CaliToday (24/11/2025): As the Chinese economy continues its downward trajectory and trade tensions with the United States intensify, the world is witnessing the largest-scale supply chain exit from China in over three decades. Manufacturers spanning textiles, electronic components, chemicals, and metallurgy are abandoning China to escape high costs, dwindling orders, and escalating geopolitical risks. This migration is rapidly forging a new industrial order across Southeast and Central Asia.
The Great Unreported Migration
The scale of the "China Exit" is far greater than official figures suggest. Entrepreneurs from key manufacturing hubs like Zhejiang, Guangdong, and Jiangsu reveal the staggering scope:
Zhejiang Shift: Over 60 factories in Zhejiang alone transitioned their production to Vietnam or Malaysia within the first ten months of this year. The true number is estimated to exceed 100, as many companies quietly build shadow factories without reporting the move.
Expat Management: Many factory owners are seeking European or Southeast Asian passports and are now remotely managing their remaining Chinese operations from abroad, hedging their personal and corporate risks.
Capital Flight and FDI Deception
Foreign capital is confirming the trend. While Beijing boasts of 30,014 new Foreign Direct Investment (FDI) enterprises, the actual utilized foreign capital plunged by 15.2%. This disparity indicates a "place-holding" strategy, where investors establish a legal presence but withhold actual investment money, a clear sign of diminishing confidence in the Chinese market.
Central Asia and Southeast Asia Emerge as Winners
The migration is not confined to consumer goods; heavy industry is also seeking refuge:
Central Asian Pivot: Kazakhstan and Uzbekistan are becoming new destinations for Chinese chemical, building materials, and metallurgical firms. Beijing invested over $23 billion in these sectors in Central Asia during the first half of the year alone, securing new strategic manufacturing bases.
Vietnam’s Triumphs (and Risks): Vietnam is the biggest winner in Southeast Asia. Factories are being erected at breakneck speed in industrial parks near Hanoi and Hải Phòng. However, this shift introduces a new dependency model: while production moves to Vietnam for export to the U.S. and EU, Vietnam’s imports from China surged past $101 billion in the first seven months of the year, accounting for 40% of Vietnam’s total imports. This indicates that Vietnam is exporting "Made in Vietnam" products using "Made in China" materials.
Indonesia and Cambodia are also emerging as key hubs. Indonesia is attracting heavy industries like nickel smelting, which is crucial for easy export to the U.S. and EU. A C4ADS report highlights China's strategic control, noting that Chinese companies control 75% of Indonesia's nickel smelting capacity—a massive strategic leverage point.
Global Buyers Demand De-Risking
International buyers are proactively pushing for diversification away from China. Japanese and South Korean orders have seen sharp cuts. European companies now require suppliers to have factories in multiple countries, making diversification a mandatory condition for doing business in the post-COVID-19 era.
One factory owner in Kunshan noted that European orders drastically slowed since 2022, and clients demanded he open a factory in Thailand to mitigate risk. "The equipment and technology are still from China, but the production is in Thailand," he stated.
A Chinese scholar provided a sobering assessment: “Many products bought in supermarkets today are no longer ‘Made in China.’ They come from Vietnam, Indonesia, Mexico.” He warned that the Chinese economy will not return to its golden age over the next 20 years, as Beijing’s sustained policy mistakes have forced China to voluntarily push itself out of the global supply chain.
This industrial exodus is more than a change of address. It marks the collapse of China's central role in global manufacturing as the world shifts toward a distributed, multi-national production model—a new order severely detrimental to Beijing’s long-term economic and geopolitical ambitions.