Knowledge Center: Publication
Changing Gears - Manufacturers Take a Fresh Look At Taiwan12/6/2013
Global manufacturers have long exploited China’s low-wage environment. But salary inflation, pollution in the coastal manufacturing hubs, and intellectual property issues, are prompting a search for alternatives.
Some multinationals are moving away from the coast to lower-cost, second and third tier city factories further inland, while others are moving to Vietnam, Cambodia or Mynamar to take advantage of cheaper skilled labor – or Mexico, for its proximity to the North American marketplace.
With China’s domestic demand for manufactured goods growing at 10% a year, most multinationals are there to stay. Plants are established, its infrastructure works well, and the country still has the world’s best supply chains of components. But as Airbus chief executive Fabrice Brégier says, “For skilled workers, China is no longer a low-cost country.”
Rising prosperity and changing dynamics inside China are having two major consequences:
- Restless workforce
In “hot market” for talent, the best workers are changing jobs every 18 months to two years to get an uptick in pay. They also want to live in better (less-polluted) conditions.
- IP leakage
Senior executives and smart factory-floor leaders are taking valuable intellectual property with them when they walk out the door, to the advantage of other local and global competitors.
Yet there is a location that combines close cultural, linguistic, historic and commercial ties with China and is building on an established reputation for stability and innovation - Taiwan.
Many of Taiwan’s skilled executives who moved to the mainland when the manufacturing boom began, are returning. Their startup and mentoring job is done, they are now mid-career, and back in Taiwan seeking opportunities to apply their talents.