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[China Special] Taiwan Firms Shift R&D to China
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Taiwan's IT companies have been using China's cheap manufacturing labor for years, and recently they have begun to shift their research and development (R&D) over to China, tapping into the country's large pool of engineering resources.
PC maker Mitac International Corp is one such Taiwanese company aggressively trying to utilize China's IT engineering talent (See Photo). "We set up an R&D center in Shanghai in 2000, in which Chinese engineers work on the designs of our mainboards, PCs, servers and information appliances," said P C Wang, associate vice president at Mitac.
As with most Taiwanese companies with operations in China, Mitac's R&D team in Taiwan mainly works on the more advanced products. "While our Shanghai team works on mature products or specific products for the China market, our R&D engineers in Taiwan focus on high-end, high-profit or advanced products, or products for the global market," said Wang.
Wang added that the main reason that Chinese engineers focus on products for the local market and on mature products is not because they lack technical expertise, but because of information logistics. "It depends on our schedule and policies, not on the technical difficulty of the project," he said. "Basically all tasks could be done in China with the support of our Taiwan R&D team. Without that support, it would be difficult. Our Chinese engineers also handle a lot of software work for us, such as Linux OS, software applications and diagnostic programs."
Different Mindset
Wang said the major difference between Mitac's Taiwanese engineers and their mainland counterparts is not so much one of technical expertise but of mindset. "Chinese engineers are intelligent but lack experience; they are passive and not creative," he said. "The biggest hurdle with our Chinese engineers is that they have to learn to adjust to the Taiwanese work ethic. They are coming from a government-run business model, while we are very market-oriented. Our Taiwanese engineers regularly work long hours of overtime in order to get a new product to market. The training given to our Chinese engineers is not so much technical but attitudinal in nature. We teach them how to work in a market-oriented company where time-to-market is a very critical factor."
Mitac is not alone in this process of training Chinese engineers to work in a market-oriented environment. Taiwanese IC design house VIA Technologies Inc has several R&D facilities in China and faces similar problems. "We have three R&D centers that we have opened in the past two years," said Richard Brown, director of marketing for VIA. "The key difference is design experience, particularly in a commercially-driven environment. Our Chinese R&D staff concentrate mainly on VGA and BIOS software development as Chinese engineers have particularly strong skills in software and on the communications side."
Overseas-Trained Engineers
Taiwan's IC fabrication companies have a particular interest in Chinese engineers who have gained work experience in the IC industry in the US or Europe. "There is a shortage of experienced IC fabrication engineers worldwide," said Alex Hinnawi, assistant to the chairman of United Microelectronics Corp. "One of the benefits we will derive from having foundries in Singapore is that we will be able to hire not only the Chinese engineers with foreign IC fabrication work experience, but to lure talented engineers from all over the world to work for us in Singapore."
It is this pool of top engineering talent that Taiwan's IC fabs are after in China, not low-cost labor. "A senior Chinese IC fabrication engineer with experience in a foreign fab can work anywhere in the world," said Hinnawi. "Their salary is not much different from that of a Taiwanese engineer with similar experience." Nevertheless, labor cost savings are still significant. "Shanghai's salary level is 1/3 or 1/4 compared to that of Taiwan," said Wang of Mitac. In addition, China has an abundant supply of engineering talent.
by David Baldwin, Taipei
Websites:
Mitac International: http://www.mitac.com
UMC: http://www.umc.com
VIA Technologies: http://www.via.com.tw
(April 2002 Issue, Nikkei Electronics Asia)
PC maker Mitac International Corp is one such Taiwanese company aggressively trying to utilize China's IT engineering talent (See Photo). "We set up an R&D center in Shanghai in 2000, in which Chinese engineers work on the designs of our mainboards, PCs, servers and information appliances," said P C Wang, associate vice president at Mitac.
As with most Taiwanese companies with operations in China, Mitac's R&D team in Taiwan mainly works on the more advanced products. "While our Shanghai team works on mature products or specific products for the China market, our R&D engineers in Taiwan focus on high-end, high-profit or advanced products, or products for the global market," said Wang.
Wang added that the main reason that Chinese engineers focus on products for the local market and on mature products is not because they lack technical expertise, but because of information logistics. "It depends on our schedule and policies, not on the technical difficulty of the project," he said. "Basically all tasks could be done in China with the support of our Taiwan R&D team. Without that support, it would be difficult. Our Chinese engineers also handle a lot of software work for us, such as Linux OS, software applications and diagnostic programs."
Different Mindset
Wang said the major difference between Mitac's Taiwanese engineers and their mainland counterparts is not so much one of technical expertise but of mindset. "Chinese engineers are intelligent but lack experience; they are passive and not creative," he said. "The biggest hurdle with our Chinese engineers is that they have to learn to adjust to the Taiwanese work ethic. They are coming from a government-run business model, while we are very market-oriented. Our Taiwanese engineers regularly work long hours of overtime in order to get a new product to market. The training given to our Chinese engineers is not so much technical but attitudinal in nature. We teach them how to work in a market-oriented company where time-to-market is a very critical factor."
Mitac is not alone in this process of training Chinese engineers to work in a market-oriented environment. Taiwanese IC design house VIA Technologies Inc has several R&D facilities in China and faces similar problems. "We have three R&D centers that we have opened in the past two years," said Richard Brown, director of marketing for VIA. "The key difference is design experience, particularly in a commercially-driven environment. Our Chinese R&D staff concentrate mainly on VGA and BIOS software development as Chinese engineers have particularly strong skills in software and on the communications side."
Overseas-Trained Engineers
Taiwan's IC fabrication companies have a particular interest in Chinese engineers who have gained work experience in the IC industry in the US or Europe. "There is a shortage of experienced IC fabrication engineers worldwide," said Alex Hinnawi, assistant to the chairman of United Microelectronics Corp. "One of the benefits we will derive from having foundries in Singapore is that we will be able to hire not only the Chinese engineers with foreign IC fabrication work experience, but to lure talented engineers from all over the world to work for us in Singapore."
It is this pool of top engineering talent that Taiwan's IC fabs are after in China, not low-cost labor. "A senior Chinese IC fabrication engineer with experience in a foreign fab can work anywhere in the world," said Hinnawi. "Their salary is not much different from that of a Taiwanese engineer with similar experience." Nevertheless, labor cost savings are still significant. "Shanghai's salary level is 1/3 or 1/4 compared to that of Taiwan," said Wang of Mitac. In addition, China has an abundant supply of engineering talent.
by David Baldwin, Taipei
Websites:
Mitac International: http://www.mitac.com
UMC: http://www.umc.com
VIA Technologies: http://www.via.com.tw
(April 2002 Issue, Nikkei Electronics Asia)
