Taiwan Tech Firms Bring Jobs Home Quietly

On the same day that Apple jolted the tech world with the announcement it will manufacture some Mac computers in the U.S., another piece of tech news slid by largely unnoticed: Two of Apple’s Taiwanese suppliers were also planning to bring jobs home.

Pedestrians cross a road in the business district of Xinyi in Taipei, Taiwan.Apple’s announcement has made bigger waves because Apple is Apple, and because outsourcing has long been a big headline-grabber in the U.S. But it’s also been bigger because, rather than trumpet their decision the way Apple has, the two Taiwanese companies — Catcher Technology Co. and Largan Precision Co. — haven’t sought the limelight.

The announcement that Catcher and Largan planned to invest in new factories in Taiwan that will create some 3,800 jobs over the next few years came not from the companies, but from Taiwan’s government, which approved the companies’ investment plans on Dec. 6.

This was supposed to be the first coup in a new Taiwanese sweetener program to lure businesses back home. But both Catcher and Largan – which maintain operations on both sides of the strait — have declined to make any on-the-record comments to China Real Time or other publications and have expressed their desire to avoid media attention. A Catcher official said that “moving back” was a mislabeling, as the company will continue to operate factories in China, despite expanding its Taiwan operations.

The difference between the two “onshoring” stories illustrates how Taiwan’s manufacturing woes, though similar in some ways to the U.S.’s, are in other ways more complicated. Taiwan’s tech companies – which have largely moved production to mainland China for cost reasons over the past few decades – have to juggle delicate and sometimes conflicting relationships with governments on both sides of the strait, along with the interests of their big-brand foreign customers.

With wages rising across China and growing labor unrest threatening operations at mainland factories, Taiwan sees an opportunity to try to convince its “salmon to swim back home,” as local media have put it. Officials at Taiwan’s Industrial Development Bureau, which announced Catcher’s and Largan’s factory plans, said they didn’t know of any companies willing to discuss their participation in the program.

Hui-Ying Chen, deputy director of the IDB’s industrial policy division, said Taiwanese companies returning to invest often want to stay low-key, possibly to avoid accidentally offending clients or the local governments they work with. She said that since many of these companies continue to run factories in China, they likely want to avoid saying anything that might come off as negative toward the business environment there. Moreover, Taiwanese upstream suppliers tend to hold a strong belief that any publicity is bad publicity.

“When they call for information, they will leave their telephone number, but often they won’t even tell us what industry they are in,” she said. “Although they want to invest in Taiwan, many don’t want their names announced.”

Taiwan’s new reinvestment incentives began last month, with an aggressive goal of more than doubling the returning investment from overseas Taiwanese businesses to 200 billion New Taiwan dollars (US$6.89 billion) over the next two years. Companies need to meet certain requirements, such as producing critical components or marketing products under their own brand.

The big lure is that returning companies can increase the proportion of foreign workers they hire to 40% of their work force from 30%, says Ms. Chen. Companies often cite a paucity of domestic blue-collar workers as a barrier.

The measure has been controversial, though, especially among unions, who say that this opens the possibility of importing cheaper labor and disadvantaging domestic workers. Taiwan currently has the same minimum wage for foreign and domestic blue-collar workers, but business groups have been advocating separate wage tracks.

The incentives have also drawn some criticism from economists such as Kenneth Lin, economics professor at National Taiwan University, who says the island needs to incentivize automation instead of cheap labor if it wants its companies to move up the value chain. Stan Shih, doyen of Taiwan’s tech industry and founder of the island’s largest computer company Acer, also recently warned that Taiwan has to make sure the manufacturers it lures back produce high-value products.

Acer Chairman J.T. Wang had a more positive appraisal. Local media quoted him as saying at a recent tech event that the focus on reinvestment was the “most correct thing” Taiwan’s government has done in five years.


About mtlin

I'm easygoing and sometimes sentimental, also can be very funny. Geek style but social. A Blogger, a Wikipedian and an Engineer.
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