Great news, a large number of orders return to China

Sunny Worldwide LogisticsIt is a logistics company with more than 20 years of transportation experience, focusing on markets such as Europe, the United States, Canada, Australia, and Southeast Asia. It is more of a cargo owner than a cargo owner~

In early June 2026, the Vietnam Federation of Trade Unions abolished the minimum wage system that had been in place for many years, gradually reduced the weekly working hours from the current 48 hours to 40 hours, simultaneously increased legal holidays and raised overtime pay standards.

The reduction in weekly working hours to 40 hours means that more working hours are counted as overtime. If the policy is implemented, Vietnam's manufacturing industry will generally see rising labor costs. Many small and medium-sized Taiwan-funded, Korean-funded, and Chinese-funded foundry companies have revealed that they are re-planning the location of global factories and will accelerate their withdrawal from Vietnam once the policy is implemented.

In the past few years, Vietnam has been a "safe haven" for Chinese companies to avoid US tariffs.

After the Sino-US trade friction intensified in 2018, Chinese companies such as Jiansheng Group, Tianyuan Group, and JinkoSolar successively moved their final assembly processes to Vietnam and continued exporting to the United States with the help of the "Made in Vietnam" label. This triangular trade model of "production in China - assembly in Vietnam - sales to the United States" has become an important support for Vietnam's export growth from 2018 to 2024.

Taking Jiansheng Group as an example, its Vietnamese production capacity once accounted for 70% of its total production capacity. Orders to the United States are basically undertaken by Vietnamese factories, and the profit margins brought by tariff savings are considerable.

But the good times didn't last long. In 2025, Vietnam's trade surplus with the United States will rise to US8 billion, surpassing China and ranking first in the world. Since then, the United States has launched three rounds of Section 301 investigations and imposed an additional 40% transshipment tariff on re-exports from third countries. In 2026, the United States will increase pressure and list Vietnam as a "key foreign country."

Under the heavy pressure of tariffs, the original arbitrage model quickly expired.

Under the superposition of 40% transshipment tariff and 46% reciprocal tariff, the originally slim-profit export OEM model to the United States quickly turned into a loss. Vietnam's pillar industries of foreign trade, including textiles, shoes and hats, and low-end electronic products, already have slim profits and are highly dependent on labor cost advantages. Now, under the pressure of shortened working hours, increased holidays, and rising wages, the profit margins of foreign-invested factories have been further compressed.

In the first half of 2026, Vietnam's newly registered foreign investment totaled US.65 billion, but the proportion of Chinese investment has dropped to less than 5%, ranking fourth after Singapore, South Korea and Japan.

A considerable part of the funds and orders withdrawn from Vietnam returned to China.

According to China Business News, some U.S. customers brought back multiple small fan molds from Vietnam and re-delivered million-unit batch orders to Chinese factories for production.

Data also confirms this trend. In the first quarter of 2026, my country established 13,987 new foreign-invested enterprises, absorbing 249.6 billion yuan in foreign investment. Foreign investment in high-tech industries has increased significantly, and overseas capital has increased investment in China.

"Whoever wins the Chinese market wins the world" has become an industry consensus.

44 hours after Musk's visit to China, Tesla's market value soared by US billion, helping him regain the title of the world's richest man; Japan's top biotech company entered the mainland and its annual revenue exceeded hundreds of millions, and its star product "Liver Cube" has long been at the top of the list on JD.com.

Compared with Vietnam, which only relies on low-cost labor to attract foreign investment to build factories, China, which has transformed into high-end manufacturing and has a huge consumer market, is obviously more attractive.

But not all companies are returning this time. Some manufacturers are diversifying their production capacity to Mexico, Southeast Asia and other places to get closer to the end market. There are also some Chinese-funded companies that are deeply involved in Vietnam and ASEAN markets. Instead of shrinking, they continue to invest more.

Currently, the industry generally believes that Vietnam is not the "next world factory", but rather a transit node and buffer zone. Its lack of a complete industrial system, independent supporting capabilities and sufficient domestic demand determines that it is more of a link in the global industrial chain rather than a core hub.

This trend is also reflected at the data level. In the first half of the year, the monthly average number of newly established and resumed companies in Vietnam was about 28,300, but 25,200 companies exited the market, nearly doubling the number of exits year-on-year.

For Chinese companies, this round of adjustment is also a cognitive update. The past model of relying on rule dividends and tariff arbitrage is gradually losing its effectiveness.The focus of future competition is returning to fundamentals such as technical capabilities, brand value and supply chain efficiency.

China's status as the world's factory is built brick by brick by roads, bridges, electricity and people. Others cannot take it away or catch it. Some manufacturers have found that only by returning to China can they stabilize their business. When the tide recedes, you can tell who is swimming naked at a glance.