What to Prepare When Moving Production from China to Thailand

More brands are diversifying their supply chains and moving production from China to Thailand as part of a broader China + 1 strategy. Instead of abandoning China entirely, companies are keeping their existing Chinese supply base while establishing new production capacity elsewhere to reduce risk. Contract manufacturers in Thailand have gained popularity as they are able to offer landed costs to the US that compete with Chinese prices. 

But moving production from China to Thailand is not a simple plug-and-play transition. China has spent decades building a mature manufacturing ecosystem with dense supplier networks, highly trained workers, and extremely efficient production systems. Thailand, on the other hand, is still in the earlier stages of developing this ecosystem.

For companies to succeed, it’s critical to prepare for differences in mindset, work ethic, supply chain support, and efficiency. With the right preparation, Thailand can become a strong, complementary manufacturing base that fits into a long-term, resilient supply chain strategy.

The Mindset: Thailand Is Not China

One of the biggest mistakes companies make when moving production out of China is assuming they can replicate the same speed, efficiency, and structure overnight. China’s manufacturing ecosystem is the result of decades of continuous investment, education, and a strong manufacturing culture. Its suppliers, engineers, and operators are used to fast-paced development cycles and complex, high-volume production.

Thailand, while growing rapidly as a manufacturing destination, does not yet have the same level of maturity. Companies entering Thailand need to lower their expectations and recognize that this move isn’t a one-to-one replacement of China, but instead, they should recognize the shift as a strategic play for supply chain resilience. 

This means accepting that processes may be slower at first, certain capabilities may need to be developed over time, and more involvement may be required during the early stages of production. Instead of expecting Thailand to operate like China, the goal should to continue to leverage China for the strengths while using Thailand to get the country of origin through final assembly. 

By approaching the move with the right mindset, companies can avoid unnecessary frustration and set realistic expectations for their teams and their customers.

Work Ethic and Cultural Differences

Another important factor to prepare for is the difference in work ethic and workplace culture between China and Thailand. In China, the manufacturing industry has grown on the foundation of a highly driven and disciplined workforce. Chinese workers are accustomed to long hours, tight production schedules, and a “get it done” mentality. This drive is one of the key reasons why China has been able to build such an efficient and responsive manufacturing environment.

While Thailand has a capable workforce, their work culture is a bit more relaxed. Thai workers generally place more emphasis on balance and structure. While they work hard, the intensity and urgency often found on Chinese production lines may not be the same in Thailand. This doesn’t mean the quality is lower, but you should anticipate different productivity rhythms and plan accordingly.

This shift requires the way you work with them, and also sometimes the production schedule. Companies may need to allow for longer lead times, schedule more structured check-ins, and invest in additional training or clear SOPs to maintain quality and consistency. Over time, as Thailand’s manufacturing experience grows, this gap will naturally narrow, but companies that understand it upfront will be better prepared for a smoother transition.

Supply Chain Support and Local Ecosystem

One of the most significant differences between manufacturing in China and Thailand is the depth of the supply chain. In China, nearly every component or subassembly required for a product can be sourced within the same district. Whether it’s metal parts, plastic injection molding, PCBs, packaging, or surface finishing, the supplier network is highly concentrated and well-coordinated. This allows companies to make quick design changes, solve problems in real time, and keep lead times short.

Thailand, by comparison, has a less mature and more fragmented supply chain. While the country is building its manufacturing capabilities, many components are still sourced from outside Thailand, often from China. This is why countries can’t abandon China altogether but to use China differently. This means companies need to plan their BOM and sourcing strategy more carefully. Relying on local suppliers for everything may not be realistic at first, and dual sourcing is often a more practical approach.

It’s also important to factor in additional lead time for imported components and potential coordination challenges between suppliers in different countries. Successful companies build strong logistics and communication channels between their Chinese and Thai partners, ensuring a smooth flow of materials and clear visibility into timelines.

Efficiency and Cost Structure

A common misconception is that shifting production to Thailand will automatically lower manufacturing costs. While Thailand offers lower labor rates compared to China, efficiency plays a much bigger role than hourly wages in determining the true cost of production.

Chinese factories are known for their operational speed and high output per worker. Their experience, discipline, and well-integrated supply chain all contribute to an efficient production environment. This efficiency often offsets higher labor costs, which is why many companies find that their overall landed costs in China can be surprisingly competitive.

In Thailand, while labor is cheaper on paper, the output per worker is generally lower due to less manufacturing experience, slower workflows, and a less developed support network. This doesn’t mean Thailand can’t be competitive, but it does mean that companies need to plan for different cost dynamics.

Cost savings in Thailand will likely come from tariff advantages, diversification of risk, and strategic positioning, rather than just labor. For example, assembling products in Thailand can help achieve the Thai country of origin and reduce tariff exposure when exporting to markets like the U.S. and EU.

Companies that succeed in Thailand often invest in training, process standardization, and better communication structures to steadily close the efficiency gap. Over time, these efforts lead to more predictable production and improved cost performance.

Conclusion: Moving Production from China to Thailand

Thailand offers real advantages for companies looking to diversify their supply chains. It’s strategically located, cost competitive, and positioned to benefit from the global China + 1 strategy. But it’s also important to recognize that Thailand is still building the kind of deep manufacturing ecosystem that China has spent decades perfecting.

Success won’t come from trying to replicate China overnight. It comes from setting realistic expectations, planning carefully, and committing to a long-term approach. Companies that understand the differences in mindset, work ethic, supply chain support, and efficiency are better positioned to navigate the transition smoothly.

By combining China’s mature capabilities with Thailand’s growing manufacturing base, brands can create a more flexible, resilient, and cost-effective supply chain. Thailand may not be at China’s level today, but with patience, investment, and the right strategy, it can become a strong and valuable part of your global production network.

At EPower Corp, we are a global contract manufacturer with production facilities in China and Thailand. If you’re considering moving production from China to Thailand, let’s talk. We can help evaluate your product, map out a realistic transition plan, and establish a reliable production base in Thailand.