When media stories focus on China-Taiwan relations, political tensions over the unresolved sovereignty issue grab the most headlines.
While rhetorical blasts still echo through the Taiwan Strait, of late even these have become more muted, especially as both sides now appear to be working more diligently to facilitate their economic integration with direct cross-Strait passenger and cargo flights. This is good news.
Talk with local and foreign CEOs in Taiwan and the message is clear. Frequent, regularized cross-strait links can't come soon enough. Among many other benefits to business, direct links are seen as a way to help alleviate one of their biggest headaches: finding adequate talent.
There just aren't enough experienced people in key areas such as engineering, high-tech, R&D, and marketing and sales.
The extent of these shortages is illustrated by an often-quoted October 2005 McKinsey study on China's talent pool. The study estimated that between 2003 and 2008, China's colleges and universities would provide a whopping 15.7 million graduates. So why the shortage?
The study points out that roughly 14.5 million of these graduates will fail to meet the high standards of skills and performance expected in multinational corporations. Among the major reasons are poor university curricula, insufficient practical training programs, and weak academic performance by the students themselves.
Still, that leaves 1.2 million graduates qualified to fill what McKinsey estimates as 750,000 MNC-based openings in service, technical, engineering, and managerial positions. But the report estimates that 385,000 of this 450,000 surplus of available candidates are reluctant to leave their hometown or province.
As MNCs extend their business operations into second- and third-tier cities, this immobility problem will be exacerbated.
The situation is no brighter in Taiwan. Another McKinsey HR analysis given in September to local and foreign executives in Taipei, had plenty of bad news. Just like China, a large portion of Taiwanese graduates also fail to meet expected international standards, and for the same reasons.
Erosion of standards
Over the past two decades, the number of universities in Taiwan has expanded from 58 to 162, which would suggest a more robust supply of talent. Not so.
In 1990, the acceptance rate for high school graduates who applied for admission was 37%; this year it reached 91%. The rapid expansion of higher education institutions and the watering down of entrance requirements to fill the spaces have stretched educational resources and diluted the overall quality of entering students.
There is a surfeit of students, but a shortage of qualified faculty and adequate research equipment and facilities.
What this means is that graduates from the few excellent universities are being courted for jobs not only in Taiwan but also in China. Taiwan is experiencing a significant brain drain. Initially Shanghai and the Pearl River Delta were major draws. Now the flow goes to most of the coastal provinces as well as the interior. And the 1.4 million Taiwanese estimated to be in China at any one time aren't there to grow rice.
While direct cross-strait links are not going to be a panacea for solving talent shortages, they could well make a significant dent in the problem.
Executives on both sides of the strait see immediate HR efficiencies and synergies possible when it only takes a couple of hours to fly back and forth between Taiwan and China's coastal cities.
Most MNCs in Taiwan have operations in China as well. Swift transportation links (instead of the current "one-day-lost" in travel each way) will allow for a more efficient use of staff. It also means companies can give employees the option to be based on either side of the Strait and still be integrated into business operations.
MNCs are anxious to increase the cross-strait flow of their employees for activities like meetings and training sessions. This also allows for more differentiation among business units in Taiwan and China, which can reduce costs and take better advantage of the infrastructure in both places.
From a multinational business perspective, the current actions being taken to regularize cross-strait transportation are significant steps toward boosting efficiencies that will benefit both economies – economies that are joined at the shoulder and hip but still have a faulty circulation system.
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