Why the DTC Manufacturing Shift from China Is Accelerating

Over the past few years, there’s been a clear (direct-to-consumer) DTC manufacturing shift from China as these brands reevaluate where their products are made. These companies, which thrive on lean operations and direct relationships with customers, are under increasing pressure to keep margins healthy without compromising product quality or delivery speed. And for many, that means rethinking their reliance on China.

The shift isn’t just about avoiding political risk or diversifying the supply chain—though those are factors. At the core, it’s about landed cost. Many DTC brands are discovering that manufacturing in China no longer delivers the total cost advantage it once did, especially after factoring in tariffs, freight rates, and delays at customs. That’s leading them to look toward alternative manufacturing hubs like Thailand, where lower tariffs and flexible production options help them stay competitive.

In this article, we’ll explore the key drivers behind the DTC manufacturing shift from China and how brands can approach this transition strategically.

The Role of Landed Costs in DTC Manufacturing Decisions

For DTC brands, every dollar matters, especially when most sales rely on competitive pricing and free shipping offers. That’s why landed costs are playing a major role in the decision to move production out of China. While China’s factory prices might seem attractive at first glance, the total cost of getting a product from the factory floor to a customer’s doorstep tells a different story.

Landed cost includes much more than just the unit price. It also factors in international freight, customs duties, tariffs, insurance, and final delivery fees. For many U.S.-based DTC brands, tariffs on Chinese-made goods can drastically inflate these costs. Add rising shipping rates, port congestion, and longer lead times, and the savings from a low unit price quickly disappear.

Thailand and other Southeast Asian countries offer an attractive alternative. With more favorable trade agreements and lower or zero tariffs on certain product categories, DTC brands can reduce their landed cost even if the manufacturing price is slightly higher. For small to mid-sized brands, these savings go straight to the bottom line and help fund marketing, product development, or customer acquisition.

For a company operating on slim margins, landed cost is often the deciding factor in shifting away from China, not because of quality or capability issues, but because the total cost no longer makes sense.

Simpler Products Match Southeast Asia’s Current Strengths

Another reason DTC brands are leading the shift away from China is that many of their products are relatively simple. Razors, travel accessories, water bottles, and consumer electronics accessories don’t require deep integration between complex mechanical, electronic, and software systems. Instead, they focus on great design, branding, and packaging, areas where quality matters, but complexity is manageable.

This aligns well with the current manufacturing strengths in Southeast Asia. While the region is improving its capabilities, especially in places like Thailand and Vietnam, it’s still more efficient for handling products with straightforward assembly, minimal customization per unit, and lower part counts.

DTC brands aren’t asking for full robotics integration or advanced electromechanical systems. They’re looking for a partner who can deliver a consistent, well-packaged product at a competitive landed cost. And that’s exactly what many Southeast Asian suppliers are built to do today.

As capabilities continue to grow in the region, more complex manufacturing may become feasible. But for now, the simplicity of many DTC products makes them a perfect match for manufacturers in Thailand and beyond.

Tariffs and Trade Policies Are Creating Uncertainty

The U.S.–China trade war marked a turning point for many DTC brands. When tariffs were first introduced on a wide range of Chinese goods in 2018, many assumed they’d be temporary. Years later, they’re still in place and in some cases, increasing. For DTC brands that already run on tight margins, an unexpected 15%–25% tariff can turn a profitable product into a financial burden.

This uncertainty has made long-term planning difficult. Tariff exemptions come and go, and product classifications can shift without warning. It’s not just about paying more, it’s about not knowing what costs will look like six months from now. For companies that rely heavily on marketing forecasts and pre-orders, that unpredictability is unacceptable.

That’s why many brands are moving to countries with more stable trade relationships and lower tariff exposure. Thailand, for instance, benefits from preferential trade treatment through programs like the U.S. Generalized System of Preferences (GSP) and has no Section 301 tariffs. While the GSP program isn’t always active, the overall tariff structure for Thai exports is still far more predictable than China’s.

For DTC brands, shifting manufacturing outside of China is less about chasing the lowest cost and more about regaining control over their pricing and profitability in a volatile trade environment.

