Taiwan Turnaround—Fighting the Brain Drain

In part 3 of the Taiwan Turnaround series looking at how Taiwan’s internet tech scene is catching up, TechNode checks in with some star players about how Taiwan’s brain drain is affecting them and how they are addressing the issue. Next, in the finale of the series, we look at the effects that government regulations have had on the startup economy and how the government plans to be more accommodating. Read Part 1, Part 2 and Part 4.

When Ivan Lin returned to Taiwan in 2014 after working for more than 15 years on the mainland, he was surprised that the landing page for the island’s largest e-commerce platform PChome hadn’t changed much.

“PChome looked like this 10 years ago. Now, it still looks the same,” the former e-commerce executive turned entrepreneur told TechNode. Lin now runs his own lifestyle e-commerce startup called Add Ons in Tainan, a small city in southern Taiwan.

PChome’s website isn’t the only thing to have seen little change in Taiwan. Wages for university graduates have stagnated in the past 20 years. In 1999, the average monthly salary for a university graduate was $900. In 2016, it was $925—0.03% growth in 17 years. This has led many young Taiwanese to seek job opportunities in the mainland and elsewhere. The trend is set to continue, with a 2012 report by Oxford Economics predicting that Taiwan will face the largest talent loss in the world by 2021.

Against this background of a slow-moving internet industry and disappointing macroeconomic conditions, a ray of hope could be found in Taiwan’s startup economy. A group of Taiwanese and international entrepreneurs are bucking the trend by making Taiwan their base and fighting the brain drain in the process.

Add Ons – Exporting Tainan’s small-town charm

Tainan is Taiwan’s oldest city, originally created by the Dutch East India Company as a trading base in the 17^th century. The port city is famed for its local cuisine and agricultural products such as tea, orchids, and fruit. At the Add Ons office on the outskirts of Tainan, we were greeted by the smells of brewing organic jasmine tea and berry-infused coffee.

Add Ons is a lifestyle e-commerce startup working with local suppliers such as tea farmers, utensil manufacturers, and designers to brand and package their products, then market and distribute to other retailers or sell directly to customers through their app and website. Founded in late 2014, the startup has built a customer base in mainland China, Malaysia, and Japan, and continues to expand.

Lin had been working for 15 years in China in various roles at startups and multinational companies. When he was deciding where to set up his new company, Beijing and Shanghai didn’t make the cut because of the high costs. Lin settled on Tainan for the specialty products and the low costs of operating a business. But more importantly, Tainan is also Lin’s hometown.

“[Tainan] is like Dali in Yunnan, once you’ve lived here for a long time, you realize it’s a place with a slow tempo, suitable for retirement and to not do anything at all,” Lin told TechNode. “But we are focusing on products that take time to refine, catering to lifestyles that have specific needs.”

These conditions also create challenges for the Add Ons team when they are trying to expand. Lin said that recruiting good talent is harder in Tainan. However, Add Ons has come up with solutions to tackling this challenge.

“We prefer to train our talent, helping them to develop problem-solving skills. Working in startups is a constant training exercise anyway,” Lin explained. “In this day and age, it’s all about user experience, whether it’s for your customers or our own staff. We aim to create a better user experience for everyone.”

Appier – Happier through Artificial Intelligence

Changing to a faster pace in Taipei, we checked out Appier’s new office which is just a 10-minute walk from Taipei 101, a famous landmark. It was the world’s tallest skyscraper until the Burj Khalifa was completed in 2004. Appier was the name that popped up again and again as the one to watch whenever we talked to entrepreneurs and investors in Taiwan.

The name “Appier” comes from happier and apps, inspired by the founders’ mission to make people’s lives better and happier through artificial intelligence apps. It provides business analytics solutions based on artificial intelligence and was the first Taiwan-based company to have received investments from Sequoia Capital, a well-known US venture capital firm. Appier’s founders, Chih-Han Yu, Winnie Lee, and Joe Su all met while studying in the US. They actually started what was to become Appier there before deciding to relocate back to Taiwan.

“As Taiwanese natives, we know we have a lot of great talents here,” Appier co-founder and COO Winnie Lee told TechNode. “That’s the first reason [why we came back]. The second reason is that we wanted to provide AI solutions to all these Asian countries, where there is a higher demand and has been underserved. Taiwan is probably one of the best launch pads for Asia.”

Since returning to Taiwan in 2012, Appier has grown fast by fully embracing the motto “going global”. The company has over 200 employees spread across 14 offices in Asia, almost one in every major city. Appier has gone through four rounds of funding, receiving $82 million from big-name investors such as Sequoia Capital, Alibaba Taiwan Entrepreneurs Fund, Naver, and SoftBank.

As the case with other companies in Taiwan and especially in the artificial intelligence sector, talent is hard to come by. Appier is constantly on the lookout for AI talent and has set up a scholarship for students of AI (in Chinese) with multiple Taiwanese universities in hopes of nurturing future AI engineers and specialists. Other than domestic talent, Lee has also observed other positive signs in the Taiwan startup ecosystem.

“We do see a clear growth in terms of the startup activities and startup companies emerging in [Taiwan],” Lee told TechNode. “There are more international founders coming into Taiwan. I’d definitely say it’s a good environment now compared to a few years ago.”

Bitmark – Transforming ownership through blockchain

Bitmark’s founders are an example of international founders choosing Taiwan as the base for their startups. Co-founder Sean Moss-Pultz came to Taiwan by chance, after a Taiwanese friend told him to come check out the island when Moss-Pultz was looking to travel after he graduated from college.

“So I came out here and actually thought it was pretty cool,” Moss-Pultz said in an interview with the Linux Journal. Since then, Moss-Pultz married and started a family in Taiwan. He’s even gained an affectionate nickname as a “son-in-a-law of Taiwan”.

Moss-Pultz worked in software engineering for a few years then became involved in launching Project Openmoko, which made open source mobile devices. This was around the same time that Android was also being launched.

In 2014, Moss-Pultz and three other co-founders started Bitmark to provide a decentralized reputation platform where users and services can manage and transact digital assets. Users can “bitmark” and keep track of various digital assets such as Instagram photos or blog posts.

“We would like to be the world’s largest digital asset records system,” Moss-Pultz said in an interview with local media (in Chinese). And it seems that Bitmark is steadily tracking progress towards that goal. In March this year, Bitmark was selected as the first Taiwan-based company to join the Linux foundation’s Hyperledger initiative. This is an open source collaborative project involving 122 banks, institutions and companies to advance cross-industry blockchain technologies.

Bitmark is also one of the first batch of startups to have received funding from Alibaba’s Taiwan Entrepreneurs Fund. Now that Bitmark has just completed their API, the startup and Alibaba are starting to explore whether the internet giant’s ecosystem could make use of Bitmark’s blockchain technology.

The next steps on Bitmark’s expansion plan: North America, Taiwan, and the mainland market, then Southeast Asia.

Follow the opportunities

Many young Taiwanese have moved overseas because of the lack of opportunities. As more and more founders choose to start their companies in Taiwan, they are creating opportunities for themselves and for others. If the trend continues, then not all hope is lost with Taiwan’s brain drain crisis.