Why Moving with Your Chinese Factory Isn't a Long-Term Fix

This is going to get messy.

In the past week, I’ve spoken with several major U.S. companies—including some household names— and the pattern is clear: “Our Chinese factory is moving to Southeast Asia. Problem solved, right?”

Not so fast.

On the surface, it might look like these companies are diversifying their supply chains. But in reality, they’re just relocating the same risk. Same ownership. Same control. Just a different flag on the shipping container.

And Washington sees it. Loud and clear.

The 90-Day Freeze Is Not a Strategy

The recently announced 90-day tariff pause on some Chinese imports is a gift to companies already making product in China or able to spin up quickly. But let’s be honest—it’s short-term thinking. There’s no clarity on what happens after 90 days, and no reason to believe the long- term trade environment will stabilize in Chinas favor.

If anything, the pattern is becoming more clear: China is and will remain the central concern in U.S. trade policy. The real issues—fentanyl trafficking, intellectual property theft, and escalating Taiwan tensions—aren’t going away. And when the freeze lifts, tariffs may hit even harder.

The Tariff Net Is Widening

The U.S. has reignited tariff enforcement with force. New duties—some as high as 3,521%—have been slapped on solar panels coming from Vietnam, Thailand, Cambodia, and Malaysia. The reason? Transshipment fraud. The illusion that goods “originating” in Southeast Asia are anything but Chinese at their core.

Governments are reacting fast. Vietnam and South Korea are tightening origin verification.South Korea alone seized tens of millions in fraudulent exports in a single quarter. Meanwhile, China is pressuring its neighbors to resist U.S. investigations—another sign that companies caught in the middle will pay the price.

The Illusion of Risk Reduction

Here’s the hard truth: if your “China+1” strategy is simply moving your Chinese supplier to a new factory in Southeast Asia, you haven’t de-risked anything. You’ve just delayed the inevitable.

U.S. Customs is ramping up audits. Penalties for transshipment fraud are getting steeper. And it won’t be your overseas factory that gets burned—it’ll be you, the importer of record.

Thailand and other regions have their own trade complexities. But unlike China, they aren’t under a microscope for fentanyl production or geopolitical threats to Taiwan. When the dust settles, Thailand is positioned to land on a fair and stable footing—while China and the U.S. grapple with far bigger, long-term challenges.

A Smarter Path Forward

Yes, it may be more expensive—and take more time—to establish a clean, Thai-owned manufacturing relationship. But that’s the only path to true resilience. Without separating from Chinese control, you’re setting yourself up to fight the same battle under a different flag.

At Thailand Sourcing Services, we’ve watched this cycle repeat itself. Companies wait too long, assume a pivot will be easy, and scramble once enforcement kicks in.

Our advice? Follow your current partner for now if needed. But in parallel, build a legitimate Thai solution—one with local ownership, clear origin documentation, and true independence from China.

Because when the hammer drops—and it will—the companies that invested early in real solutions will be the ones still standing.