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Crossing the Strait of No Return

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Crossing the Strait of No Return

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China boasts 10 times more resources than Taiwan, and 100 times the limelight. But once a Taiwanese exec has made the move to China, they often find no way back. How can Taiwan retain its native talent?

Crossing the Strait of No Return

By Elaine Huang, Ming-Ling Hsieh
From CommonWealth Magazine (vol. 523 )

May in Beijing ushers in early summer, with snow-white willow tree blossoms swirling in the breeze and temperatures exceeding 25°C.

Standing on a Beijing street corner, Jeff Han, general manager of marketing for Tencent Online Media, clearly looks ill at ease.

Peering at his smartphone, Han knits his brow on seeing the absurdly poor air quality index readings. Having moved from Taipei to Beijing a year ago, he's yet to acclimate to the bad air and the battle for a taxi to work each morning. Buying a car is fraught with difficulties. Every month he and a million other Beijingers line up to draw lots to see who will be one of the lucky 20,000 who will be permitted to buy a car.

With his impeccable educational and work experience credentials, having obtained a master's degree from Northwestern University in the United States and having served stints with Kraft Foods in Chicago and Yahoo in Singapore and Taipei, Han boldly resigned his lofty position as Asia-Pacific marketing vice president for Yahoo last year. At the ripe age of 42, Han made a life-altering decision: depart the familiarity of his comfort zone with Western companies and become an executive in China's private sector with Chinese Internet titan Tencent.

"Tencent's WeChat service alone has more than 300 million users," Han says, "and there's so much that can be done with our products."

So despite Beijing's terrible air quality and chaotic traffic, and his own penchant for quality of life, Han decided to embrace China.

Joining China's massive Internet traffic with Tencent's platform, Han frequently leads his staff of 70-plus in staging events that capture global attention, such as the webcast of the Boao Forum for Asia in Hainan Province.

Who's Heading to China?

"This is an arena for world-class talent, where they do world-class projects. Taiwan really doesn't offer a whole lot of world-class projects," Han says. At the height of his career, his aspirations are clear: he longs for a stage on which to perform.

According to a 2013 human resources report from executive recruitment group MRIC, of the top 15 choices for overseas postings among Taiwanese executives, seven are in China. The executive headhunting firm Ozific International Consulting alone has placed at least 200 middle- and top-tier Taiwanese executives in positions in China over the past three years.

In 2007, Ozific International managing director Andrew Yang began headhunting for Chinese companies.

"Five years ago, we were mostly looking for R&D personnel," he says. "Salaries were astronomical, starting at NT$10 million."

But the human resource market has seen a sudden shift.

"Over the past two years, Chinese companies have sought to establish brand names, and institute managerial systems based on good practice, so they have begun courting managerial talent from Taiwan's big enterprises at the VP-level on up," Yang says, conveying a deep sense of the rapid shift in personnel demands in China.

A more refined service industry is booming in China, catering to consumers' increasingly sophisticated tastes. Chinese retailers and consumer chains, as well as Taiwanese companies active in China, are now aggressively recruiting seasoned Taiwanese service industry professionals.

Why are Taiwanese executives electing to go to China?

Reason 1: China's a Much Bigger Pond

"Coming to China, you get to do world class things, which I feel is an exciting challenge," says Ben Wang, president for sales with Alibaba.com, part of Chinese e-commerce leader Alibaba Group.

Born in Taiwan, the 51 year-old Wang got his start in Silicon Valley's open-source software revolution before his company was acquired by Redhat Inc. In 2007, as growth of the Alibaba e-commerce engine began to take off, the Chinese company brought him on board to provide back-end IT support for the continued expansion of their system.

Last year on what has become known as "Singles Day" (11/11), Alibaba's two main e-commerce engines – Tmall and Taobao – racked up 19.1 billion renminbi in sales, besting total U.S. e-commerce sales (about 13 billion renminbi) during the crucial Thanksgiving holiday weekend just weeks later.

"We could not allow a system crash, and I was able to bring to bear a hundred-strong e-commerce IT support team. I did it. I put that team together single-handedly. That's my know-how," Wang says bluntly. It is a great sense of achievement to be a part of such explosive business growth, he adds. Professionalism and a sense of responsibility are the weapons middle- and top-tier Taiwanese executives can bring to bear in the big Chinese pond.

