Is China Still Competitive for Manufacturing?

Is China still competitive for manufacturing? It’s a question many supply chain teams are asking as tariffs, geopolitics, and rising costs reshape global sourcing strategies. For some product categories, the answer is increasingly “no.” Countries like Thailand, Vietnam, and India are now more attractive for simpler goods, especially those affected by tariffs. But other types of products with 20 or more parts in the BOM are still more competitive in China (at least for the most part). 

Everything depends case by case, but in this blog, we will keep it high level on when China is still the most competitive option, when it isn’t, and why the real answer depends on what you’re building.

Why Tariffs Have Challenged China’s Position

One of the biggest reasons companies have reconsidered China is tariffs. Since the U.S.–China trade war began, many consumer products manufactured in China have faced import duties. For brands selling into the U.S., that added cost can make a supplier in China no longer cost-competitive. 

As a result, companies have started looking to countries like Vietnam, Thailand, and Mexico. These locations offer lower tariffs under various trade agreements and have become default alternatives based mostly on their geographical location to China and the US. 

But while tariffs are important, they’re just one piece of the puzzle. A lower tariff rate doesn’t always mean lower total landed costs, especially when your product is more complex. 

Simple Products? Look Outside of China

If your product is relatively straightforward, such as just a plastic injection molded part, soft goods or a product with just a few components, then China may no longer be the most competitive option. Countries like Thailand or Vietnam have become strong alternatives for these types of goods, especially when paired with lower labor costs and favorable tariff structures.

In many of these countries, the NRE costs might be higher or timelines may be longer, but the total landed cost often ends up lower due to reduced import duties and wages. For companies producing high-volume, low-complexity products, shifting production outside of China can deliver meaningful savings, especially if you are affected by the higher tariffs in China. 

However, the equation changes when the product becomes more advanced.

Complex Products? China Is Still the Leader

When it comes to manufacturing complex products, maybe those are electromechanical products with more than 20 unique parts, with multiple assembly steps, then China still continues to have an advantage. No other country in Asia or anywhere else offers the same infrastructure or supply chain for these types of products. 

China’s strength lies in its manufacturing ecosystem. Whether you're sourcing PCBs, precision metal parts, packaging, or final testing, everything is nearby, often within hours of each other. This proximity enables faster development cycles, smoother engineering collaboration, and more agile production scaling.

In addition, Chinese factories tend to have deeper experience with quality systems, layered inspections, and supporting global compliance standards. That’s not to say other countries can’t build complex products, but you’ll most likely see higher NREs, longer lead times, and workers who are not professionals. 

It’s More Than Just Tariffs: It’s the Manufacturing Mindset

What truly sets China apart isn’t just the supply chain, it’s the mindset. Chinese contract manufacturers approach production with a level of urgency and problem-solving that’s difficult to find elsewhere. When an issue arises, teams often work overtime, make adjustments overnight, and do whatever it takes to keep things moving. This responsiveness is a major advantage when you’re under pressure to hit launch deadlines or resolve quality issues quickly.

Beyond work ethic, there’s also a deeper understanding of manufacturing processes. Many Chinese engineers and factory teams have decades of hands-on experience, not just with their own equipment, but with how each part of the supply chain fits together. That cross-functional knowledge means faster DFM feedback, better coordination between component suppliers, and a smoother path from prototype to production.

In contrast, factories in other regions may have strong capabilities but often lack the same speed, flexibility, or depth of experience, especially when coordinating multi-process builds.

A Balanced Strategy: China +1 Still Makes Sense

For many companies, the smartest move isn’t to leave China entirely but to diversify. The China +1 strategy has become popular for good reason. By maintaining production in China for complex, high-integration products while shifting simpler SKUs to countries like Thailand or Vietnam, companies can balance cost, risk, and flexibility.

This approach helps mitigate tariff exposure, provides a backup option if disruptions occur, and gives you leverage across suppliers. It also opens the door to achieving different countries of origin for different SKUs, a useful tactic for managing duties in multiple markets.

In short, China is still highly competitive, but that doesn’t mean it’s the only option. A dual-region strategy often delivers the best of both worlds: the expertise and infrastructure of China, paired with the tariff advantages and cost savings of Southeast Asia.

Conclusion: Is China Still Competitive for Manufacturing?

So, is China still competitive for manufacturing? It depends, and the answer starts with your product. If you’re making something simple and tariff exposure is eating into your margins, Southeast Asia may be the preferred option. But if your product requires complex assembly, multiple components, and a high level of coordination, China still offers unmatched capabilities.

Ultimately, competitiveness isn’t just about unit cost or tariff rates, it’s about total landed cost, lead time, risk, and execution. And for many companies, China continues to strike the right balance.

If you’re weighing options or unsure where your product fits best, we’re happy to help you assess the right manufacturing strategy. As a global contract manufacturer with production facilities in both China and Thailand, we can help you make the best decision based on your needs. Feel free to reach out today.