Human resource challenges for American manufacturing in Taiwan

Human Resource Issues in Taiwan

The forces of globalization and market liberalization have opened new doors to economic prosperity for the American corporations. Large numbers of economic agents have found increased abilities to benefit from the comparative advantages of various global regions. The majority of the comparative advantages sought by the U.S. corporations materialize in cost efficient labor force or an abundance of natural resources. But despite the preliminary advantages offered by some countries, it is necessary for the organization to research some vital aspects of the respective economy, such as its human resource issues. The aim of this paper is to reveal the human resource issues in Taiwan in order to support the managerial team in making a best informed decision. A short description of Taiwan will be offered, followed by its human resource highlights and a benchmarking of Nike, as an American corporation conducting operations in the eastern Asian island.

Brief Description of Taiwan

Taiwan is the 20th largest economy of the globe in terms of estimated gross domestic product for 2008 with a GDP of $738 billion. Throughout its history, Taiwan has been occupied by either China or Japan, but has managed to gain its independence and its consequent economic prosperity turned it into one of Asia's economic "Tigers." The state is entirely surrounded by water and it spreads over an area of 35,980 square kilometers. Its lack of land boundaries implies that our organization will be forced to transports its commodities and products by either sea or air. The land is mostly rugged and mountainous, with reduced agricultural abilities. The population counts a total of 22,974,347, out of which the labor force accounts for 10.85 million, with an unemployment rate of 4.1%. 58% of the Taiwan population works in services, followed by 36.8% in industry and 5.1% in agriculture. The country's main trade partners are China, Japan, the United States and Singapore (Central Intelligence Agency, 2009).

3. Human Resource Issues in Taiwan

Our company is looking into opening a manufacturing plant in Taiwan due to two primary advantages of the region -- first of all, there is the reduced expenditure with the personnel, and secondly, there is the country's rich experience in collaborating with American corporations, translated into increased levels of adaptability as well as high levels of employee experience and skills. In terms of cost-effective labor force, one has to notice that the modern Taiwan is characterized by increasing levels of economic prosperity which in turn translate into increased employee wages. More specifically, the income per capita increased from $29,500 to nearly $32,000 in 2008. To get a more objective view of this figure, it is best to compare it with the income per capita within the United States, as well as the global average. In this order of ideas, the American GDP per capita is of $47,000 in a context in which the global average is of $10,400 (Central Intelligence Agency). Relative to the two figures, the wage medium in Taiwan is in fact lower than in the United States, but significantly higher than the global average. This means that while our company would benefit from lower costs than operating the plant in the U.S., Taiwan may not be the best solution as it generates increased personnel expenditure relative to other global regions, more specifically the less developed countries.

However, the less developed countries that would offer a superior cost-efficiency in terms of employee wages would be characterized by less capable, skilled and adaptable workforce. Additional investments would have to be made in training the staff members and allowing them time to integrate and familiarize with the new chores. This would mean reduced operational efficiency and losses with reduced productivity levels, all to lead to the conclusion that these financial losses would best be avoided by opening the plant in a country already familiar with American multinationals, such as Taiwan.

The economic growth of the recent years materializes in one additional feature. The multinational organizations entering the Taiwanese market do so not only to manufacture cheap products and ship them off to global regions, but also to compete in the national market. In order to ensure their successful outcomes, these companies implemented numerous practices of human resource management, such as "job evaluation, merit pay, management by objectives, performance appraisal, equal pay for equal work and management development and training" (Gross, 1996). The competition became obvious then not only in terms of attracting customers, but also in terms of attracting and retaining the best employees. All these issues point out to the indubitable fact that the human resource in Taiwan is coming closer to the labor force in the highly developed western economies and that additional efforts will have to be made in order to succeed in the island.

Another human resource issue that is important to be mentioned is given by the different cultural values of Taiwan and the American multinational. Divided by language, religion and customs barriers, Taiwan is closer to the Japanese culture than the American one. This will unavoidably mean that our organization has to hire several human resource specialists to make a transition from the Japanese HR issues to the U.S. implementation of human resource policies. Some other issues that have to be understood by our company refer to the decision making process, which is generally done in groups; a decision once made is supported by all individuals, regardless of their personal opinions. Then, the Taiwanese employees are not focused on performance, but are more interested in doing their work and receiving their paycheck. This means that motivations through promotions and recognition might be difficult to implement. Third, the Taiwanese people are warm people, meaning that the employees and their managers tend to emphasize greatly on interpersonal relations and a pleasant working environment is key to a successful business outcome. This is different from the United States where performance and task completion come before human relations (Gross).

5. Conclusions

Our company benefits from the advantages of globalization by seizing the opportunities presented by the opening of a manufacturing plant in Taiwan. The country has been revealing increasing levels of economic prosperity throughout the recent years, meaning that the employee expenditure is continually increasing. However, relative to the United States, the costs with the human resource would be significantly lower. Additionally, the personnel in Taiwan are already trained and highly capable to adapting its workload to the requirements of the American corporations. These features, alongside with the employee training and compensation programs introduced, as well as the competition to retain the best skilled employees, point out that the workforce in Taiwan is developing at a rapid pace and is closer than ever to becoming similar to the labor force in the developed western economies. Additionally, one must also address the differences in cultural features, such as a reduced focus on performance and the overall acceptance of a made decision.

Shoe and apparel manufacturer Nike Inc. benefited from the comparative advantages of Taiwan before the country's economic growth became so obvious, but they have however encountered some challenges, such as the accusations of running sweatshops. The eastern Asian island is well on the way to becoming a respectable and strong workforce, but this also means that the foreign investors are less attracted to the region.

References:

Boje, D., Academic Studying Adidas, Reebok and Nike -- Taiwan, New Mexico State University, College of Business, http://cbae.nmsu.edu/~dboje/nike/taiwan.html last accessed on May 11, 2009

Gross, A., 1996, Human Resource Issues in Taiwan, Pacific Bridge, http://www.pacificbridge.com/publication.asp?id=6 last accessed on May 11, 2009

2009, The World Factbook, Central Intelligence Agency, https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html last accessed on May 11, 2009