The Middle East conflict has had limited direct impact on Chinese industrial technology companies, but transport, cost, and FX pressure should be monitored

Overview

This report focuses on feedback from Chinese industrial technology companies on operations, demand, orders, transportation, raw-material supply, and cost pass-through in the context of the Middle East crisis. The scope includes companies with direct Middle East sales exposure, FA/machinery companies, and companies with ESS businesses. The overall conclusion is that most companies have limited direct Middle East exposure, employees and operations have been affected only minimally, and there is no immediate risk of a supply-chain cutoff; however, shipping delays, customers taking a wait-and-see approach to capex, rising raw-material costs, and FX volatility are creating near-term operating pressure.

Core views

First, the main risk for companies with direct Middle East sales exposure is shipping and logistics, and prolonged conflict will magnify transport delays. Second, FA/machinery companies have low Middle East exposure, so the operational impact is limited, but uncertainty in global demand affects some customers' capex decisions. Third, ESS companies have not yet seen a significant acceleration in European residential storage demand due to the conflict in the near term, but commercial and industrial storage demand is strong, and energy supply reliability could support ESS demand over the medium to long term. Fourth, raw-material supply has not yet been directly affected by the Middle East conflict, and cost pressure is coming more from rising metal prices. Fifth, overseas ESS businesses need to closely monitor FX, as the recent USD/CNY trend is pressuring RMB-denominated revenue, overseas gross margins, and working-capital FX gains and losses.

Analysis framework

The report combines company feedback with industry coverage observations, breaking the impact path down by business type: first assessing shipment, demand, and supply-chain effects for companies with direct Middle East sales exposure; then assessing orders, operations, and cost pass-through for FA/machinery companies; and finally assessing changes in European demand, overseas shipping, raw materials, and FX for ESS businesses.

Methodology notes

• Industry researchCompany operating feedback

  Assessing geopolitical conflict impact based on feedback from covered companies

  The report uses company feedback on transportation, orders, raw materials, costs, and FX as core evidence to judge the direct and indirect impact of the Middle East conflict on different industrial technology subsectors.

• Equity research disclosure frameworkGS Factor Profile

  Growth, financial returns, valuation multiples, and composite percentile comparison

  Goldman Sachs discloses that its factor framework compares individual stocks with the market and industry peers on a percentile basis using metrics such as growth, financial returns, and valuation multiples; this report does not present the framework results for any specific stock.

• Equity research disclosure frameworkM&A Rank

  Tiered acquisition probability

  Goldman Sachs discloses that its M&A Rank assesses the probability that covered companies become acquisition targets on a 1-to-3 scale, where 1 indicates high probability, 2 indicates medium probability, and 3 indicates low probability; this report does not use it as a primary analytical conclusion.

• Research databaseQuantum

  Goldman Sachs proprietary financial database

  Quantum is used to access historical financial statements, forecasts, and ratios, supporting single-company deep dives or cross-industry comparisons; this report does not show any specific Quantum data tables.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Chinese industrial technology companies

  Industry research coverage universe

  Strengths

  Most companies have limited direct Middle East exposure, and employees and overall operations have been affected only minimally.

  Weaknesses

  Some products shipped to the Middle East are delayed, and prolonged conflict will weigh on delivery schedules.

  Comparison

  Compared with companies with direct Middle East sales exposure, FA/machinery companies face a lower operational impact because their presence in the Middle East market is limited.

  Risks

  Shipping delays, demand uncertainty, rising costs, and FX volatility.

• FA/machinery companies

  Subsector impact assessment

  Strengths

  Middle East exposure is limited, operations are broadly normal, and no direct risk to raw materials or components has been seen so far.

  Weaknesses

  Some downstream customers are delaying capex expansion amid uncertainty in global demand.

  Comparison

  Relative to overseas ESS businesses, FA/machinery companies are less sensitive to FX and changes in European energy demand.

  Risks

  Metal costs have risen since 2H25, and cost pass-through is more difficult in the domestic market.

• ESS companies

  Both beneficiary of energy-supply disruptions and subject to short-term pressure

  Strengths

  European commercial and industrial ESS demand is strong, and improved energy-supply reliability may support storage demand over the medium to long term.

  Weaknesses

  European residential ESS demand has not shown a clear acceleration over the past 2-3 weeks, and some overseas shipments have been disrupted by the conflict.

  Comparison

  Compared with FA/machinery companies, ESS companies have a more pronounced overseas revenue and FX exposure.

