Looking to Dodge U.S. Tariffs, Chinese Manufacturers Set Up Shop in Southeast Asia
By Li Rongqian, Zou Xiaotong and Ding Yi
A growing number of Chinese manufacturers have set up factories in Southeast Asia, hoping to use the region to bypass U.S. import controls as the Trump administration plans to slap additional tariffs on Chinese goods.
Whether this approach will work, however, remains to be seen as Washington may tighten its scrutiny over Chinese companies registered overseas.
In 2024, the industrial parks that Amata Corp. PCL operates in Southeast Asia attracted nearly 90 foreign-funded factories, 75% of which were from China, Amata Chairman Vikrom Kromadit said in a recent interview with Caixin.
Amata’s main business is industrial real estate development in Thailand and other Southeast Asian countries like Vietnam and Laos. The company began developing industrial parks in 1988, and its properties are now home to about 1,600 factories, a quarter of which were built by Chinese companies.
Amata aims to increase the number of Chinese factories operating in its industrial parks, which mainly sit along the Mekong River, to 2,000 in the foreseeable future, a target set based on Chinese manufacturers’ rapid development in the past years, said Kromadit, who is also chairman of the Thailand-China Business Council.
What is happening in Amata’s industrial parks is part of a broader shift where more and more Chinese companies are building out their manufacturing presence in Southeast Asia, which a local industrial real estate investor partly attributed to China’s significant trade surplus with the U.S.
Facing U.S. tariffs and import controls designed to cut down that surplus, many Chinese manufacturers have to adopt the same strategy their Japanese peers once used — build factories in Southeast Asia, the investor said.
In fact, the Chinese manufacturers are still producing goods for their longtime American customers, but the only difference is that the location of production has changed to Thailand or another part of Southeast Asia to avoid higher U.S. tariffs, the investor added.
On Thursday, President Donald Trump announced that the U.S. would impose an additional 10% duty on Chinese imports on March 4. The new tariffs would be on top of the 10% extra tariff that the U.S. implemented on Feb. 4.
Hot investment destinations
China has become a leading source of foreign direct investment into Thailand, marking a significant shift. “In the past, Chinese investments were mostly in labor-intensive and high-polluting industries. Today, Chinese high-tech companies have established a strong foothold in Thailand with their high-quality products and export-oriented business models,” Kromadit said.
Kromadit cited Chinese electric-vehicle makers as an example, saying that their products have posed a great challenge to Japanese cars in Thailand, where Japan’s automakers have built a mature supply chain. Of the 1,600 factories in Amata industrial parks, more than 600 produce auto parts.
Since the beginning of 2024, Thailand has also attracted significant investments from Chinese consumer-electronics makers, leading to an increase in the number of related factories in the country, according to Kromadit.
In Thailand, industrial parks have set their sights on building complete supply chains as the Board of Investment of Thailand has been trying to draw in foreign investors that can contribute to the high-quality development of local industries, said Cao Yuan, a partner at Beijing Yingke (Shanghai) Law Firm.
Apart from Thailand, Southeast Asian countries including Vietnam and Indonesia also have an opportunity to lure foreign investors, especially those from China, due to their large potential markets, involvement in China’s Belt and Road Initiative, and their good trade ties with the U.S., according to Cao.
U.S. threat
Despite pivoting to Southeast Asia, Chinese manufacturers may still face challenges exporting goods produced in the region to the U.S.
The U.S.’ imposition of anti-dumping and countervailing duties on solar cells shipped from Cambodia, Malaysia, Thailand and Vietnam in 2024 stopped the high growth of many Chinese photovoltaic firms that have built factories in Southeast Asia, said Song Bin, a vice president at global logistics company Kuehne+Nagel International AG.
This will, to some extent, force Chinese companies to stop making heavy-asset investments in Southeast Asia, said Song. He predicted that they will instead leverage the existing resources to adopt an asset-light investment model to develop their businesses there, including contract manufacturing.
If the U.S. government sees Chinese companies’ overseas investments as a threat, even if they are registered as local companies, Washington may still sanction the firms, Cao said.
“The U.S. may adopt a differentiated standard that could trace the actual controllers of the target companies to uncover the ultimate investors and key figures who shape decision-making at these companies,” Cao said.
The U.S. may apply this standard to the strategically important sectors of microchips, biotechnology and telecommunications, according to Cao.
On Feb. 21, Trump signed a memorandum directing a high-level committee to restrict Chinese investment in strategic U.S. sectors such as technology, critical infrastructure, health care, agriculture, energy and raw materials, fueling concerns of spiraling tensions between the world’s two largest economies.
Wang Meng contributed to this story.
Contact reporter Ding Yi (yiding@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
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