According to statistics of the Ministry of Education, over 100,000 Chinese students have gone abroad to study over the past forty years. The government has always striven to create an environment and opportunities to attract these highly skilled specialists back to Taiwan to irrigate sterile domestic fields.
In the 1960's, the first batch flowed back into the government and academia, where they were sorely needed.
The second stream in the 1970's flowed into industrial research institutions, the Chungshan Institute of Technology, and similar bodies, laying the research and development foundation for domestic technology.
In the 1980's, the flow picked up, rippling into technology industries, with great successes emerging from the Science Based Industrial Park.
With the onset of the 1990's, the trend continues, with an even stronger vogue of friends and colleagues coming back in groups. So who is digging the channels for this flow of talent? And where will the river run in the future?
The incoming tide of technology personnel from abroad has increased in strength over the past few decades--especially those who come back as entrepreneurs.
In the main camp for high technology industry--the Hsinchu Science-Based Industrial Park--over forty companies have been set up in the past three years by returning scholars, exceeding the total of the previous eight years.
Not only has the number of companies increased, the size of the teams for those overseas scholars who return in groups to develop an enterprise are increasingly large. Macronix International, set up last year, brought back forty-plus experienced integrated circuit designers from the US. The scale set a new precedent.
According to statistics of the Science Park Administration, more than 300 returned scholars took up residence in the park in 1989 and 1990. Prior to that, there were only ten or so a year, notes the director, Pi Hsiang-chuan.
To study abroad and return home to put one's new skills to work was in fact the "original intent" of many overseas students. But in the past, because of limits set by the nation's economic situation and conditions for technology development, the great majority of students stayed overseas.
For example, in the 1960's, the domestic economy was still shaped by traditional industries, and there was little research and development. The only two paths for young people returning home were to be introduced into academia through a former mentor or the National Youth Commission.
In the 1970's, the government strongly promoted industrial transformation, and a series of research institutes (including the Industrial Technology Research Institute [ITRI], and the Chungshan Institute of Technology) were set up. These had a great demand for overseas technical talent, and the numbers returning increased.
The 1980's was the takeoff period for the ROC information electronics industry. The Hsinchu Science Based Industrial Park and special regulations to reward industrial upgrading were put in place. This was timed just right to give many young scholars who had lived in the US for a few years and acquired great experience the chance to come back to found enterprises, leading to an unprecedented wave of returning talent.
The vast increase over the past two years marks the front edge of a new high tide.
"High tech talent, especially people with more than ten years experience directing R&D programs, are hot property in the international market, targeted by all large corporations. If one lacks considerable inducements, it is quite difficult to get them to abandon their existing achievements to come back and enter upon the new path of entrepreneurship," says Irving Ho, first director of the Park Administration and now president and CEO of International Integrated Systems, Inc.
Further, how can those abroad for long periods know about developments in various areas in Taiwan? About which direction economic policy is going in? About who will provide capital? Or where to build a factory? So there must be some "seductive" inducements.
"In the early days, when the Park was still little known, most of the companies there came in response to invitations from domestic economics and technology officials," says Ho.
Besides setting up the Hsinchu Park in imitation of California's Silicon Valley, the government has provided tax exemption, low-rent land, and buildings to strengthen the incentives to attract overseas scholars back home.
At that time then Minister without Portfolio K.T. Li, Hsu Hsien-hsiu, director of the National Science Council, and Ho himself had to crises-cross back and forth across the US, with Park blueprints in hand, to "pull in business." They tried to invite large companies abroad to set up affiliates in the Park, or convince scholars to come back. Major companies like Wang were among those recruited in that wave.
Of these "techno-matchmakers," the impact of K.T. Li--former Minister of Economic Affairs, Minister of Finance, Minister without Portfolio, and current Senior Adviser to the President--was greatest.
