Facing escalating tariff measures imposed during the previous U.S. administration, Chinese manufacturers initially accelerated their shift towards Southeast Asia, aiming to diversify supply chains and reduce dependency on the American market. However, emerging challenges in the region – including rising labor costs, infrastructure bottlenecks, and complex regulatory environments – have compelled many firms to pause and reassess their expansion strategies. Rather than a straightforward relocation, companies are increasingly adopting a hybrid approach, balancing production between domestic bases and a select number of Southeast Asian hubs.

Key factors influencing this recalibration include:

  • Increasing operational expenses in popular destinations such as Vietnam and Thailand
  • Strengthening economic policies within China supporting local…