Global manufacturing supply chains are undergoing one of the most significant transformations in recent decades. Rising geopolitical tensions between the United States and China, the long-term consequences of the COVID-19 pandemic, trade restrictions, and the risks associated with overdependence on a single manufacturing market are forcing multinational companies to reconsider their production and supply chain strategies.

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At the center of this transformation is the China+1 strategy — a business model in which companies maintain operations in China while simultaneously relocating part of their manufacturing capacity to other Asian countries. Thailand is increasingly emerging as one of the primary beneficiaries of this global shift.

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Today, the country is strengthening its position as a regional industrial and technology hub within Southeast Asia. Thailand continues to attract international manufacturers through its developed industrial infrastructure, strong automotive and electronics sectors, government investment incentives, and strategic location within the ASEAN region.

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Against the backdrop of record foreign direct investment (FDI), the rapid expansion of the EV industry, and the relocation of manufacturing operations by major global corporations, Thailand is increasingly viewed as one of the leading alternatives to China for global manufacturing and industrial supply chains.

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Thailand emerges as a key beneficiary of the China+1 strategy

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In recent years, Thailand has significantly strengthened its position as one of Southeast Asia’s leading manufacturing hubs. As global companies continue to implement the China+1 strategy, many businesses are relocating or diversifying production outside China to reduce geopolitical exposure, mitigate supply chain disruptions, and improve operational resilience.

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Thailand has become one of the main beneficiaries of this shift. According to JLL research, foreign direct investment (FDI) in the country’s manufacturing sector increased by approximately 29% from the pre-pandemic period, rising from $3.9 billion to $5.1 billion. The report compares the pre-COVID period with the post-pandemic investment environment observed in recent years, particularly between 2020 and 2024. Chinese investors now account for nearly 44% of total manufacturing FDI in Thailand, highlighting the country’s growing importance within regional industrial supply chains.

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Several factors continue to attract international manufacturers to Thailand, including its well-established automotive ecosystem, developed supplier network, strategic ASEAN location, and government-backed investment incentives. These advantages have positioned the country as an increasingly attractive destination for companies seeking long-term manufacturing stability outside China.

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Record investment applications reinforce Thailand’s growing industrial attractiveness

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In 2025, Thailand recorded one of the strongest investment surges in recent years, further reinforcing its position as a strategic manufacturing and technology hub in Southeast Asia. According to data from the Thailand Board of Investment (BOI), referenced by the Asian Macroeconomic Research Office (AMRO), the total value of investment applications during the first three quarters of 2025 reached approximately THB 1.37 trillion (around USD 42.2 billion), representing a 94% increase compared to the same period of the previous year.

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Notably, foreign investors accounted for nearly 80% of all submitted applications, highlighting strong international confidence in Thailand’s economic and industrial potential. Investment activity has been particularly concentrated in sectors identified by the Thai government as priorities for long-term economic transformation, including electric vehicle (EV) manufacturing, advanced electronics, semiconductor production, digital infrastructure, and data centers.

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The AMRO report also emphasizes Thailand’s active use of investment incentives through the Thailand BOI framework, including tax incentives, simplified procedures for foreign investors, and targeted support for high-tech industries. A significant share of new investments is being directed toward the Eastern Economic Corridor (EEC), a special economic zone designed to serve as a regional hub for advanced manufacturing, logistics, and technological innovation.

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Analysts associate this rapid growth primarily with the global China+1 strategy, under which multinational corporations are diversifying manufacturing operations outside China due to geopolitical tensions, trade restrictions, and the need for more resilient supply chains. Supported by its established industrial ecosystem, strategic ASEAN location, and developed infrastructure, Thailand continues to strengthen its role as one of the region’s leading industrial destinations.

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Thailand strengthens its position as Southeast Asia’s EV manufacturing hub

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Thailand is rapidly emerging as one of Asia’s most important centers of electric vehicle (EV) production, supported by aggressive government incentives and growing foreign investment from major global automakers. Traditionally recognized as the “Detroit of Southeast Asia” due to its long-established automotive manufacturing sector, the country is now repositioning itself as a regional EV and advanced mobility hub.

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According to Reuters, Thailand’s EV support measures have already attracted more than USD 4 billion in investment commitments from international manufacturers. Chinese automotive companies are among the most active investors, with brands such as BYD, Great Wall Motor, Changan Automobile, and GAC AION expanding production facilities and building local EV supply chains.

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The Reuters report highlights that the Thai government introduced extensive incentive programs to accelerate both EV production and domestic adoption. These policies include corporate tax incentives, reduced import duties, subsidies for EV purchases, and support for battery manufacturing and related infrastructure. Authorities have also adjusted certain EV policies to address concerns regarding potential oversupply and market balance as production capacity rapidly expands.

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Thailand’s long-term industrial policy sets an ambitious target for electric vehicles to represent approximately 30% of total domestic automobile production by 2030. This strategy forms part of the country’s broader economic transformation agenda focused on advanced manufacturing, green technologies, and high-value industries.

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One of Thailand’s strongest competitive advantages remains its mature automotive ecosystem. For decades, the country has served as a key production base for Japanese automotive manufacturers, resulting in a highly developed supplier network, an experienced industrial workforce, and an export-oriented logistics infrastructure. These existing capabilities make the transition to EV manufacturing significantly more efficient than in many neighboring countries.

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In parallel, the ongoing China+1 strategy continues to redirect manufacturing investment toward Southeast Asia. As multinational corporations seek to diversify production away from China amid geopolitical tensions and supply chain risks, Thailand is increasingly seen as a stable, strategically located alternative for regional manufacturing and exports.

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Global tech companies are relocating production outside China

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The ongoing China+1 strategy is no longer limited to theoretical discussions or long-term planning — major international technology companies are already actively relocating manufacturing operations outside China. One of the most notable recent examples is ASUS, which significantly reduced its dependence on Chinese production facilities amid growing geopolitical tensions and rising tariff risks.

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According to Tom’s Hardware, ASUS confirmed that more than 90% of its motherboard and PC production has already been moved out of China. The company redistributed manufacturing operations primarily to Thailand, Vietnam, and Indonesia as part of a broader effort to diversify supply chains and reduce exposure to trade restrictions between the United States and China.

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The report highlights that Thailand has become one of the key destinations benefiting from this manufacturing shift, thanks to its developed industrial infrastructure, established electronics ecosystem, and strategic location in Southeast Asia. For global manufacturers, relocating production to ASEAN countries allows businesses to maintain access to Asian supply chains while reducing geopolitical and operational risks associated with excessive concentration in a single market.

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Conclusion

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Recent developments show that Thailand is evolving far beyond its traditional image as a tourism-driven economy in Southeast Asia. The country is increasingly positioning itself as a major industrial and technology hub, attracting record levels of foreign investment across manufacturing, automotive, electronics, and EV industries.

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The expansion of industrial infrastructure, government-backed investment programs, large-scale projects within the Eastern Economic Corridor (EEC), and the growing presence of multinational corporations all indicate a long-term transformation of Thailand’s economic model. The country is becoming more deeply integrated into global supply chains while strengthening its role as a regional manufacturing platform for international business.

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For foreign companies, this may create significant opportunities for expansion into ASEAN markets, production localization, supply chain optimization, and access to one of the world’s fastest-growing economic regions. At the same time, for Thailand itself, this transformation could accelerate technological development, industrial growth, and the country’s transition toward a higher value-added economy.

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