Should Your Next Contract Manufacturer be In Thailand?

It’s no secret that manufacturers are exploring production options outside of China. Rising tariffs, shifting trade policies, and the push for supply chain resilience have all led companies to rethink where their products are made. But if you’ve already decided that it’s time to look beyond China, the next question is clear: where should you look, and is Thailand the right option for you?

In this blog, we’ll break down what Thailand does well, where it may fall short, and how it compares to other manufacturing hubs. By the time you’re done reading, you’ll have a clearer picture of whether working with a contract manufacturer in Thailand is the right move for your business.

Why Companies Are Looking at Contract Manufacturers in Thailand

Thailand is attracting more attention from manufacturers as global supply chains diversify away from China. The most common reason companies explore production there is the lower labor rate compared to China. For labor-intensive projects, this can translate into significant cost savings. However, it’s important to understand that the lower labor cost often comes with a lower efficiency rate per worker. While the labor is skilled and reliable, productivity levels are not quite the same as what companies are used to seeing in China. 

Because of this, Thailand is generally better suited for simpler products with fewer parts in the bill of materials (BOM). Projects with a complex supply chain or a high number of components may run into challenges due to the country’s smaller supplier base and longer sourcing times for certain materials. However, if you are able to utilize China’s supply chain with the China +1 Strategy and then assemble the parts in China then this can be very beneficial. 

That doesn’t mean electromechanical products can’t be made in Thailand. They can, but success often depends on volume and complexity. For instance, a low-to-mid-volume electromechanical assembly with moderate part count might be a good candidate, but a low-volume, highly complex build might be more efficient in China.

Some of the best fits for a contract manufacturer in Thailand are straightforward consumer goods, such as simple plastic injection molded parts, basic assemblies, or products that require moderate labor without a large network of specialized suppliers.

Thailand does bring other advantages to the table:

• Intellectual property protection is stronger than in many nearby countries.

• Country of origin benefits can help avoid “Made in China” labeling and tariff exposure.

• Stable workforce with lower turnover than some manufacturing regions.

Ultimately, the decision isn’t just about cost; it’s about matching your product’s requirements with what Thailand can do efficiently.

Limitations and Challenges to Consider

While Thailand offers compelling advantages, there are some limitations that need to be factored into your decision-making.

The most notable challenge is efficiency and scale. Thailand’s manufacturing workforce is skilled but does not yet match China’s speed, output per worker, or deep experience across a wide range of industries. For highly complex, high-volume builds, especially those requiring large supplier networks, China is still difficult to beat.

Another consideration is supplier availability. Thailand does not have access to raw material and component suppliers, which means that certain parts may need to be imported from China or other countries. This can extend lead times and increase logistics costs, especially during the early stages of production.

Labor costs, while lower than China’s, are not the lowest in the region. Countries like Vietnam or Cambodia may offer cheaper labor, though often with even more limited infrastructure and capabilities. Thailand sits in the middle ground: competitive for quality, but not always the cheapest option.

Finally, there’s ramp-up timing. If tooling, specialized materials, or certain subassemblies have to be sourced internationally, it can take longer to reach full production. Companies should build in extra time for the transition when moving a product to Thailand, especially if it involves complex engineering or multi-part assemblies.

Understanding these trade-offs is key to deciding whether a contract manufacturer in Thailand is the right fit, or whether your product is better suited to another location, possibly in combination with a hybrid China + Thailand strategy.

Comparing Thailand to China

When you compare Thailand to China purely on manufacturing capability, China still comes out ahead in most categories. Its massive supplier network, unmatched scale, and highly efficient workforce make it the world’s most capable manufacturing hub. For high-volume, highly complex products—especially those with dozens or hundreds of parts in the BOM, China remains the most efficient and cost-effective option overall.

So why move production to Thailand? In most cases, the driving factor is tariff and country-of-origin considerations. If your product is subject to high import tariffs when made in China, shifting production to Thailand can deliver substantial landed cost savings, even if some aspects of the supply chain are less efficient. Products manufactured in Thailand can often avoid “Made in China” labeling, opening the door to tariff reductions and improved market perception.

Thailand can also be a smart choice for simpler products that don’t require the full depth of China’s supplier network. For these builds, the slightly lower efficiency is offset by the labor cost advantage and tariff savings.

To sum it up:

• Choose China if your product is complex, high-volume, and you need maximum efficiency and speed.

• Choose Thailand if tariffs are impacting profitability, if you want to diversify your supply chain, or if your product is simple enough that Thailand’s capabilities meet your needs without significant compromise.

The Decision

There’s no universal answer to whether your next contract manufacturer in Thailand should replace your current supplier. The decision ultimately comes down to your product’s complexity, volume, and strategic goals.

If your BOM is small, your volumes are moderate, and tariffs are hurting your bottom line, Thailand can be an excellent fit. On the other hand, if you’re producing a highly complex product with a large number of parts that rely on China’s deep supplier network, moving to Thailand could slow production, raise sourcing costs, or complicate logistics.

Many companies find that a hybrid approach works best, keeping complex production in China while shifting simpler, tariff-sensitive products or subassemblies to Thailand. This spreads risk, protects margins, and builds supply chain resilience without sacrificing efficiency for your most demanding products.

The best way to decide is to evaluate your product’s requirements, run the numbers on landed costs, and consider the long-term growth plan for your product line. Only then can you determine if Thailand is not just an alternative, but the right strategic move for your business.

At EPower Corp, we operate facilities in both China and Thailand, giving our customers the flexibility to choose the right location. Whether you’re looking to fully shift production or simply diversify to reduce risk, our team can guide you through the process with engineering support, prototyping, and smooth supply chain transitions.

If you’re evaluating whether your next contract manufacturer in Thailand is the right move, contact us today to discuss your options. Together, we’ll find the best fit for your product and your business.