After China — New Frontiers or New Dependencies?

China’s remarkable rise as a manufacturing superpower is now encountering its own internal and external constraints. Rising wages, demographic shifts, environmental pressures, and deteriorating geopolitical relations—especially with the United States—have prompted many firms to consider diversifying their production footprints. As a result, the global economy is witnessing a partial recalibration of supply chains, with production moving toward a new set of emerging economies.

Vietnam has emerged as a notable beneficiary. Its geographic proximity to China, favorable trade agreements (such as CPTPP and EVFTA), and relatively stable political environment have made it a prime location for electronics, apparel, and machinery assembly. Companies like Samsung, Apple, and Intel have significantly increased their investments in the country. Yet Vietnam’s capacity to absorb large-scale industrial relocation is limited by infrastructure constraints, land scarcity, and a relatively small population compared to China.

India presents a more complex case. With a population exceeding 1.4 billion and a growing internal market, India holds significant long-term potential. The Modi government’s “Make in India” initiative has sought to attract foreign direct investment, simplify labor regulations, and build industrial infrastructure. Yet bureaucratic inefficiencies, erratic regulatory enforcement, and an uneven business environment remain impediments. Despite recent progress in electronics and automobile production, India has yet to become a true substitute for China in global manufacturing.

Other countries, including Bangladesh, Indonesia, the Philippines, Mexico, and Ethiopia, are positioning themselves as part of the so-called “China +1” strategy—where firms retain a Chinese presence but diversify risk by investing in secondary sites. These countries vary widely in their capabilities, but many remain concentrated in low-value manufacturing and face challenges in workforce training, logistics, and governance.

Moreover, the fragmentation of manufacturing raises the risk of deepening inequalities. Environmental degradation, poor labor conditions, and economic dependency on volatile export markets remain pervasive across these regions. The relocation of production may avoid political risk but often replicates exploitative labor and ecological practices.

Crucially, this trend does not signify the end of China’s manufacturing dominance. Rather, it indicates a strategic recalibration: China is moving up the value chain—investing in semiconductors, green tech, and high-speed rail—while outsourcing low-margin assembly to its neighbors. Thus, the shift “beyond China” is not a clean break but a redistribution within a broader East Asian industrial ecosystem.