Japan's brain drain

This Times article describes the exodus of senior engineers from Japan to other Asian countries, in particular companies in Taiwan. Hsinchu is the silicon valley of Taiwan. Japan, unfortunatlely for them, has no silicon valley. The incentives must be particularly attractive for insular Japanese to consider joining a foreign company and living abroad, but there you go. These are exactly the talented risk takers that no nation can afford to lose.

See also here for more on the decline of the chip industry in Japan. Japanese LCD-makers have had to form alliances with Korean and Taiwanese competitors to stay in the display business, where fabs cost billions each.

A Japanese Export: Talent

By MARTIN FACKLER
HSINCHU, Taiwan — One of the hottest exports from Japan these days isn’t video games or eco-friendly cars.

It is engineers.

Japan’s once vaunted electronics industry has downsized to survive global competition, and is inadvertently setting off a brain drain. Thousands of Japanese engineers and other industry professionals have gone to Taiwan, South Korea and China to seek work at aggressive, fast-growing companies that want to use Japanese technological expertise.

One such explorer is Heiji Kobayashi, a 41-year-old semiconductor engineer, whose career hit a dead end when his employer, Mitsubishi Electric, spun off its memory-chip business a few years ago. With job prospects bleak in Japan, he turned to Taiwan’s booming chip industry, where he became a popular commodity.

Last month, he began a new job overseeing the design of factory production lines at Powerchip Semiconductor, a memory-chip maker in this suburban city just south of Taipei. As a deputy director, he gets stock options (rare in Japan) and a secretary, and he is climbing the top rungs of management at the company, which has 6,500 employees.

“My skills are in far higher demand here,” said Mr. Kobayashi, who once worked in Taiwan for Mitsubishi Electric. Such employment mobility was once unthinkable in highly insular Japan, where until recently, workers virtually married into their company and kept their jobs for life, and the strength of its electronics industry was a source of national pride.

However, the recent export of job seekers is a sign of just how much Japan has changed during a decade of increased competition, corporate belt-tightening and the end of lifetime job guarantees. This harsher new world has forced Japan’s famously conservative salarymen to become more aggressive in their job choices, and to view their careers as something for their own benefit and not simply their companies’, employment experts say.

This shift in mindset also underscores how Japan’s long-closed economy is finally integrating with that of its neighbors. China has already replaced the United States as Japan’s biggest trading partner, and many Japanese now see their nation’s and their own personal future as linked to Asia’s red-hot economies.

“Salarymen are taking bigger risks,” said Mitsuhide Shiraki, a professor of economics at Waseda University in Tokyo. “They’re making a logical decision to work in Asia, where they are being better rewarded than in Japan.” The trend has set off some hand-wringing in Japan, where the government fears the loss of technology to Asian rivals. Some Japanese companies are also complaining that they are having trouble finding enough talented engineers at home, especially as fewer young Japanese are now entering the field.

No one knows for sure how many Japanese have left, since the outflow began in earnest less than five years ago. However, employment agencies in Tokyo have reported a surge in inquiries by middle-age Japanese professionals seeking work abroad.

There has also been a growing number of retired engineers wanting to go to less-developed economies where their skills are still highly valued, allowing them to pursue second careers late in life.

“In Asia, we can keep contributing to society,” said Kazumitsu Nakamura, 64, a former engineer for Hitachi who quit to go to Taiwan, and was recently hired by a Hitachi subsidiary to train Taiwanese employees. “In Japan, we would just be collecting pensions.”

Taiwan was one of the first to start courting Japanese professionals, with at least 2,500 moving here in recent years, the Taiwanese government says.

Taiwanese companies have been keen to gain access to Japan’s leading technology in areas like electronics, both to catch up with Japanese front-runners like Sony and to stay ahead of fast-gaining Chinese competitors.

More recently, however, China and Southeast Asian countries like Singapore have also begun hiring Japanese en masse to acquire their know- how, recruiting agencies say.

“This is a new era,” said Tomoko Hata, managing director of Pasona Global, a Tokyo-based recruiting agency that specializes in finding jobs overseas for Japanese. “The number of Japanese working abroad is only going to keep growing.”

