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Taiwan tensions: Reassessing the risks of operating in China

October 4, 2022 Article 4 min read
Authors:
Lou Longo
The race for clean energy has combined with rising geopolitical tensions to undermine already fragile trade relations between China and Washington. In CFO, Lou Longo discusses what this means for companies with business in China.
Chess pieces on a chessboard.Companies with Chinese ties are facing the biggest escalation of risks in decades, as the race for clean energy combines with rising geopolitical tensions to undermine already fragile trade relations with Washington.

This is not just a squall that CEOs can hope to ride out while relations return to some normality. It’s part of a tectonic shift that’s fundamentally changing the old economic order in which China was the world’s default factory floor and trade relations with the West were relatively smooth.

Significant new factors undermining trade are climate politics and military tensions in the Pacific. Companies with ties to China, especially those with operations and partners on the ground, should undertake a hard-headed reassessment of their risks in this environment and take action to mitigate. This could be the time for companies with a higher risk profile to leave China and rebase to another low-cost country or take advantage of the growing incentives to operate in North America.

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