As Chinese military exercises around Taiwan become the new normal, foreign companies are reassessing the risks and costs of doing business in Taiwan and maintaining supply chains that pass through or near the self-governing island that China considers its territory, media reports said.
Neil Thomas, a senior China analyst at the Eurasia Group, a political risk consultancy, said that expanded People’s Liberation Army exercises around Taiwan increase the risk of an accident or miscalculation that escalates into a prolonged military standoff or another type of international security crisis, VOA reported.
Thomas said that China’s military exercises after US House Speaker Nancy Pelosi visited Taiwan raise operational costs for foreign business “because they involved exclusion zones that forced planes and ships in the area to take longer routes to avoid these areas, adding time to supply chains and adding costs to trade”, VOA reported.
The Wall Street Journal reported that insurers are shying away from providing new policies to cover Taiwan-related political risk. It cited an insurance broker as saying that they are not providing policies to new clients “at least until things calm down somewhat”.
Rupert Hammond-Chambers, the president of U.S.-Taiwan Business Council said that if things don’t calm down soon, most global companies will reconsider what it means to invest in Taiwan.
Dale Buckner, CEO of Global Guardian, a security solutions firm headquartered in Virginia, said some of his largest clients are concerned about operating in Taiwan.
He said companies should start to examine their essential personnel in the region, their hard and soft assets, and if they have financial assets that are parked within the Chinese or Taiwanese system.
“I think if you’re a leader, and you’re thinking over the horizon – not only in the next 12,18 months, but the next decade – you have to be thinking about these things. I don’t think currently my clients are in panic, but I think they’re taking it very, very seriously. And they don’t want to replicate what’s happened between Russia and Ukraine on a much bigger scale,” he said, VOA reported.