Supply Chain Resilience Is Now a Priority

The COVID-19 pandemic, port congestion, and factory shutdowns in recent years revealed just how fragile global supply chains can be, especially when they’re overly dependent on a single country. For many DTC brands, this was a wake-up call. They realized that having all production in one place, even a well-established hub like China, posed a serious risk to their business continuity.

Resilience has become just as important as cost when making supply chain decisions. DTC brands now want backup options, faster response times, and more flexibility if something goes wrong. That’s led to growing interest in the “China +1 strategy, where brands maintain some production in China while adding a second manufacturing base in countries like Thailand, Vietnam, or India.

Manufacturing in Thailand stands out as it is a business-friendly option with a stronger logistics infrastructure than others, a skilled workforce, and favorable trade relationships with the U.S. and Europe. By diversifying into Southeast Asia, DTC brands can reduce the risk of future disruptions while still keeping production costs in check.

In today’s environment, the ability to pivot quickly, reroute production, or scale in multiple regions is a competitive advantage. And for DTC companies, resilience in the supply chain can make the difference between surviving a disruption and missing an entire sales season.

Better Fit for Smaller Production Volumes

Unlike big-box retailers that place massive orders months in advance, DTC brands often work with smaller batch sizes and faster product cycles. They may launch with limited inventory, test products through pre-orders, or frequently update designs based on customer feedback. This agile model doesn’t always align with how many Chinese factories are structured, especially those optimized for high-volume, repeatable production.

In contrast, contract manufacturers in countries like Thailand tend to offer more flexibility for smaller production runs. They’re often more willing to support low-to-mid volume orders, accommodate mixed SKU builds, and tailor their processes to fit unique packaging or product requirements. For a DTC brand that needs 2,000 units across five variants, not 100,000 of a single SKU, this makes a big difference.

Ultimately, the DTC manufacturing shift from China is about working with partners who understand the unique needs of a DTC business model. And in many cases, that means moving to manufacturing hubs better suited for flexibility and collaboration.

What to Consider Before Making the Shift

While the benefits of moving manufacturing out of China are clear for many DTC brands, the transition isn’t something to rush. A successful shift requires careful planning and the right partners to minimize disruption and protect product quality.

Start by reviewing your landed cost breakdown in detail. Compare what you’re currently paying, including tariffs, shipping, customs fees, and delays, to what you would pay if producing in a country like Thailand. Sometimes, even a slightly higher unit price still results in a lower overall landed cost.

Next, consider running a pilot build with your new supplier. This is a low-risk way to test capabilities, evaluate quality, and validate packaging or assembly processes. DTC brands often skip this step in favor of speed, but it can save thousands in rework or lost sales later on.

Documentation also matters. Ensure that your BOMs (Bill of Materials), CAD drawings, and packaging specs are complete and clearly communicated. A good contract manufacturer will help fill in any gaps and flag issues before they affect production.

Finally, assess the supplier’s engineering support, communication, and responsiveness. DTC companies typically rely on short development cycles, custom branding, and fast turnarounds. You need a supplier who can keep up and who sees your growth as a shared goal, not just another job.

The DTC manufacturing shift from China is about more than just changing factories; it’s about building a smarter, more resilient supply chain. Done right, it can position your brand for better margins, faster launches, and long-term growth.

Conclusion: DTC Manufacturing Shift From China

The DTC manufacturing shift from China isn’t just a trend; it’s a strategic move that more brands are making to stay competitive in a changing global market. As tariffs remain high, landed costs continue to rise, and supply chain risks increase, DTC companies are realizing that the old model of relying solely on China no longer fits their needs.

Instead, they’re turning to new manufacturing hubs like Thailand that offer cost savings, flexibility, and a more resilient foundation for growth. Whether it’s reducing tariffs, improving lead times, or gaining more personalized support, the shift allows DTC brands to take greater control over their products and their margins.

At EPower Corp, we’ve built our operations around this shift. With facilities in both China and Thailand, we help DTC brands transition their supply chains smoothly, whether you’re testing your first pilot run or scaling up for mass production. If you're considering moving your production out of China, we’re here to help you evaluate your options and make a decision rooted in long-term value.