China's factory ecosystem draws some manufacturing back from Southeast Asia

  • Dawang Metals regained orders after a U.S. customer encountered problems shifting production to India.
  • China’s estimated U.S. tariff rate was about 20%, versus 6.1% for Vietnam.
  • Target restored some Chinese orders, while Shein reduced some Vietnam operations, according to sources.

Some companies that shifted production and sourcing away from China after higher U.S. tariffs are restoring Chinese manufacturing, finding that alternative hubs can struggle to match China’s skilled labor, supplier networks, equipment availability and reliable electricity. Dawang Metals regained orders from a major U.S. agricultural machinery customer after the buyer encountered problems in India, while Dawang abandoned its own offshore production plans. U.S. retailer Target has also moved some orders back to Chinese suppliers, and Shein is scaling back some operations in Vietnam, according to people familiar with the companies’ activities. There is no hard data yet showing the scale of sourcing returning to China, and India, Indonesia and Vietnam continue to attract major investment. The shift comes as tariff gaps narrow and businesses await an expected meeting between President Donald Trump and Chinese President Xi Jinping this month, including possible clarity on a mechanism to reduce barriers for some non-sensitive goods.

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