Between 1982 and 1985, Li was Minister without Portfolio. Together with Minister of Economic Affairs Chao Yao-tung and Premier Y.S. Sun, they formed an "iron triangle." Because of their technological backgrounds and emphasis on domestic technological development, they were called the "Technology Cabinet."
At that time technology policies functioned extraordinarily smoothly, creating a trend of foreign corporations investing and overseas scholars returning to set up businesses in the Park. These ushered in the development of the personal computer, integrated circuit, and other industries in Taiwan. Li, heeding the suggestions of foreign technical advisers, also opened up the introduction of venture capital companies, which invest mainly in high-tech industries. Only because of this do we now see the flourishing investment in high technology production.
Besides creating the environment, Li also endeavored to attract talented persons. Overseas scholars were introduced by him into academia and various administrative or research institutes in technology or economics. These coalesced into a powerful force for continuous spurring of domestic technological development. Chang Chung-mou, who had been head of a company in the US, in 1985 accepted K.T. Li's invitation to come back to take charge of the plan for domestic technologically-related industries at ITRI.
In fact, a number of leading players, like Shih Tse-yi, Ph.D. (who is strongly promoting industrial automation), Shih Ta-cheng, Ph.D. (convener of the photelectronics committee of the NSC), and Shih Min (director of the Microelectronics Computer Center at Chiao Tung University), all returned home to their jobs explicitly at his recommendation. Then there's Stanford University Aerospace professor Chao Chi-chang, who had never even received education in Taiwan. He resigned his position and returned to become director of research work in aerospace engineering at Cheng Kung University, simply because of Li's intercession.
There are countless similar examples, so that Li is respectfully dubbed "Father of Technology." Moreover, the talented people he "arranged marriages" for will themselves play a "matchmaker" role in the future. But even if all returned scholars become matchmakers, the master still is occasionally called upon to lend his persuasive powers. Etron Technology is a case in point.
"If it weren't for Senior Adviser Li, Chang Chung-mou, and Lin Chui-ti and Shih Chin-tai, I think I wouldn't be sitting where I am right now," says Nicky C.C. Lu, president of Etron. Last year he resigned his post as a manager in integrated circuit R&D at IBM, and, with five other overseas scholars, returned to throw themselves into Etron.
The origins of the return of the Etron group lie in a Ministry of Economic Affairs plan: The "Submicron" Technology Development Plan.
"Sub-micron" refers to the memory part of the computer. Like the human brain, this is the most important part of the computer. Taiwan's computer industry is still unable to produce these on its own at present, and must rely on imports. In order to guarantee sources and achieve technological autonomy, the government decided three years ago to promote the domestic R&D and production of memory chips.
The task of lobbying overseas scholars to come back fell to key technology decision-makers held in great respect by overseas scholars, especially K.T. Li, Chang Chung-mou, and Lin Chui-ti.
Chang Chung-mou, who simultaneously wears the hats of ITRI, Taiwan Integrated Circuits, and United Microelectronics Corp. chairman, long ago decided not to allow dependence on other countries for integrated circuits, a key part in semiconductors. He invested great effort to plan, instigate, and build up the NT$10 billion "Taiwan Integrated Circuits Company," enabling Taiwan to become one of the world's leading producers of semiconductors. He became one of the leaders of the new plan.
Thus, when the insightful Chang went to the US to find a design team, it immediately attracted the interest and confidence of Lu Chao-chun and others.
"It's even more amazing that K.T. Li, already 80, not only was familiar with the plan in extraordinary detail, he also was very knowledgeable about us. You could see that he had been continually keeping abreast of the dynamics of overseas scholars," says Lu with some awe.
Besides appeals, these top-ranked policy-making "technology matchmakers" gave considerable substantive assistance to overseas scholars.
"They have enormous promotion capacity," states Andrew J.S. Kang, president of Technology Associates. "Before the environment was fully prepared, they swept away obstacles."
