Chinese companies go to Taiwan to grab talent Scholars: State-backed systematic poaching

Taiwan media recently reported that a Chinese company illegally set up in Taiwan, set up a high-paying poaching group, poaching hundreds of Taiwan’s semiconductor talent over the past three years, by Taiwan’s prosecution unit investigation. Taiwan analysts said that this incident has exposed the Chinese “red supply chain” under the war to grab people with a variety of tricks, but also to prevent China’s systematic economic espionage network infiltration, is the way to correct the source.

Bitmainland, a major Chinese manufacturer specializing in making cryptocurrency mining machines, set up “IGS” and “Core Road” in Taiwan in 2017 with Chinese capital support without the permission of the Investment Review Committee of Taiwan’s Ministry of Economic Affairs. “The two companies are suspected of violating the Cross-Strait People’s Relations Regulations by poaching a large number of Taiwanese semiconductor talents with high salaries. The prosecution launched a search in seven directions and interviewed 19 people. The heads of the two companies were ordered to post bail of NT$100,000 and NT$200,000 after the hearing.

Poaching hundreds of Taiwanese engineers in three years

According to the investigation conducted by the prosecutors, IGS Technology Co., Ltd. and Core Road Internet Co., Ltd. set up large R&D centers in Taiwan through joint investment in start-up companies to develop AI chips for their parent company, Bitmain.

The specific operation is that the poaching team first poached the R&D personnel of the original Taiwan IC design company to serve as the chairman of the newly established company, and the chairman then recruited colleagues from the previous company to join the company, and at the same Time, the “head hunter” was publicly announced in online manpower banks to poach Taiwanese chip R&D talents with a salary more than twice the original annual salary.

The investigation said that Taiwan has been poached hundreds of semiconductor talents over the past three years, seriously affecting the development of Taiwan’s semiconductor industry.

Liu Mengjun, director of the Institute of Mainland Economics at the Chinese Academy of Economic Research in Taiwan, said in an interview with the Voice of America that China is facing a “catch-up economy,” which means that at first poorer countries tend to grow faster than richer countries, and in order to speed up to the level of developed countries, they have to do everything possible to catch up. At first it was direct “imitation”, and then it was “reverse engineering”, buying back other people’s things to do disassembly, researching how various parts are made, and then assembling them by themselves. He said that China’s high-speed railway is a typical representative of “reverse engineering”, and Shenzhen‘s “Huaqiang North” business district is known as the “cottage base camp” can also be seen in general.

Liu Mengjun said, when the copycat practice gradually by advanced countries to protect patents and intellectual property rights as a means of prevention, China had to offer a corner-cutting.

Korea’s “weekend experts” when catching up with Japan

According to Liu Mengjun, not only China, other catching up economy in the process of catching up, are all tricks. For example, South Korea in the process of catching up with Japan, there is a “weekend experts” model.

As Korea is very close to Japan, Samsung will help Japanese engineers who are about to retire buy a ticket, and Japanese engineers will take a flight from Japan to Korea every Friday after work, and work for Samsung technology factories in Korea on Saturday and Sunday, and then fly back to Japan on Sunday evening. This is a way used by South Korea in the process of catching up with the economy.

Liu Mengjun said that China’s poaching of Taiwan is mainly to poach high-level talents, because the high-level director knows best which talents are needed to cooperate in order to maximize the benefits, therefore, for Taiwan, the loss of talents is a systematic loss.

Liu Mengjun pointed out that the famous Din Tai Fung Xiao Long Bao in Taiwan as an example, if you want to get the technology of Din Tai Fung, the whole team must go out to be effective, otherwise, just dig away the people who are very good at rolling out the skin, but also can’t make the taste of Din Tai Fung Xiao Long Bao.

Liu Mengjun said: “Din Tai Fung Xiao Long Bao to do technology outflow, you will roll the skin of the rolled skin, the division of labor is very fine, then you dig people unless the whole team together, otherwise you dig one or two people are useless. Mainland China he wants to dig people is to dig very high level, if the lower and middle classes one by one to dig, the effectiveness is not necessarily so high, (senior) digging over, he will help you to group a team, he knows very well what part of a team of talent will have a relatively large key, and the loss of talent will be very systematic.”

Digging senior talent to form a “young and old match”

Mr. Huang, who was once scouted by China to work as a supervisor in an Anhui semiconductor plant, confirmed this statement to the Voice of America. He said he was originally in Taiwan’s Hsinchu Science Park semiconductor plant as a mid-level IC technology supervisor, in a higher-ranking officer introduced together to work in China, because the salary offered on the other side of the Taiwan Strait is originally more than four times the original Taiwan, the ranking of two consecutive levels, very attractive to him.

