China faced an effective U.S. tariff rate of about 20%, compared with 6.1% for Vietnam, 13.4% for Indonesia and 4.5% for Thailand, according to Economist Intelligence Unit estimates in July. But that advantage has narrowed as Washington extended tariffs to a wider range of countries, prompting some Chinese manufacturers to rethink overseas investment, the EIU said.
Access to power has become as decisive as price, especially after the Middle East crisis tested the energy reliability of manufacturing bases, some companies said.
Stanislaw Krykun, CEO of Poland-based packaging firm DST Pack, worked with his six-year Chinese manufacturing partner to get through the painful period when plastic input costs spiked 15% in April because of soaring oil prices.
"In case of any crisis, the Chinese production plants will be the most stable plants you can use," Krykun said.
DST Pack sources 80% of its production from a factory in Shenzhen, with 10% each from long-established backup plants in the U.S. and Europe, he said.
Those alternatives cost two to three times more per unit.
Krykun had dismissed relocating to Southeast Asia after seeing a business partner struggle in Vietnam. "He faced a lot of issues starting with production and finishing with the export," he said. "The system there doesn't really work as smoothly as it works in China."
Guan Baokui, a Qingdao-based lawyer who advises manufacturers, said Vietnam and Indonesia suffer from an "unstable and not continuous" electricity supply, a problem that intensified as global oil prices surged.
Not all exporters are seeing U.S. demand return. Summer Hu, a Ningbo-based sales agent for gift and outdoor sports products, said her company had not seen U.S. orders increase.
"We are not that optimistic," Hu said. "The competition is too intense."
Vietnam remains one of the biggest beneficiaries of supply-chain diversification, attracting billions of dollars of foreign investment.
Yu Yangxian, who sells electric lockers and vending machines, said her company is keeping roughly one-eighth of its total capacity in Vietnam as a hedge.
She said the company could expand there again "if Trump goes crazy" and tariffs spike.
Exporters said they do not expect the Trump-Xi summit to resolve their problems.
"We gave up expecting much from Trump long ago. We can't depend on him for our livelihood or pin all our hopes on him. We have to find export markets to sustain ourselves," Kuang said.
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