In order to induce Nicky Lu and others to return to Taiwan, innovative methods were set up. "So they didn't have to worry about operational problems and could concentrate on their work, we allowed them to set up the company with the Ministry of Economic Affairs to handle the business side--and used a 'cost-plus' system to buy their products," says Shih Yen-shiang, director of the Office of Science and Technology Advisers in the Ministry of Economic Affairs.
Looking at it from the point of view of returning entrepreneurs, can the domestic environment meet their needs? After they return will they be able to exploit their talents to the full? These are important issues.
This is precisely the reason why Singapore, which is also a Chinese society, and extends similar if not better conditions to Chinese-American scientists, scholars and engineers, is unable to complete with Taiwan.
"Naturally an important factor is that 'This is home,' but even more important is that founding an enterprise is a team struggle," points out Macronix International Co. general manager Wu Min-chiu. The quantity and quality of engineering personnel produced by Taiwan universities can not even be dreamed of in Singapore. As a result, "after much thought at first, we still wanted to come back here."
Besides talented personnel, other things in the larger environment are also inducements to scholars to return to the country to start up enterprises.
According to statistics of the Investment Review Committee of the MOEA, from 1987 to 1990, the total foreign and overseas Chinese investment in Taiwan reached US$8.3 billion. The growth rate in these five years exceeded 300%. Compare this with Singapore's US$170 million.
"In the past, because the conditions for development of technology-related industries in Taiwan were not sufficiently mature, the government had to take the first steps and create the environment and attract talented people," points out Irving Ho. "But with the accumulation of experience in domestic industry, the capacity of the private sector is stronger and stronger, and the role of the 'technology matchmaker' is gradually being taken over by specialized and commercialized venture capital companies."
Early on, domestic enterprises had no confidence to undertake high-risk, slow return, high technology investment. So the government assigned the Bank of Communications and the Development Fund of the Executive Yuan to undertake leading investment, and "on the other hand they brought in the venture capital corporation system which had long been in use abroad, and gave a 20% tax deduction to encourage private sector enterprises or financial groups to invest in high-tech," explains J.H. Huang, senior vice president and GM of the Investment Department at the BoC.
Because of the preferential tax rate and the leading role of the BoC and Development Fund, the risk was lowered considerably. As a consequence, since 1985, when the government permitted the establishment of venture capital companies, domestic enterprises and financial groups have moved quickly to pool funds to set them up.
According to statistics of the Ministry of Finance, as of last year, already 24 venture capital companies have received approval to set up shop. They employ all types of direct and indirect methods to find tomorrow's stars, then invest their money, and after the company grows and goes on the counter or on the market, they recover costs and profit in the capital markets.
For example, Miin Wu, president of Macronix International Company, Ltd., who returned to Taiwan to found his business two years ago, had had the idea of bringing in communications production technology and organizing a team to return to Taiwan to found a business as early as eight years ago, but had to shelve the idea because he was unable to find capital. Two years ago, he again returned to Taiwan to check out the prospects, and met up with Andrew Kang, who had served in the investment affairs division of the MoEA and was then the vice general manager of a venture capital company. "After he and the GM saw my proposal, within six months they had raised two billion in capital," recalls Yu.
Compared to the policy-oriented responsibilities of the BoC and Development Fund, profit-oriented venture capital companies naturally expand their perspective and seek out even more profit making opportunities. At present the duties of venture capital company "matchmaking," besides assisting technology teams to establish new companies, also include bringing in overseas technology for domestic enterprises as well as investing in overseas technology companies.
In order to guarantee the success rate of investments, specialized venture capital companies do not simply play the role of "matchmakers." They also provide planning and analysis for products, markets, and financial affairs, diagnose problems and package images, and assist in getting on the market. "We are not simply matchmakers, we are partners in entrepreneurship," says Andrew Kang.
James C. Jeng, vice president of Lodestar Technology Inc., who came back from Bell Labs in the US with four partners to found an enterprise, relates that venture capital companies were of enormous help to him. "When the company was first established, I didn't even know how to write a proposal," he says. With the guidance of the venture capital company, he has already drafted a five year plan.
