--- title: How a China-Taiwan Conflict Could Impact the Manufacturing Industry description: Learn how the manufacturing industry could be impacted should a China-Taiwan conflict occur. image: https://www.globalguardian.com/hubfs/GG%20RiskMap2024%20Email%206-09-1.png --- [+1 (703) 566-9463](tel:+17035669463) | [Emergency Support](https://www.globalguardian.com//emergency-support) [![GG Logo Main White](https://www.globalguardian.com/hs-fs/hubfs/GlobalGuardian_Oct2019/Logos/GG%20Logo%20Main%20White.png?width=208&height=45&name=GG%20Logo%20Main%20White.png "GG Logo Main White")](https://globalguardian.com) - [Corporate ](https://www.globalguardian.com/corporate-solutions) - [Personal ](https://www.globalguardian.com/personal-solutions) - [Government](https://www.globalguardian.com/government-solutions) - [Outcomes](https://www.globalguardian.com/case-studies) - [ Travel Security ](https://www.globalguardian.com/case-studies?topic=Traveler%20Security) - [ Executive Protection ](https://www.globalguardian.com/case-studies?topic=Executive%20Protection%20and%20Transportation) - [ Emergency Response ](https://www.globalguardian.com/case-studies?topic=Emergency%20Response) - [ Medical Assistance ](https://www.globalguardian.com/case-studies?topic=Medical%20Assistance) - [ Event Security ](https://www.globalguardian.com/case-studies?topic=Event%20Security) - [ Video Surveillance ](https://www.globalguardian.com/case-studies?topic=Asset%20Security) - Learn - [ Global Digest ](https://www.globalguardian.com/global-digest) - [ Newsroom ](https://www.globalguardian.com/newsroom) - [ Webinars ](https://www.globalguardian.com/media-room#t4) - [ Global Guardian Academy ](https://academy.globalguardian.com/) - [ FAQ ](https://www.globalguardian.com/faq) - Company - [ About Global Guardian ](https://www.globalguardian.com/about-global-guardian) - [ Executive Leadership ](https://www.globalguardian.com/executive-leadership) - [ Menu of Services ](https://www.globalguardian.com/service-menu) - [ Global Coverage ](https://www.globalguardian.com/global-coverage) - [ Contact Us ](https://www.globalguardian.com/contact) - [ Careers ](https://www.globalguardian.com/careers) [![Request Security](https://no-cache.hubspot.com/cta/default/2233164/aecafd49-7abe-4a80-95c2-e37dbbacda44.png)](https://cta-redirect.hubspot.com/cta/redirect/2233164/aecafd49-7abe-4a80-95c2-e37dbbacda44) # Taiwan Shock Index: Impact on Advanced Manufacturing October 11, 2023 | [Security Alerts](https://www.globalguardian.com/newsroom/topic/security-alerts) [![Share on Facebook](https://static.hubspot.com/final/img/common/icons/social/facebook-24x24.png)](http://www.facebook.com/share.php?u=https%3A%2F%2Fwww.globalguardian.com%2Fnewsroom%2Ftaiwan-china-conflict-manufacturing-impact%3Futm_medium%3Dsocial%26utm_source%3Dfacebook) [![Share on LinkedIn](https://static.hubspot.com/final/img/common/icons/social/linkedin-24x24.png)](http://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fwww.globalguardian.com%2Fnewsroom%2Ftaiwan-china-conflict-manufacturing-impact%3Futm_medium%3Dsocial%26utm_source%3Dlinkedin) [![Share on Twitter](https://static.hubspot.com/final/img/common/icons/social/twitter-24x24.png)](https://twitter.com/intent/tweet?original_referer=https%3A%2F%2Fwww.globalguardian.com%2Fnewsroom%2Ftaiwan-china-conflict-manufacturing-impact%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&url=https%3A%2F%2Fwww.globalguardian.com%2Fnewsroom%2Ftaiwan-china-conflict-manufacturing-impact%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&source=tweetbutton&text=How%20a%20China-Taiwan%20Conflict%20Could%20Impact%20the%20Manufacturing%20Industry) [![Share on Pinterest](https://static.hubspot.com/final/img/common/icons/social/pinterest-24x24.png)](http://pinterest.com/pin/create/button/?url=https%3A%2F%2Fwww.globalguardian.com%2Fnewsroom%2Ftaiwan-china-conflict-manufacturing-impact%3Futm_medium%3Dsocial%26utm_source%3Dpinterest&media=) [![Share on Email](https://static.hubspot.com/final/img/common/icons/social/email-24x24.png)](mailto:?subject=Check%20out%20https%3A%2F%2Fwww.globalguardian.com%2Fnewsroom%2Ftaiwan-china-conflict-manufacturing-impact%3Futm_medium%3Dsocial%26utm_source%3Demail%20&body=Check%20out%20https%3A%2F%2Fwww.globalguardian.com%2Fnewsroom%2Ftaiwan-china-conflict-manufacturing-impact%3Futm_medium%3Dsocial%26utm_source%3Demail) The following impact report is part of Global Guardian's [2024 Taiwan Shock Index](https://www.globalguardian.com/about-taiwan-shock-index). ## Sector Snapshot: Advanced Manufacturing **Sectors Impacted Upstream: **Raw materials, software, energy, semiconductors, metallurgy, chemicals **Sectors Impacted Downstream: **Aerospace, construction, transportation and logistics, automotive, medical, electronics A decoupling with China would cause a major shock to the advanced manufacturing sector impacting supply chains, market size, and open up firms to a number of thorny legal, compliance, and possibly expropriation risks. China’s near monopoly on the primary stages of the semiconductor value chain could create catastrophic disruption to the production and supply of microchips,  photovoltaic solar panels, and batteries. ### Short-Term Impact: HIghly Adverse - Advanced manufacturers would be faced with diminished access to the Chinese market due to a combination of export controls, reciprocal Chinese sanctions, and logistical disruptions in the Taiwan Strait and South China Sea. - Firms producing strategically valuable or dual use products in China — including semiconductors, complex machine parts, or certain chemicals — would likely be forced to divest from China or face legal sanctions directly. - These firms would also have to increase spending on compliance to minimize the legal risks associated with export controls and sanctions. - Firms engaged in the production of goods that contain sanctioned components could also face supply chain risks due to sanctions. - Companies with assets in China may face expropriation risks. - Manufacturers with production outside of China would likely see increased costs for Chinese-supplied components and raw materials. The procurement of these inputs could become extremely challenging. - Most personal electronics use components and materials produced and processed in China. While some of the raw materials, such as cobalt and lithium, are produced abroad, Chinese capital, labor, and technology are highly involved in their extraction. - Other raw materials, including rare earths, are largely extracted and processed in China. - Chipmakers, firms in the green energy sector, as well as electric vehicle manufacturers, would be highly affected by the increased costs of many of these materials. ### Medium to Long-Term Impact: Moderately Adverse - This sector may see increased costs and tighter margins in the long term. - The profitability of advanced manufacturing in developed economies has been driven in part by several macroeconomic trends dependent on Chinese growth and integration into the world economy. A hard decoupling would slow, end, or reverse some of these trends. - China subsidized the development of strategic upstream sectors like rare earths processing for market capture. The economies of scale that China added to the supply chain reduced costs for both Chinese and Western firms downstream. - However, the extent of cost increases for firms is largely dependent on future governmental policy on subsidies and trade. - In some cases, the loss of access to Chinese markets by foreign firms may be partially offset by reduced competition from Chinese-subsidized competitors. - As China often prioritizes revenue over profit in its state-owned companies, Chinese companies can operate at price levels that foreign companies cannot. The electric vehicle market is a prime example. With strict reciprocal sanctions and trade restrictions in place, the loss of access to Chinese customers by foreign automakers may be offset — to a degree — by the removal of Chinese automakers from certain foreign markets. ## Recommendations Businesses that could be directly or indirectly impacted by a Taiwan Strait Crisis should walk through the “what-if,” and explore the various scenarios — including the worst-case — that could arise. Now is the time for organizing tabletop exercises with key stakeholders and established vendors across the organization. It's essential to develop business continuity plans ahead of time to bolster operational resilience, as well as emergency response plans. Having a robust plan in place that has been effectively communicated to your workforce will ensure your organization is able to pivot and dampen the impacts of what could be the next major geopolitical shock.  ## Standing by to Support Global Guardian is actively supporting global businesses with business resiliency assessments, contingency and emergency response planning, and tabletop exercises. To learn more, complete the form below to contact Global Guardian's 24/7 Operations Center or call us directly at +1 (703) 566-9463. 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