust performance of TSMC and similar foundries attests. These companies and their suppliers have become primary drivers of Taiwan's economy.

 

Like many other observers of the regional economic scene, Prestowitz encountered plenty of evidence that yesterday's Asian tigers are being confronted with a host of new economic challengers. For instance, while it took a mere decade to alter the landscape of Shanghai's Pudong district from centuries-old agricultural fields to an ultra-modern high-rise metropolis, what's currently under way in such disparate locals as Macau, Ho Chi Minh City, and secondary cities throughout China make that transformation look downright sluggish. And while old tigers Singapore and South Korea are adjusting vigorously to newcomer challengers, Taiwan's decade of "go slow, be patient" policy toward China and a protectionist-driven "do-it-yourself" infrastructure upgrading has had less sparkling results.

So Prestowitz was asking what the drivers of the Taiwan economy will be over the next decade, and will they be strong enough to take on all comers in Asia. He no doubt will have another round of good insights in his next publication, but his current book already raises significant issues for Taiwan's policymakers to consider. One of the most important relates to official and popular attitudes toward foreign human resources.

Prestowitz points out, for instance, that economies increasingly need to look beyond their borders in order to meet the broad range of their human-resource requirements. This is true even of large players like the United States and China. In his book, Prestowitz cites the example of a high-tech operation established in China in which the team consisted of "560 Taiwanese engineers, 300 Americans, 40 Koreans, 15 Japanese, and 80 from Singapore, Malaysia, and Europe" - and another 400 mainland Chinese engineers. Here is an important warning for Taiwan: China and other regional competitors have already recognized the importance of building international teams by attracting highly capable people from around the world and putting them to work in predominately English-language environments. The world has become one global pool of talent that can be tapped best by those who offer the best work environment, family support services, and intellectual challenges.

A few decades ago, the Hsinchu Science Park was able to attract a large influx of overseas Taiwanese from Bell Labs and other U.S. companies. But the current Taiwanese diaspora just isn't large enough to meet local HR needs - and this is increasingly true as China continues to attract so many of the best and brightest from Taiwan by offering such inducements as tax incentives, good schooling for the kids, and the chance to associate with internationally cutting-edge colleagues. The "buzz" is elsewhere.

How to turn this around? Perhaps the most important step would be jettisoning the protectionist mindset that has brought convoluted procedures and heavy restrictions in the granting of work permits for professional personnel. Taiwan has a declining population and one-twentieth of its prime age group (roughly 23-45) is working in China because the opportunities are greater. As a result, manufacturing and service industry growth is being thwarted by shortages of appropriately skilled employees. Taiwan needs to open its doors to welcome anyone who wants to set up business here or has professional talents to contribute. And it should start building the additional international schools that will be needed in Taipei and the other major cities to educate their children.

Another needed mindset change would be to jump-start internationalization of the business environment by being more aggressive about courting investment and other forms of economic participation by international companies - including those with expertise in the water, power, sewage, and tourism sectors - just as is being done in Vietnam, Macau, and throughout China. International firms immediately introduce new business models, technology, and in-depth training for the local workers and managers they hire. The more people who move in to set up businesses, the more jobs they create - and the more tax revenue they generate.

It's time to start right by fixing basic HR policies. Make Taiwan an aggressively open, welcoming place to work and compete - and see what happens to the business "buzz."
 
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