Manufacturing Moving to Cambodia/ Thailand/ Vietnam/ Malaysia/ Taiwan/ Mexico/ Poland

Home | China Law Blog | Manufacturing Moving to Cambodia/ Thailand/ Vietnam/ Malaysia/ Taiwan/ Mexico/ Poland Ever since the New York Times did an article, Wary of China, Companies Head to Cambodia, on companies leaving China for Cambodia, there has been media and play and real life discussions on how "everyone" is leaving China for places like Cambodia or Thailand or Vietnam or Mexico or Indonesia or Taiwan. First, let's look at the New York Times article, which could lead some to believe a massive China exodus is taking place, including the following: "Foreign companies are flocking to Cambodia for a simple reason. They want to limit their overwhelming reliance on factories in China." “Every couple days, I’m getting calls from manufacturers who want to move their businesses here from China,” said Bradley Gordon, an American lawyer in Phnom Penh. The article makes clear that only certain types of companies are leaving China entirely: Only a smattering of companies, mostly in low-tech sectors like garment and shoe manufacturing, are seeking to leave China entirely. Many more are building new factories in Southeast Asia to supplement operations in China. China’s fast-growing domestic market, large population and huge industrial base still make it attractive for many companies, while productivity in China is rising almost as fast as wages in many industries. “People are not looking for exit strategies from China, they’re looking to set up parallel operations to hedge their bets,” said another American lawyer here. The article notes that though foreign investment is rising in "Vietnam, Thailand, Myanmar and the Philippines," conducting business in those countries is usually not as easy as in China: Tatiana Olchanetzky, a manufacturing consultant to companies in the handbag and luggage industry, analyzed the costs in her industry of moving operations from China to the Philippines, Cambodia, Vietnam and Indonesia. She found that any savings were small because China produces most of the fabrics, clasps, wheels and other materials required for the bag trade, and these would have to be shipped to other countries if final assembly moved there. But some factories have moved anyway, at the request of Western buyers who fear depending exclusively on a single country. While moving to a new country with an unproved supply chain is a risk, Ms. Olchanetzky said, “There’s a risk in staying in China, too.” The article does an excellent job setting forth what my law firm is seeing among our clients, which include the following: Small clothing and shoe companies that looked at moving operations to Vietnam or Cambodia but then chose not to do so because it would be "too difficult" to set up a supply chain in those places. Just as described by Ms. Olchanetzky above. Mid-sized and large clothing and shoe companies that have moved into Vietnam or Cambodia by doing a bit of outsourcing from those countries or by setting up small factories there. Many companies of all kinds sending people to scope out Vietnam and Thailand and Mexico, and more recently and to a lesser extent, Myanmar. Many companies of all kinds looking at adding facilities or offices in Thailand or Malaysia or Indonesia, believing these three countries are going to thrive in the next decade as ASEAN's economic importance rises. Many companies of all kinds looking at Mexico and Poland, due to their proximity to the United States and the EU and because it would diversify them away from "just Asia." I recently spoke with an international manufacturing consultant who hasbeen working on a project examining China’s future role as a producer, as compared with SE Asia and he gave me the following five "off the cuff predictions”: Manufacturers in China will need to diversify and balance production throughout Asia, specifically Southeast Asia, to share risk and increase efficiencies. China and Southeast Asia are complementary. China will need to upgrade technically with automation to compete on anything other than scale, supply chain depth, and market demand. FDI flows into Southeast Asia will increase at faster rates than into China, assisted by an undervalued Japanese Yen and US Dollar, and by anger at China. The infrastructure and expertise in ASEAN will improve significantly. Productivity rates in Thailand and in Malaysia will continue to outpace China as they rapidly adopt mechanization. Electronics companies will establish themselves in Thailand and Malaysia due to their high productivity and growing middle classes. Vietnam, the Philippines, Taiwan and possibly Indonesia will be secondarily important. As the secondary hub in ASEAN, Bangkok will increasingly challenge Singapore's supremacy as the marketing and sales hub, due to its geographic centrality, cost structures, and its rapidly growing market and middle class. Singapore will retain its status as the finance hub, but its importance in manufacturing will wane rapidly as it faces natural limitations on land and labor. I share this optimism about Thailand, Malaysia and Vietnam. But I also see China manufacturing continuing to upgrade over the next ten years. and its continued rise as a consumer and product market will also influence decisions to manufacture in China. But on the flip side, I am a raging bull when it comes to ASEAN. I recently spent considerable time in Thailand, Vietnam, and Myanmar and I am convinced that if those countries can even modestly improve upon their political issues, they will boom. Below are my notes from a portion of those trips. Bangkok The Good: Bangkok is booming economically and if it can deal with its political problems and its pocket of violent Muslim extremists in the South, it will continue to thrive. ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam) will become one common market and many multinationals are already looking to take advantage of this. Singapore will be where the largest and wealthiest of the multinationals set up their ASEAN headquarters, but many smaller companies will choose Bangkok because it is considerably cheaper, and yet still a fairly easy city for foreigners. I have a friend who lives in a very nice, 2 bedroom, 2 bath condo, in one of Bangkok’s nicest areas and pays only USD$1200 per month. Bangkok even has excellent healthcare. And the food is incredible. The Bad: Thailand is rightfully proud of its history of withstanding colonization and that means it often does things its own way. In practical terms, that means things like Bangkok’s street system are like just about nowhere else. Get used to hot and humid. The Random: Seems more flights land late at night in Bangkok than anywhere else. I am told not to complain about this because late night landings are the best way to avoid the traffic. As fewer and fewer people continue believing China’s economic growth-line perpetually points up while its costs remain flat, the concept of a China Plus One strategy will gain considerable currency. Yangon The Good: The people. The food. The sights. The new. The temples. The Bad: The business climate. The Random: A surprisingly decent local wine. The world’s most (only) patient cab drivers. Twice I got stuck in horrible traffic due to accidents/rain. If this had happened in Beijing, I probably would have been tossed out of the car into the middle of the freeway in the pouring rain. Instead, the cabbies were uber polite the whole time. Both times I paid them double on the fares and both times the drivers were as gracious as could be. I know it makes me sound like a complete hick to say that the people are nice, but dammit, the people are nice. Hardly a day goes by without one of our clients expressing an interest in Vietnam or Mexico or Thailand. Perhaps the best "leading" measure of that interest is the trademark registrations we do in countries other than China. This makes for a great leading indicator because companies often register their trademarks when they become serious about a country, but before they actually start doing business with it. In the last year, my law firm has registered at least double the trademarks in Asian countries other than China than in the preceding year and the same is true for Mexico. What are you seeing out there? Check Out Our China Law Services Share Twitter Facebook LinkedIn E-mail Comment Dan Harris Dan Harris is a founding member of Harris Sliwoski, an international law firm where he mostly represents companies doing business in emerging market countries. Most of his time is spent helping American and European companies navigate foreign countries by working with the international lawyers at his firm in setting up companies overseas (WFOEs, Subsidiaries, Rep Offices and Joint Ventures), drafting international contracts, protecting IP, and overseeing M&A transactions. In addition, Dan writes and speaks extensively on international law, with a focus on protecting foreign businesses in their overseas operations. He is also a prolific and widely-followed blogger, writing as the co-author of the award-winning China Law Blog. Harris Sliwoski Attorney Read more posts [email protected] Read More China Business, International Manufacturing Related Posts September 15, 2026 Your AI-Drafted China Contract Says It Needs a Lawyer. Listen to It. September 11, 2026 Forensic Accountants in China Business Litigation: How True Numbers Can Tell the Wrong Story September 4, 2026 China NNN Agreement or Trademark Registration? 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