In response to China’s aggressive efforts in the past few years to attract high-tech talent from Taiwan, the Legislative Yuan on May 20 passed amendments to the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area (台灣地區與大陸地區人民關係條例) and the National Security Act (國家安全法). The amendments add the offense of “economic espionage,” along with penalty clauses designed to curb the outflow of trade secrets, including those concerned with “the nation’s core critical technologies,” and to deter the outflow of technological talents who might take Taiwan’s core technologies with them.
From a national security perspective, the amendments are necessary, but they might also place restrictions on people and companies engaged in science and technology.
From the point of view of a company, the amendments do not differentiate between “the nation’s core critical technologies” on the one hand and “trade secrets” on the other. This could blur the line between the public and private sectors, because “core critical technologies,” as defined by the government, are not necessarily the same as what a company might consider its “trade secrets.” If the government is empowered to unilaterally define what constitutes a “core critical technology,” then a company that possesses such a technology would face impediments to its capital flows. Faced with such a prospect, the company might hurriedly move its investment offshore before the government acts.
With regard to individuals, under the existing high degree of division of labor in global industry, Taiwanese and foreign companies might set up factories in China, or establish joint ventures or joint-stock companies with Chinese partners. If there is no clear definition of what it means to work for a “Chinese company,” it will cause anxiety among those working in factories or at companies that might face such a categorization.
The amendments also stipulate that employees of enterprises that are entrusted, subsidized or funded by the government are not permitted to go to China within three years after leaving their jobs. This restriction might make firms less willing to work with the government because, given the world’s heavy dependence on Taiwan-made semiconductors, companies that take on government contracts would be constrained by strict legislative regulations and gain relatively limited benefits.
Furthermore, although the amendments impose criminal penalties on people who work illegally for Chinese companies, those who are determined to do so still have many ways of getting around the rules.
One way is to travel to China for academic purposes. A similar pattern plays out in South Korea, where Samsung Group in 1996 renewed a partnership with Sungkyunkwan University in Seoul in which it uses the university as a staging post for talent who are on their way from one job to another.
For example, Liang Mong-song (梁孟松), a former senior research and development director at Taiwan Semiconductor Manufacturing Co, started lecturing at Sungkyunkwan University in 2010 and went on to join Samsung Electronics as a chief technology officer the following year.
Another way around the restrictions is for a prospective employer to lure talent, such as by offering super-generous pay and conditions that allow the new employee to move abroad with their family and possessions. That way, they need not worry about returning to Taiwan and facing possible prosecution.
While the amendments might alleviate Taiwan’s technology brain drain, they would not constrain the top tier of senior technology personnel.
Furthermore, although they would help to preserve Taiwan’s technological advantage in the short term, they might have the long-term effect of reducing manufacturers’ willingness to invest in Taiwan.
These problems can only be solved by addressing Taiwan’s overall industrial policies. After all, for companies and talented people, what they really care about is not whether they work in China, but where they can get better pay and conditions, or make the most profit. As well as being a necessary feature of a market economy, this is also a basis for rational actors to make decisions.
The amendments are a first step in facing competition from China. For the next step, the government should focus on how to improve the relatively low wages that prevail in Taiwan’s industrial sector and improve the working environment.
Only by so doing can the root of the problem be addressed.
Yang Chung-hsin is a civil servant.
Translated by Julian Clegg
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