China's overcapacity impact is transmitted primarily through price mechanisms. When China exports large volumes of steel, plastics, rubber, and other bulk products, international market prices for similar products get depressed. Taiwanese manufacturers can maintain their original quality and delivery times, but struggle to compete against the price gap. The Ministry of Finance's report directly mentions that China's continued large-scale steel exports put pressure on supply and demand dynamics in surrounding markets. This brings not just fewer orders, but systemic weakening of your negotiating position—customers start using Chinese quotes to push down your prices, your margins thin out, and the switching cost for buyers drops, eroding customer loyalty.