At the Tencent corporate headquarters campus in Shenzhen's Nanshan District, Vincent Lin, assistant general manager of Tencent's e-commerce platform department, is hard at work expanding marketing channels in hopes of meeting this year's sales target for Tencent subsidiary 51buy.com, projected to exceed NT$60 billion this year.

"In Taiwan, this would be the equivalent of the combined operating revenue of the top ten e-commerce companies," the 42 year-old Lin says.

One of the original founders of Taiwanese e-commerce leader PChome who had achieved a personal monthly sales record in excess of NT$100 million, Lin two years ago decided to throw in his lot with China's biggest Internet service portal – Tencent.

Lin, with his professional e-commerce background, feels confident that China is the stage where he is set to shine.

"My personal aim is to become an Asian regional manager," Lin says. "China is the new battleground toward achieving that goal."

With the rapid growth of the China market, companies not only provide the stage, they're also more wont to provide the resources needed to vie for market share. The battles these top Taiwanese executives are fighting are all well-financed.

For example, the primetime TV ad campaign that Lin approved with one hand via smartphone will cost his company some 3 million renminbi (about NT$15 million). In Taiwan, the advertising budgets for many major corporations seldom exceed NT$50 million for the entire year.

Kevin Lee, senior marketing director for Renren Network ("the Chinese Facebook"), has done the math. In Taiwan, the budget for an average TV commercial is around NT$1 million. In China, it's a million as well. But that's in renminbi – almost five times as much.

"Costs here can't be viewed from a Taiwanese perspective," says Lee, a former product manager with a foreign company who says it took some time getting accustomed to the scale of resource inputs when he first started working for a Chinese company.

Reason 2: Career Advancement Springboard

Going to China also affords the opportunity to step into the spotlight and really shine.

"In the future, whether or not you have China experience will be a key factor in whether you become a global CEO. Aside from the United States, it's the most important market," says Vincera Capital vice chairman and president Charles Yen.

That's especially true at foreign multinationals, where China experience is a virtual prerequisite for promotion within the group.

Yet despite all the clamoring out front to ascend that stage, the career choices being made by middle- and top-tier Taiwanese executives are not without a price to be paid.

The situation is different from past scenarios involving groups of Taiwanese corporate executives descending on China to expand their companies' manufacturing facilities there, setting up their own localized fiefdoms. The challenge this time around requires direct engagement with Chinese consumers, usually in the service or Internet industries. Signing on with a Chinese company can make you feel like a drop in a vast ocean, an extraordinarily lonely and isolating experience.

Tencent's Lin recalls that when he first arrived for his posting in Shanghai he wasn't sure he would even last six months and even balked at buying home electronics in compatible voltages. When he walked into a conference room on his first day at work, all of his coworkers were speaking in Shanghai dialect.

"My head was spinning, I had never imagined I'd find myself in a situation where I didn't understand a word anyone was saying," he says, adding that he began to have doubts as to whether he'd made a wise decision.

To better fit in, he forced himself to learn how to type simplified Chinese characters within a month. He even discarded his "Taiwanese identity" so he might approach and understand the ongoing changes in China from the perspective of his employers.

There's a huge difference between Taiwan and China in terms of the scale of e-commerce. The two sides use different Internet portals, and surfing habits differ too. China has many homegrown Internet services and applications unknown to the outside world.

"My own Taiwan experience did not really apply," Lin says. "By the end of six months I had decided to just scrap the old version of myself."

The Glass Ceiling

In the past when mid- or top-tier Taiwanese execs jumped ship to China, their Taiwan-dollar salaries would get converted into a similar number of renminbi – a five-fold leap. But if they didn't produce results, they could easily get laid off.

According to one headhunting agency's statistics, an astounding attrition rate exists among Taiwanese executives in China: Only 2.7 percent remain in their posts after five years.

On top of that, China is now awash with world-class talent. The world's top 500 corporations have all set up offices in China.