The Japanese migrants are finding themselves welcomed with open arms and generous pay packages. The Taiwan government says it has spent $20 million a year since 2003 to recruit foreign engineers, including Japanese, in key industries like semiconductors and flat-panel displays. It has held annual job fairs in Japanese cities like Tokyo and Osaka, and offers subsidies to Taiwan companies to help pay moving costs and the higher salaries that Japanese expect. To avoid angering Tokyo, Taiwan officials say that they direct their efforts at older Japanese engineers nearing retirement age.

“We need experienced engineers, and we need them quickly,” said Lin Ferng-ching, the cabinet minister in charge of technology policy in Taiwan. “Japanese engineers are very well trained, and have good attitudes toward their work.”

Larger Taiwanese companies have offered annual pay packages topping $1 million for candidates in prized technological fields, according to some Japanese engineers. Such a large number of Japanese has moved to Taiwan that some cities are building or planning Japanese-language schools for the engineers’ children.

In Hsinchu, a subeconomy has sprung up to serve the rising number of Japanese, including izakaya (pub-style restaurants), karaoke bars and dubious-looking massage parlors with names like Tokyo Town.

Japan’s trade ministry is trying to stem the outflow of engineers by persuading Japanese companies to offer better pay and more frequent promotions. It has also reminded companies of other alternatives, like laws that forbid former employees from leaking corporate secrets to competitors. Asian diplomats have also said that Japanese officials have complained to them about their efforts to lure Japanese engineers.

“The national government cannot stop these people from going overseas,” said Nobuhiro Komoto, an official in the Japanese trade ministry’s manufacturing policy section. “We’re helping companies think of their own ways to protect their technological know-how.”

While many Japanese engineers say that they have been offered potential jobs by Asian companies, others say that they have looked for work in Asia in hopes of finding something more promising or stimulating.

Pasona Global, the employment agency, said 4,930 Japanese registered last year for job searches in other Asian countries, twice the number five years ago.

Almost every Japanese with technology-related experience attracts job offers, Ms. Hata said. The largest number of offers are from companies in China, she said, but those with the most coveted skills tended to be hired by companies in Taiwan, which is rushing to close the technological gap with Japan.

Hiroshi Itabashi was an engineer with more than 20 years of experience at a midsize Japanese television maker when he got an unexpected phone call in 1999 from Delta Electronics, a fast-growing Taiwanese electronic components company. Delta wanted to start producing TV screens and asked Mr. Itabashi to help set up their operation.

Three interviews later, including one with a Delta executive who flew to Tokyo to have lunch with him on a Saturday, Mr. Itabashi decided to make the jump.

“They gave me this exciting opportunity to build a whole new business from scratch,” said Mr. Itabashi, 56, who asked that his former Japanese employer not be named. “This is something you can’t do in Japan. These days, Japanese companies always seem to be closing down operations, not starting new ones.”

Mr. Itabashi said that his friends were puzzled at first about his moving to a company they had never heard of. But now, they ask him for help finding jobs overseas for themselves. To lure Japanese engineers and their families to Taiwan, a government-run industrial park for technology companies in the southern city of Tainan is building a Japanese-language school. A similar technology park in Hsinchu plans to add a Japanese school and a Japanese restaurant.

“Companies in the park are asking us to do more for the Japanese,” said the director of the Hsinchu Science Park, Huang Der-ray. Though the benefits are great, Japanese going abroad say they sometimes struggle to adapt to vastly different corporate cultures. For Tatsuo Okamoto, a 51-year-old semiconductor engineer, the biggest change was the speed in decision-making at the Taiwanese company, Winbond Electronics, which hired him away from the Tokyo-based chip maker Renesas Technology two years ago.

Dr. Okamoto recalled one instance when a 15-minute chat in the hallway with Winbond’s president was enough to win immediate approval to purchase millions of dollars worth of factory equipment. The same decision in Japan would have taken days of committee meetings, he said.

Dr. Okamoto said the experience opened his eyes to the problems that were hobbling the competitiveness of Japan’s electronics industry.

“Joining a Taiwanese company was a high-risk, high-return decision,” Mr. Okamoto said. “But staying in Japan had become a high-risk, low-return proposition.”