‘Poster child’: why more Chinese firms have Thailand in their expansion plans

With domestic profits narrowing and production capacity expanding, China’s firms are continuing to widen their overseas footprints in search of new, more lucrative markets. In this series, we examine China Inc.’s next phase of “going global” and the complex, challenging international environment its companies have chosen to enter.
A subtle shift is taking place among Chinese businesses as they adopt a “China plus one” outlook and redirect domestic investments to neighbouring economies – a strategy largely designed as a hedge against tariffs and geopolitical risks.
Vietnam, popular for much of this period, is beginning to lose some favour as firms look to Thailand as another alternative destination. The latter country has gained the edge on its competitor in the post-trade war 2.0 era, attracting billions of US dollars in outlays last year.
But the influx has also made Bangkok more mindful of risks, particularly those related to US measures intended to limit Chinese transshipment.
“Thailand is hailed as a new poster child of the ‘China plus one’ strategy of the new era,” said Donald Low, professor of public policy at the Hong Kong University of Science and Technology.
As tech-intensive Chinese manufacturers flock there while the sun sets on export re-routing via Vietnam, the Land of Smiles may gain further ground over its neighbour.
“Thailand has a reasonably mature, sophisticated manufacturing base that is more advanced than Vietnam’s,” Low said.
From Vietnam’s perspective, “manufacturing saturation” and a perception change – aggravated by US trade scrutiny, including punitive tariffs of 40 per cent on Chinese goods found to have been diverted through the country – mean it may have run its course as a popular destination, the scholar added.

Thailand in, Vietnam out?
In 2025, Thailand attracted US$5.33 billion in Chinese investment, compared with Vietnam’s US$2.46 billion, according to data from the Chinese Ministry of Commerce.
Thailand’s location and established industrial infrastructure have allowed China-funded factories to plug straight into supply chains that are being extended from China to members of the Association of Southeast Asian Nations (Asean), Low said.
“For tech-intensive manufacturing – like electronic components and machinery, electric vehicles [EVs] and solar panels – Thailand has the requisite capabilities to attract investments. BYD, for instance, runs an EV plant there,” he said.
In a success story now touted by Thai officials, the first EV made by BYD in Thailand rolled off the production line in 2024 in Rayong, the location of a US$490 million factory with an annual capacity of 150,000 units and a Thai workforce of 10,000.
On the other hand, BYD’s plan for a similar factory in Vietnam, unveiled in 2024, remains stuck in the slow lane, with construction delayed.
“Even before the US imposed tariffs on transshipped goods, there were already signs Vietnam was ‘saturated’ with manufacturing from China, especially in assembly,” according to Low.
“It was becoming less attractive to assembly manufacturing due to infrastructure bottlenecks and rising labour costs … American levies added to the pressures facing Chinese firms there.”
Some again see Thailand as the next Vietnam … They need a ‘Made in Thailand’ label
Thai trade official
Perception in Vietnam is also becoming less favourable towards Chinese investment. “A growing view is that Vietnamese domestic manufacturers weren’t benefiting from Chinese firms investing there for avoiding US tariffs,” Low said.
“There was little technology transfer, the investments weren’t helping the economy upgrade and worse, they may also squeeze out Vietnamese firms.”
In contrast, Thailand is anticipating a growing influx.
In the first half of 2026, Thai authorities approved 321 mainland China-funded investment projects for government incentives, representing one-quarter of the total. These projects brought in 45.7 billion Thai baht or 9.7 billion Chinese yuan (US$1.4 billion), according to Thailand’s Board of Investment (BOI).
Between 2021 and 2025, total investments from mainland China reached 132.5 billion yuan, with an average year-on-year growth of 56 per cent.
Thailand has also entered the top four recipients of Chinese foreign direct investment in Asean, alongside Singapore, Indonesia and Malaysia.

Thailand not becoming another Vietnam
Though more Chinese firms are making their way to Thai shores, their motives may still differ substantially, according to a trade official with Thailand BOI’s office in China, adding that some still sought only to divert exports.
“Some again see Thailand as the next Vietnam … They need a ‘Made in Thailand’ label,” she said, declining to be named as she was not authorised to speak to media.
The official said Bangkok’s relatively favourable trade ties with Washington presented an opportunity for companies looking to establish themselves in Thailand – as well as less scrupulous exporters searching for tariff loopholes.
She pointed to Bangkok’s 17 free trade agreements covering 24 partner economies, which would enable “broad export access”, as well as Bangkok and Washington’s reciprocal trade agreement, which included possible zero-duty treatment for certain products.
This stands in contrast with Vietnam’s higher US duty exposure, thanks to stricter transshipment rules and its trade surplus with the US – two times the size of Thailand’s.
Thailand, though also subject to rules of origin verification, experiences “relatively lower US scrutiny”, the official said.
These considerations are likely to have influenced Chinese manufacturers’ plans.
In a December stock exchange filing, Shandong Bailong Chuangyuan Bio-tech, one of China’s largest food ingredient producers, said it had raised 748 million yuan to expand its Thai operations.

“This is a strategic move … The Thai facility will not only boost profitability by leveraging low-cost raw materials and tariff advantages there … It can also circumvent trad…