Against the backdrop of the continued shift in the global industrial chain and escalating tensions between China and the United States, mainland China’s foreign trade-oriented manufacturing enterprises are facing unprecedented pressure. Recently, traditional foreign trade hubs in mainland China have been reporting factory closures and order losses, leading to widespread concerns in regions like Guangdong and Zhejiang that “Made in China” is facing a new round of challenges.
In 2025, due to the impact of the global industrial chain shift, foreign trade-oriented enterprises in mainland China have become the hardest-hit areas for business contraction. The Pearl River Delta, as the most concentrated area of foreign trade factories in mainland China, now presents a starkly different picture from its busy past. During interviews with factory operators and local residents in Shenzhen, Dongguan, and Fanyu district of Guangzhou, it was revealed that many factories are tightly shut with rental notices posted outside; laid-off workers are flocking to the job market in Guangzhou, awaiting new job opportunities.
Xue Ming (pseudonym), the person in charge of an electronics switch factory in Henggang, Longgang District of Shenzhen, expressed in an interview with Dajiyuan on August 26th that since the beginning of this year, foreign demand for products has significantly shifted towards Vietnam, resulting in a significant decrease in orders: “Since February this year, the American orders we received have decreased by over 30% compared to last year. We used to export two to three containers per month, but now we can barely maintain one container. With most of the factory’s staff on leave, the capacity utilization rate is less than 50%.”
Xue Ming admitted that European and American customers, in order to evade tariffs, have shifted large orders to Vietnam and Bangladesh, leaving Chinese manufacturers with small-batch, low-profit sporadic orders. “Many machines in my factory are idle, but machines still have depreciation, rent needs to be paid, whether we operate or not, it’s a loss, and finally, we can only consider halting production.”
Zhejiang’s Yiwu, Wenzhou, and other key foreign trade towns are similarly impacted, with export order declines putting businesses in a semi-dormant state. Fang Bang (alias), an operator of a footwear export factory in the area, disclosed to Dajiyuan that although there are still orders, prices have been driven very low by international buyers, with little to no profit margin left. He said, “Previously, a pair of shoes could earn two to three US dollars, but now we can only make a few cents, while bearing the constantly rising costs of raw materials, labor, and transportation. What money can we make? Eighty percent of Wenzhou’s shoe factories have had their orders transferred to Vietnam and Malaysia.”
Fang Bang mentioned that a friend of his working within the system advised him to relocate the factory to Southeast Asia. “A friend of mine from the Industry and Commerce Bureau advised me earlier this year to move the factory abroad. He said that the global industrial chain is leaving China, do you know how many companies are closing every day? If you don’t leave now, it may be too late in the future.”
According to information from within the system quoted by Fang Bang, based on internal statistics from the Zhejiang Industrial Association, hundreds of small and medium-sized export factories chose to halt production or shut down in just the first half of the year, with more companies in a state of “semi-stagnation.”
Several interviewees expressed that the current predicament is not solely due to Western countries restricting Chinese products; China’s own business environment, including policies like “mandatory social security” and heavy penalties imposed on enterprises, also make it difficult for factories to operate smoothly.
Shen Zhiyong (pseudonym), an economic consultant for businesses focusing on US-China trade in Zhejiang, told reporters, “In the midst of geopolitical confrontation: firstly, as US-China tensions continue to escalate, some customers are opting for the ‘China +1’ model after the US imposed additional tariffs, turning toward the markets in Southeast Asia and South Asia. Secondly, rising wages and environmental protection costs in China’s coastal areas are causing the gradual loss of traditional cost advantages.”
Huang Wei (alias), a sales manager at a toy export company in Yiwu, lamented, “We have been in this industry for over twenty years, never did we expect that one day Vietnam and India would compete with us in pricing, even offering lower prices than us. From March this year until now, our orders are more than halved compared to last year. Some of my old customers keep reminding me to diversify risks. If I redirect products from other countries to the US, customs in Vietnam and Malaysia are scrutinizing goods imported from China; if they are found, additional taxes will be imposed, leading to not only no profit but also losses.”
An unnamed economist in Beijing indicated that the shutdowns and reductions of foreign trade factories in Guangdong, Zhejiang, Jiangsu, and other locations signify that China’s export-oriented industries have entered an irreversible situation. To find a new position in the reconstruction of the global industrial chain, Chinese authorities must earn the trust of Western countries such as the US and Europe, “which currently seems difficult to achieve.”
Interviewees generally believe that with the continued shift of the global industrial chain out of mainland China, manufacturing orders continue to decrease, and foreign trade enterprises and manufacturing are constantly shrinking. As Fang Bang said, “It’s not that we don’t want to persist, but the question is, is there still a future in continuing?”