China’s Manufacturing Exodus Accelerating Amid Deteriorating Economy, Say Insiders
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As China’s economy continues to deteriorate and U.S.–China trade tensions deepen, manufacturers are accelerating an exodus from China to Southeast Asia and Central Asia, reshaping supply chains that once anchored global production, according to multiple industry insiders.
Labor-intensive and mid to low-tech manufacturing chains are moving to Southeast Asia, while some energy-intensive industries are extending into Central Asia. Some Chinese business owners have obtained foreign passports and now manage their Chinese factories remotely from abroad.
The sources did not provide their full names out of safety concerns.
Mr. Wang, a member of the Zhejiang Provincial Chamber of Commerce, told The Epoch Times that Zhejiang province has seen a sharp acceleration in factory relocations in the past five years.
“I know that in the first ten months of this year, at least more than sixty companies in the province moved their operations to Vietnam or Malaysia because they couldn’t get orders,” he said. “And there’s another group quietly building factories in Vietnam that the chamber doesn’t know about, so the real number may be over a hundred or even higher.”
He added that some Zhejiang factory owners now live for long periods in Europe or Southeast Asia, managing their companies remotely while obtaining residency or citizenship in those countries.
For some exporters, relocating is not new. It is simply accelerating.
“Some companies in our industry began setting up production units in Hanoi and Haiphong in Vietnam as early as 2018 to take on orders from Europe and the United States,” said Mr. Zhao, a machine-parts manufacturer in Zhejiang province, to The Epoch Times.
Trade Tensions and Shrinking Orders
The relocation trend is not limited to Zhejiang province. Jiangsu and Guangdong, two of China’s main export hubs, are facing the same pressures as foreign orders decline.Mr. Fang, whose family belonged to the powerful Rong Yiren business clan, said to The Epoch Times, “Zhejiang companies are relocating overseas mainly because their clients are requiring production sites in different countries, [and] compared to China, land and labor costs in those places are relatively more manageable.”
Foreign buyers across industries are reducing purchases from China. “This round of the trade war has affected the entire supply chain,” he said. “In some sectors, the withdrawal of foreign companies is very obvious, and many upstream and downstream firms have gone bankrupt, cutting off the supply chain.”
Several Japanese and Korean companies near Ningbo have cut procurement from China and now require suppliers to set up locations in Vietnam or Thailand, according to Fang.
In Suzhou and Kunshan, two major manufacturing hubs in the Yangtze River Delta region, foreign investors are evaluating which production lines to move abroad.
Mr. Gu, who runs an electromechanical OEM factory in Kunshan, told The Epoch Times that European orders have fallen since 2022. Customers demanded multi-country redundancy, so his company built a branch in Thailand. “The equipment and design are still provided by the headquarters [in China], while the factory in Thailand handles the intermediate production steps,” he said.
Vietnam Emerges as the Biggest Winner
Vietnam has become the primary destination for Chinese textile, electronics assembly, home goods, and footwear production, with most new factories clustered in northern industrial zones.Mr. Huang, a Taiwanese businessman in Vietnam, told The Epoch Times, “After they start production locally, hiring assembly workers goes quickly, but the calibration of key equipment is still done by Chinese technicians. These Chinese factories are setting up in Vietnam to shorten export times to the European and American markets, and also to spread out risk amid uncertainty.”
After Vietnam, Cambodia has become a hub for Chinese garment manufacturers. Former Chinese business journalist Mr. Chen told The Epoch Times, “Chinese investments are mostly structured as joint operations in which Chinese investors hold shares, and the raw materials are sourced from Zhejiang and Guangdong [in China].”
He also noted that Indonesia attracts resource and energy-heavy industries such as nickel smelting since Chinese manufacturers can more easily export from Indonesia to Europe and the United States.
Central Asia’s Role in Energy and Materials
While light manufacturing has flowed into Vietnam and Cambodia, heavier industries are expanding westward into Central Asia. Those Chinese manufacturers are choosing Kazakhstan and Uzbekistan.“Kazakhstan and Uzbekistan are attracting chemical, building-materials, and metal-processing companies,” Chen said. “Chinese firms produce basic materials there and then ship them by rail to western China.”
China’s Manufacturing Shift
Chinese scholar Mr. Su told The Epoch Times he recently noticed in China that many store-bought goods are no longer made in China.“Products under the same brand may now come from Vietnam, Indonesia, or Mexico,” he said.
Su argued that China’s manufacturing changes reflect deeper supply-chain restructuring. Companies are recalibrating around labor availability, raw materials, energy costs, and market access.
“I don’t think China’s economy is going back to the way it was,” he said. “For at least the next twenty years, if you want to blame someone, blame the policymakers.”