Mr. Huang said that his previous colleagues in Taiwan, many people are also introduced to each other among colleagues, one followed by one across the sea to work on the other side of the Taiwan Strait, the grassroots staff about 30 years old, most of them are still single, even if there are families are usually one person only to China, children, wives, Parents stay in Taiwan. However, Mr. Huang said that only semiconductor component design requires people to work on site in China in person, if they are doing IC design, work is not limited by geography, people in Taiwan can work for Chinese companies.

He said that China likes to poach people with certain qualifications, senior executives are the best, and the senior people to find the shallow people to form a “young and old” team to match each other. Mr. Huang said: “They (China) looking for people may first have a management class, and then to dig inside some of the people they need; management class also can not be a person in the past, he will look for their own knowledge, the original cooperation will try. They will look for people who must be looking for experience, to be able to match the old with the young, the old have experience, too young should not be too good, they have to have a certain degree, is already full of senior, old and young together with.”

Mr. Huang also said that most of the people who accept the Chinese company’s poaching is mostly due to high salary considerations, but there are some people for political considerations, that the church Chinese technology, will not be conducive to the development of Taiwan’s semiconductor, so for the “greater good” and refused. He reminded people to receive higher salaries to take higher risks, he himself felt “cheated”, when the negotiated salary package and the actual get different, so to work in the mainland after more than a year back to Taiwan.

Mr. Huang said: “Those packages are not credible, the package may have to have certain conditions, it will give you. A kind of technical shares, one is the annual dividends of the profits in terms of words, technical shares of this kind would have spoken well should be given, but has been locked, so in the lawsuit, the latter part of the dividend to be given that more needless to say, so about two years less than left, the beginning of the conditions will be open to good.”

Poll: high salary is the biggest incentive to “go west”

However, China’s high salary poaching is still very attractive to Taiwan’s engineers, so that people will go to the mainland to work.

Taiwan’s largest website portal “Yahoo! The poll was conducted by Yahoo!

According to the poll, 16,400 people voted, 28.8% said they were “very willing” and 25.1% said they were “quite willing”, making a total of 53%. Those who chose “not very willing” accounted for 15.8%, and those who chose “very unwilling” were 23.0%, totaling nearly 39%. When asked, “Under what conditions would you want to work in mainland China?” The highest number of respondents, 44.6%, answered “good pay”. It is clear that “high salary” is indeed the biggest incentive for Taiwanese talents to work in China.

Wu Jianhui, an associate researcher at the Institute of European and American Studies, said that although it is normal for talented people to move around the world, not only Chinese manufacturers will poach, but also American companies, but China is a threat to Taiwan and an enemy, but the United States is not, which is the fundamental difference.

Wu Jianhui said: “The problem now is that, first, we think China is a threat, China poaching is a violation of the business model of poaching, the process of our technology and talent will be outflow, the same it may violate the relevant legal provisions, one like business secrets, one may have a non-compete issue, this is the problem we consider. Secondly, when our talents go to the United States, there is a formal legal means, it has the relevant intellectual property rights and legal protection, we may not necessarily have the relevant protection when we go to China. In simple terms, that is, we go to China to invest, our investment technology may be outflow, our technology may have been forced technology transfer problems.”

Scholars: systematic poaching is the fundamental problem

The Chinese Academy of Economic Research mainland economic director Liu Mengjun said that the semiconductor industry in Taiwan is regarded as a national security industry, once China has acquired the technology, due to the internal incomplete market mechanism, local governments compete with each other capital caused by overcapacity, state subsidies and become low-cost dumping, which in turn undermines the global market price, more worrying for the Taiwan government.

CTRC Europe and America, deputy researcher Wu Jianhui said, in addition to international poaching, Taiwan’s local manufacturers will poach among themselves, so China poaching and take away business secrets is not yet the fundamental problem. The real problem is that China is devoting its national efforts to the development of the semiconductor industry, these Chinese companies are under the support of the Chinese state, systematically to poach Taiwan talents, to steal Taiwan technology, this is the fundamental problem.

Wu Jianhui said: “The fundamental problem is that China’s poaching it is systematic, it is built on the basis of state support. Competition between manufacturers and manufacturers, infringement or infringement of patents, it is between manufacturers and manufacturers compensation, usually can be solved by criminal law and civil compensation. But when your business espionage model or poaching model is based on state support, it’s not vendor-vendor competition, but vendors have to face a state-supported vendor competition.”

Wu Jianhui believes that Taiwan’s work to amend the law focuses on imposing severe penalties on engineers who take business secrets to China, but the focus should not be on how to prevent Taiwanese engineers, but on preventing China’s systematic economic espionage network in Taiwan, such as how many Chinese economic spies infiltrate, where their strongholds are, etc., and then make a systematic response, which is the solution.