Although the rise of venture capital companies has helped overseas scholars to return home to found businesses, venture capital companies also expand the atmosphere and scope for domestic investment in high-tech production. However, "from the fact that more than 70% of venture capital investments are concentrated in the already mature electronics and information industries, you can see that they can't really get completely away from the conservative attitude of short-term profits," says one technology leader with concern.
The Executive Yuan Development Fund and the BoC have largely achieved their goals of leading investment, and are gradually moving from the foreground to backstage, and their main responsibility is now assisting venture capital companies in broadening investment in high technology production.
Nevertheless, owing to the fact that private sector investors devote the most attention to industries which already have a stable foundation, like consumer electronics, information, communications, and semiconductors, the Fund and the Bank are still unable to bring to an end their investment leadership in areas like photoelectronics, aerospace, special chemicals, and other still higher technology products in which no one seems interested right now. The best example is the aerospace industry, seen as a future star by the government. The Bank and Fund are now investing in the Tai Hsiang Company, the first in the nation to do mainly aircraft manufacturing. Since the project calls for NT$10 billion, and the private sector knows little about aerospace and can't see the room for market development, the Fund has naturally taken responsibility for collecting the capital.
What is the future role, then, of the government?
Looking to the 90's, it is truly an opportune moment to move toward pooling private sector resources for higher technology production. This is especially because domestic industry consists largely of medium and small enterprises. In order to compete with major international corporations, this can only be achieved through strategic alliances. Whether or not a new high tide of technology production is in the works depends on whether or not the government can successfully play the flagship role.
[Picture Caption]
The Hsinchu Science Based Industrial Park is a gathering point for academics returned from overseas to start up companies.
Senior adviser to the president Li kowh-ting (center) has been vigorously promoting the return of academics from overseas to start up in business.
Chinese engineers from silicon valley have been trickling back home over the years. (photo by Arthur Cheng)
The science park includes a well-planned living environment, where returned academics can settle in peace with their families.
The science park includes a bilingual school so that the children of academics returned from the US will not face educational problems.
Taiwan's large pool of talent in engineering and technology is a strong draw for investors from overseas.
International forums on technological research benefit domestic technology and encourage talent from overseas to learn something about the situation in Taiwan.
The Etron Group's return to Taiwan originated with the MOEA's "Sub-micron" Technology Development Plan.
The surge of the information industry in Taiwan during the 1970s, laid the foundation for the development of high-tech industry. (photo by Diago Chiu)
The return of the Etron Group to Taiwan showed the government's orientation towards combining the forces of industry, government and academia.
Venture capital companies are the bridge between technology and finance.
The government hopes to develop the aerospace industry to advance high technology in Taiwan still further. (photo by Diago Chiu)
Telecommunications and electronics are in a period of growth in Taiwan.
The Hsinchu Science Based Industrial Park is a gathering point for academics returned from overseas to start up companies.
Senior adviser to the president Li kowh-ting （center） has been vigorously promoting the return of academics from overseas to start up in business.
Chinese engineers from silicon valley have been trickling back home over the years. （photo by Arthur Cheng）
The science park includes a well-planned living environment, where returned academics can settle in peace with their families.
The science park includes a bilingual school so that the children of academics returned from the US will not face educational problems.
Taiwan's large pool of talent in engineering and technology is a strong draw for investors from overseas.
International forums on technological research benefit domestic technology and encourage talent from overseas to learn something about the situation in Taiwan.
The Etron Group's return to Taiwan originated with the MOEA's "Sub-micron" Technology Development Plan.
The surge of the information industry in Taiwan during the 1970s, laid the foundation for the development of high-tech industry. （photo by Diago Chiu）
The return of the Etron Group to Taiwan showed the government's orientation towards combining the forces of industry, government and academia.
