An Exploratory Study on Workforce Development Strategies by Taiwan-Invested OEMs in China

Abstract

This study employs the perspective of global value chain (GVC) to address the workforce development (WFD) strategies conducted by Taiwanese OEMs in China for supporting their GVC upgrading. According to the case-based empirical analysis, five major characteristics of their WFD strategies are identified: 1) Consideration of the imbalance between skills supply and demand for GVC upgrading in China; 2) Inclusion of training industry-specific skills as per international standards, 3) Emphasis on developing "soft skills"; 4) Specific training for key bottleneck positions required by GVC upgrading; 5) Establishment of innovative corporate career development initiatives. This paper contributes to the literature by promoting better understanding of the WFD strategies by Taiwanese OEMs in China as well as examining the critical role of these strategies in facilitating GVC upgrading. Further, since a variety of enterprises interviews were conducted, it answers to a recent call for using first-hand information to analyze relevant issues, providing constructive implications for other Taiwanese OEMs to overcome the critical skilled labor shortage that may hinder their GVC upgrading.

Understanding labor conflicts in Chinese manufacturing: a Yin-Yang harmony perspective

“…The execution of this law has strengthened and legitimized the role of All-China Federation of Trade Unions (ACFTU) in helping migrant workers to protect their legal rights through union organizing. Hence, since the 2008 financial crisis triggered an economic downturn, the number of labor dispute cases going to the court in the Chinese manufacturing has been rising sharply because of numerous OEMs being shut down and workers being laid off (Chin and Liu, 2014).…”

“…Considering that the continuous appreciation of Chinese currency, the worsening shortages of skilled labors and the constant increase of minimum wage levels have slowed down the export growth of China's OEM industry, the Chinese government has claimed that China will be moving from production-based to innovation-oriented economy. The export-led OEM business is expected to be even less competitive and profitable in China, and the relocation of labor-intensive OEMs from China to other developing countries with cheaper labor is becoming a prevalent phenomenon (Chin and Liu, 2014;Fang et al, 2010). Hence, the manufacturing employment could be further exacerbated, and labor conflicts may be raising more and more concerns in the Chinese market.…”

“…In recent years, the appreciation of RMB, shortages of migrant workers and a sharp increase in the minimum wage are among the factors leading to the rising sourcing costs (Fang et al, 2010). Many large multinational manufacturers, especially those which are export-oriented original equipment manufacturers (OEMs), feel the pressure to shut down factories and/or reduce production in China, shifting their main manufacturing bases to other developing countries with lower wage rates, such as Vietnam, Indonesia, Mexico and India (Chin and Liu, 2014). In such a tough environment, the manufacturing employment in China has been deteriorating, further incurring the associated labor issues of high turnover rate and difficulty for recruitment of production employees.…”

Global production networks and the uneven development of regional training systems: Conceptualizing an approach and proposing a research agenda

“…In this book, GVC scholars developed an approach that could serve as a policy tool to instruct developing countries and development practitioners to understand the role of skill development in GVCs and in upgrading processes (see Fernandez-Stark et al, 2011; Psilos and Gereffi, 2011). Therefore, descriptive accounts of how production networks impact skills and workforce development systems prevailed over in-depth theorizations on the topic; a problem not exclusive to studies from the Duke CGGC but a general feature of the GVC literature (see, for example, Chin and Liu, 2014; De Vries et al, 2016; Fernandez-Stark and Bamber, 2018).…”

“…The Duke CGGC approach describes how firms in value chains evolve through different stages of upgrading and how different skills, workforce development programs, and initiatives are required at each stage (see Chin and Liu, 2014; Christian et al, 2011; De Vries et al, 2016; Fernandez-Stark and Bamber, 2018; Fernandez-Stark et al, 2011; Gereffi and Fernandez-Stark, 2011). By understanding upgrading and skill trajectories, GVC scholars claim that governments can predict future skill demands and better prepare to develop workforce development initiatives to support upgrading to higher-value activities (see Chin and Liu, 2014; De Vries et al, 2016; Fernandez-Stark and Bamber, 2018; Gereffi and Fernandez-Stark, 2011). For example, Fernandez-Stark et al (2011) analyzed how Chilean firms inserted at the entrylevel of the chain of the global fruit and vegetable industry (e.g., growers) are marked by an unskilled labor force, which does not require formal training.…”