  Risks

  USD exchange rates, overseas gross margins, working-capital FX losses, and rising costs for electronic components and cells.

• Sieyuan

  Example of a company with direct Middle East sales exposure

  Strengths

  The company is actively looking for alternative ways to reroute products to the Middle East region.

  Weaknesses

  Products already shipped to the Middle East are delayed.

  Comparison

  Compared with companies whose businesses are mainly in China, Sieyuan is more directly exposed to Middle East logistics disruptions.

  Risks

  If the conflict persists, the impact of transport delays may continue.

• Inovance Technology

  FA/machinery company case

  Strengths

  The company believes the Middle East conflict has limited direct impact because its business is mainly focused on the Chinese domestic market.

  Weaknesses

  It faces cost pressure from rising metal prices.

  Comparison

  Compared with companies with Middle East sales exposure, it has a smaller direct geopolitical impact.

  Risks

  Whether price increases can be accepted by customers and the company's ability to pass through costs in the domestic market.

• Haitian International

  FA/machinery company case

  Strengths

  The report does not indicate any direct operational disruption at the company.

  Weaknesses

  Some customers are taking a wait-and-see approach to capex expansion amid uncertainty in global demand.

  Comparison

  Its risks stem more from demand and customer investment timing than from local operational exposure in the Middle East.

  Risks

  Global demand uncertainty delaying orders or the capex cycle.

Key data

• Inovance Technology impact from the Middle East conflictLimited direct impactThe company's business is mainly focused on the Chinese domestic market.
• Haitian International customer capexSome customers have entered a wait-and-see modeThis is due to rising global demand uncertainty amid the Middle East conflict.
• FA/machinery company operationsBroadly normalOverall presence in the Middle East market is limited.
• Mid-size PLC price increase5-10%Inovance Technology further raised mid-size PLC prices, effective April 27.
• HMI price increase3-5%Inovance Technology further raised HMI prices, effective April 27.
• Previously proposed price increase5-25%Proposed price increase effective from January 17.
• European residential ESS demandNo obvious acceleration over the past 2-3 weeksAlthough gas prices have risen versus pre-conflict levels, the economics of battery deployment have improved marginally.
• Recent USD/CNY level6.9The report says the recent USD appreciation trend is a 1Q26 headwind for overseas ESS businesses.
• USD/CNY 1Q25 level7.2-7.3Used to compare the impact of recent FX moves on RMB-denominated sales and gross margins.
• Goldman Sachs economists' 12-month target6.70The report highlights the need to monitor how companies respond to FX headwinds.
• Goldman Sachs global equity coverage rating mixBuy 50%, Hold 34%, Sell 16%As of January 1, 2026, Goldman Sachs Global Investment Research covered 3055 stocks.

Impact & implications

For investment judgment, the report points to a relatively restrained impact framework: the Middle East conflict has not yet caused operational disruptions or raw-material supply cuts for most Chinese industrial technology companies, and the direct financial shock is limited; however, if the conflict persists, shipping delays and customers postponing capex could weigh on order recognition and revenue timing. On the cost side, rising metal prices and higher electronic-component costs need to be monitored for price pass-through capability, which is easier in overseas markets and more difficult in the domestic market. The medium- to long-term implication for ESS is positive, as energy security and supply reliability may increase storage deployment demand, but short-term European residential ESS orders have not shown a clear acceleration yet.

Risks

• A prolonged Middle East conflict could expand shipping and logistics delays.
• Global demand uncertainty could lead customers to postpone capex expansion.
• Rising metal prices could push up input costs for electronic components, raw materials, and cells.
• Price increases and cost pass-through are more difficult in the domestic market than in some overseas markets.
• Changes in USD/CNY could pressure overseas ESS revenue, overseas gross margins, and working-capital FX gains and losses in RMB terms.
• Household ESS penetration in European countries such as Germany and the Netherlands is already relatively high, so near-term demand elasticity may be limited.

What to watch

• How long the conflict lasts and whether shipping, logistics, and rerouting in the Middle East recover.
• The shipment pace and revenue recognition impact for companies with direct Middle East sales exposure.
• Whether FA/machinery customers shift from wait-and-see to recovery or further delay capex.
• Changes in metal prices, electronic-component costs, and cell costs.
• The pace of price implementation in domestic and overseas markets and customer acceptance.
• Whether European commercial and industrial ESS demand continues to expand and whether residential ESS orders recover.
• USD/CNY moves and their impact on overseas ESS revenue, gross margins, and FX gains and losses.