Even before a multinational corpo-ration officially opens a new research and development center in Taiwan, people are already talking about the problems and difficulties of doing business in Taiwan. What issues do foreign businessmen most care about? And how do you ensure that they don't feel like they have come for nothing?

1. Finding qualified personnel

To raise productivity, industrial-age businesses followed the maxim, "Reduce the human factor to the minimum," but R&D relies on brain power, and people are still a decisive factor. Most foreign companies that come to Taiwan have the preconceived notion that Taiwan has lots of very talented people. Unfortunately, when it's too late they realize that qualified R&D personnel are very hard to come by in Taiwan!

A case in point: In order to reach the target set by its head office of introducing a new product a month, Hewlett-Packard's local product-development center initially had to import the members of its research and development team from abroad, because they were the only qualified professionals able to start working immediately. But foreign professionals are too expensive and tend to be unwilling to live in Taiwan for a long time. Getting local talent to take on the job as soon as possible is still the ideal solution.

Kai Hsiao, director of Asia International Procurement Operations at Hewlett-Packard, does not mince words: "When foreign manufacturing companies first rushed to Taiwan, there were plenty of good engineers, and their price was right too; only recently have foreign companies realized that there is a woeful lack of qualified R&D talent in Taiwan." HP currently needs to recruit twenty new people to its R&D center, otherwise the project cannot go forward. But time is running out, and finding the right people is proving impossible.

Finding run-of-the-mill engineers is hard enough. Professionals with expertise in a specialized field are even rarer. The Becker Avionics research-and-development center, for example, deals with electronic instruments used in aircraft, particularly the intricate workings of human-machine interfaces. Their work includes investigating how electronic gauges are to be set to enable pilots to maintain a steady course and not be thrown into confusion in an emergency situation. In order to gain a thorough understanding of how to operate such instruments, many Western aeronautical engineers have a pilot's license, conduct research and development, and personally pilot aircraft.

In Taiwan, on the other hand, engineers capable of flying an aircraft are nowhere to be found. Other than some test pilots employed by the Aerospace Industrial Development Corporation, owned by the ROC armed forces, most people do not want to take on this type of dangerous work. This has become a big headache for Becker Avionics.

To solve the problem of a lack of qualified personnel, research-and-development centers advertise their particular strengths. Some choose foreign team leaders to implement a "technological leapfrogging strategy," while others insist that "good talent is worth waiting for" and therefore prefer to train Taiwanese personnel. IBM's bioinformatics R&D center gives classes on campus and offers internships to students. Trained from scratch, students gain an understanding of biotechnology and become IT professionals with a wide array of multidisciplinary skills. Interns are not only recruited by IBM's bioinformatics R&D center; some may also become its customers after they start their own companies.

A key government policy goal is the development of human resources. One means to achieve that goal is through the scheme whereby young men about to be drafted for their 20 months of compulsory military service can apply instead to take a four-year "tour of duty" with a single foreign R&D center. This proposal met with considerable opposition at first, but once it was accepted, the government decided that, starting this year, potential draftees with at least a master's degree can apply to work instead in foreign corporations-with the caveat that no foreign R&D center can have more than 20 of these young men, nor can they account for more than 50% of total R&D staff.

Still, young recruits straight out of college lack professional experience and therefore have failed to meet the requirements of R&D centers. Moreover, as Dr. Chou Kuang-chung of Becker Avionics notes, among those worth employing "the most talented prefer to work in the hottest listed local companies because of the stock options; we have little chance of getting them."

In addition to the alternative service program for potential draftees, the government has also agreed to assist talented foreign and mainland Chinese science-and-technology professionals in finding employment at R&D institutions in Taiwan. Mainlanders can work for up to six years in R&D institutions, as long as less than 20% of the personnel are recruited from the mainland. How much of a contribution mainland professionals will make remains to be seen, because they still lag behind their Taiwanese counterparts in terms of cosmopolitanism, creativity, and product development skills.

2. Homesickness

Since Taiwanese talent is hard to find, highly qualified foreign professionals are in high demand. Top foreign managers are particularly sought after, but they demand a very high living standard. Unless their living and work conditions are right, even the promise of high salaries will not tempt them. Although many recent international surveys show that many foreigners rank Taipei above even Tokyo in ease of living for non-natives, it still cannot compete with Singapore and Hong Kong.

Even such simple things as food, clothing, housing and transportation are problematic. Kai Hsiao once bought a dehumidifier for a foreign manager that did not come with instructions in English: there was nothing for it but go to the man's apartment and explain how it worked. And when newly arrived foreigners step out of their apartments, they have an even harder time getting around. "How are foreigners supposed to take a bus?" asks Hsiao. In Singapore, all buses have illuminated signs in English indicating the next stop, unlike Taipei, where passengers have to stretch their necks out of the window to work out what the next stop is. Not only are bus stop signs not in English, the Chinese-language signs are so small, you would think they were meant to be eye tests.

As for Shanghai, even though the cabdrivers can only speak a little garbled English, you nonetheless feel like you are in a big cosmopolitan city. But on Taipei streets what you see every day are flustered foreigners unable to communicate with cab drivers. They often get out of the cab in despair, hoping that the next driver will be able to speak English.

Just how far Taiwan has to go to appeal to foreign personnel is even more evident over at Becker Avionics. Their head office is located near the Black Forest, along the Franco-German border. When Chou Kuang-chung went there for training, he finally saw the natural beauty evoked by poets and painters. There are hiking, cycling, and even horse-riding trails throughout the Black Forest. Only three kilometers away is the French border, where a wide variety of mouth-watering, inexpensive food can be had.

Employees can also take up recreational flying and ballooning in the German countryside. Taiwan, on the other hand, has strict laws restricting flying and has yet to issue hot-air balloon licenses, not to mention licenses for nine-seater aircraft, the most common type of recreational plane. If any engineers addicted to flying do make it to Taiwan, where can they give their passion free rein?

3. Intellectual property rights

Most foreign businesses that set up R&D centers in Taiwan have previous experience cooperating with the Institute for Information Industry, the Industrial Technology Research Institute, the Chungshan Institute of Science and Technology, and major private manufacturers for the purpose of product development. Therefore, they rate the protection of intellectual property rights in Taiwan fairly high on their list of concerns. "We only work with institutions and manufacturing companies we consider trustworthy," says one foreign manager.

That said, Huang Chung-shen, an entrepreneur who works in Silicon Valley, reminds his Taiwanese countrymen that there has been a recession for the past two years, that big US manufacturing companies and businesses find themselves idle, and that the International Association for the Protection of Intellectual Property is currently searching high and low for illegal copies and the slightest trace of any infringement of intellectual property rights. Taiwanese businesspeople ought to be very careful that they aren't made scapegoats on the intellectual property rights issue.

4. Direct links with China