"Taiwanese execs are not only competing with Chinese execs but with talent from all over the world, so you really have to bring your 'A' game," says Bobby Chang, senior lecturer and director of the Global Leadership EMBA program at the University of Texas at Dallas, a former executive with Lenovo and Huawei.

Once they've survived battle in the trenches for a time, Taiwanese executives naturally seek to be a commanding officer. Toiling away for a Chinese company, however, they may encounter a glass ceiling.

Alvin Chiang, chief marketing officer for Renren Network, was formerly a group vice president with Alibaba Group.

"If you aren't an Alibaba old-timer, it's hard to penetrate the inner circle," he says. Once he came to terms with the reality that he couldn't overcome the favoritism shown to executives who got their start and rose through the ranks at Alibaba, he jumped ship to the smaller Renren Network, where he could be number three on the corporate totem pole.

And if there is relatively heavy state involvement in the company employing you, one tacitly understood consideration in breaking through that glass ceiling is: Are you a communist party member?

Among those that really want to break into China, many psychologically prepare themselves for at least a three- to five-year stint there. Yet for precisely that reason, many are never able to return to Taiwan. Among the reasons for that is the divergence in pay.

Software infrastructure engineer Jerry Tsai was the first Taiwanese executive at Alibaba Group subsidiary Alipay. He recently moved from Beijing to Shanghai to take a position as lead product infrastructure engineer with China UnionPay, responsible for mobile device support products.

Tsai, 41, has now been working in China for seven years and had previously considered returning to Taiwan.

"I wanted to go back, but I just couldn't," an exasperated Tsai says. "The pay there can't compete. What I'd make in Taiwan is only one-third of what I can make in China."

The pay discrepancy aside, many Taiwanese execs, after being out of the loop on the Taiwan end for so long, find they have lost touch with the way Taiwanese companies operate and the requisite personal connections for a smooth return.

How Can Taiwan Retain Personnel?

Large numbers of mid-level Taiwanese execs are "voting with their feet," striking out to secure their futures elsewhere. How is Taiwan supposed to fill this breach in the levee?

With corporate offices on both sides of the strait, instant noodle maker Master Kong (part of Tingyi (Cayman Islands) Holding Corp.) has had no problem attracting personnel over the years. Chen Kungju, formerly an assistant manager for corporate affairs at Standard Chartered Bank in Taipei and now head of public relations with Master Kong, remains optimistic.

If the government can focus on supporting comparatively advantageous industries, and companies can devise strategies to manage global markets from Taiwan, "the best and brightest would likely elect to stay in Taiwan rather than try their chances elsewhere," Chen says.

Industrial computing leader Advantech Co., Ltd., has plants in both Taipei and the Zhongguancun district of Beijing ("China's Silicon Valley"). It maintains more than 20 offices worldwide, employing numerous local personnel in each location. Recently, the company has been plagued with constant employee attrition.

"The chance for career advancement naturally flows in the direction of opportunity. This is something you can't avoid," says Advantech president Chaney Ho, who previously worked in China for more than 10 years.

Retention of human resources is the responsibility of both business and government, Ho says.

"Compensation in South Korea and Singapore is nearly twice that in Taiwan," Ho says anxiously. "And China has now caught up."

If companies are unable to maintain profitability, then they will be unable to offer attractive compensation and will inevitably bleed talent, Ho says.

Pay scale considerations aside, most talented people are looking for an opportunity to grow and will move in that direction, he says. According to Ho, Taiwan's "corporate DNA" differs from that of China in that there is no home market upon which Taiwanese corporations may rely. What Taiwan can excel at is putting global talent, technology and financial resources to best use for global business.

"Taiwan needs to move toward globally integrated companies," Ho says. "Integrating global talent and resources is an extension of Taiwanese industry."

Companies will need to reach out to the rest of the world to create a bigger space in which their employees can flourish, rather than limiting themselves to just China.

In any event, what the business leaders of tomorrow are after is a bigger stage on which to perform.

How are Taiwanese companies to wage this battle over personnel? How to put their personnel to best use, rather than having their best and brightest end up in the camps of their competitors is an issue that Taiwanese companies must consider with care.

Translated from the Chinese by Brian Kennedy

Keywords:

好友人數