Companies safer on the fence - Taipei Times

During Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun's (鄭麗文) visit to China to meet Chinese President Xi Jinping (習近平), the large entourage of business leaders that typically accompanies such trips was nowhere to be seen.

This is not merely a snapshot of China's economic slowdown, but a deeper signal: We are entering an era of comprehensive credit scrutiny.

The global market's risk-pricing mechanism has fundamentally changed. If people continue using outdated frameworks to explain a world whose rules have been rewritten, they could face misjudgments.

In the past, background checks were largely confined to individual job applications. Now, they have expanded to the corporate level. Today's "credit" is no longer limited to financial metrics on a balance sheet — it also includes a holistic assessment of a company's integrity, regulatory compliance, political affiliations and supply chain transparency.

Amid intensifying US-China competition, global supply chains have shifted from prioritizing efficiency to prioritizing security.

International partners now review not only financial and technical factors before signing contracts, but also whether supply chains involve sensitive technologies or high-risk regions and whether management has political associations. These conditions form a company's new corporate resume.

Who you stand with has become a signal of risk. A single photograph of a handshake or political endorsement can be flagged, potentially affecting access to international markets and cooperation on key technologies.

Taiwanese companies are increasingly unwilling to publicly endorse pro-China politics. It is not that the Chinese market has disappeared, but that once a company is labeled, the impact extends beyond short-term profits to a discounting of its overall creditworthiness. When credit becomes an entry ticket, a stance is no longer merely a choice but a screening mechanism.

In this era, what companies fear most is not market competition, but being labeled unreliable. Once deemed noncompliant with security standards, the outcome is typically exclusion from the supply chain rather than negotiation.

Corporate silence is becoming a risk management strategy. Avoiding political alignment and steering clear of politicized activities are ways to safeguard access to the global system.

The mindset driving the global economy is shifting from "capital determines everything" to "credit determines everything."

Even if a company remains profitable, if its political credibility is questioned, international capital and technology might still withdraw.

The real choice facing Taiwanese companies has never been a binary decision between China and the US, but something deeper — whether they are still deserving of the world's trust. Under these rules, the greatest failure is not financial loss, but being judged untrustworthy by the international market.

Hsiao Hsi-huei is a freelancer.

Translated by Kyra Gustavsen