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The End of the Vietnam Model and a New Starting Point for Chinese Enterprises' Globalization
Global Strategic Restructuring in the Era of De-Globalization
May 29, 2026, the Office of the United States Trade Representative (USTR) officially announced the launch of a Section 301 investigation into Vietnam. Ostensibly, the probe focuses on Vietnam’s intellectual property rights (IPR) protection and enforcement; yet within the broader context of international trade and economics, the signal it sends extends far beyond IPR alone.
Over the past few years, Vietnam has been viewed as a key recipient of global supply chain restructuring and a vital option for many Chinese enterprises to cope with China–US trade frictions, mitigate tariff impacts, and rebuild export routes. However, as the US begins to pressure Vietnam via a Section 301 investigation, a reality is becoming increasingly clear: the globalization model centered on relocation through third countries is approaching its limits.
This comes as no surprise. Years ago, when numerous Chinese enterprises expanded into Vietnam, Mexico, Thailand and other locations, I put forward a judgment: if an enterprise’s primary motive for overseas investment is not to serve local markets, participate in industrial upgrading, or build long-term international competitiveness, but merely to alter the country of origin and evade trade barriers, such a model is essentially policy arbitrage.
Policy arbitrage can deliver short-term gains but rarely fosters long-term value. Once the international political landscape, trade rules and regulatory logic shift, business models built on policy loopholes will expose profound vulnerability.
Vietnam today epitomizes this logic.
According to data released by Bắc Ninh Province, nearly 1,400 Chinese enterprises currently operate locally, accounting for 42.1% of all foreign direct investment (FDI) projects; their registered capital totals approximately US$10.8 billion, representing 23.7% of local foreign investment. China has become the largest source of foreign investment in Bắc Ninh. Chinese capital is flowing into Vietnam at an unprecedented pace across electronics manufacturing, photovoltaic modules, energy storage equipment and the consumer electronics industrial chain.
Yet it must be noted that this investment growth does not entirely stem from natural expansion of local market demand. A significant number of enterprises chose Vietnam after the US imposed tariffs on Chinese goods, seeking to change production locations to alter country-of-origin determinations and maintain access to European and American markets.
This model may have worked in an era of abundant globalization dividends, but its sustainability is rapidly declining in the current international environment. Today’s world is no longer defined solely by traditional trade competition, but by industrial chain rivalry, supply chain competition and national security struggles. The US and EU increasingly view international trade through the lens of industrial security, technological security and supply chain resilience. Locating factories in Vietnam, Mexico, India or Eastern Europe does not necessarily eliminate risks. As long as Chinese enterprises control the core of the industrial chain, and capital, technology, equipment, key components and management systems remain predominantly Chinese, so-called “de-Sinicization” may amount to mere geographical relocation rather than substantive systemic restructuring.
A clear trend has emerged from US policy shifts in recent years.
Initially, the US focused on where products come from.Subsequently, it began focusing on which enterprises are involved.Later, it turned its attention to where capital originates.
Today, the US is further scrutinizing who controls the entire industrial chain.
This shift in regulatory logic means that simple third-country transit models can no longer meet international market requirements for supply chain transparency, country-of-origin authenticity and industrial chain security.
The Vietnam investigation may only be the beginning. In the coming years, Mexico, Thailand, Malaysia and parts of Eastern Europe could face similar scrutiny. The US and EU are gradually strengthening institutional tools such as country-of-origin determinations, supply chain tracking, forced labor reviews, export controls, IPR protection and industrial security screenings. The traditional model of securing market access through geographical relocation will become increasingly ineffective.
Thus, a critical question confronts Chinese enterprises: amid rising de-globalization and intensifying geopolitical conflicts, how should we rethink our globalization strategies?
First, Chinese enterprises must shift from a trade mindset to an investment mindset.
Over the past four decades, Chinese enterprises have excelled at exports. Whether original equipment manufacturing (OEM), original design manufacturing (ODM) or brand exports, all have been fundamentally anchored in China’s role as a global manufacturing hub.
Yet future international competition will no longer hinge on simple commodity exports, but on the export of capital, technology, standards, management and industrial ecosystems.
A truly globally competitive enterprise should regard overseas factories not merely as production bases, nor reduce overseas investment to obtaining a new certificate of origin. Entering a country means integrating into its economy, creating local jobs, participating in local innovation, building local supply chains, fostering local brand recognition and forging long-term interest relationships with local communities.
Only then can enterprises become an integral part of the local economy rather than an external processing link.
Second, Chinese enterprises must evolve from cost-driven to market-driven strategies.
Many enterprises previously chose Vietnam for lower labor costs, Mexico for proximity to the US market, and Eastern Europe for EU market access. While these factors remain relevant, basing overseas expansion solely on cost, tariffs and distance reflects a low level of globalization.
Future globalization will increasingly prioritize market logic.
Enterprises must answer critical questions: What do local consumers need? What gaps exist in local industrial systems? Which industries do local governments aim to develop? What value can enterprises create for local societies? Can they help build local capacity for employment, taxation, technology, talent and industrial chains?
Only investments rooted in genuine market demand and social value possess long-term viability.
Third, Chinese enterprises must transition from isolated investments to global network deployment. Future globalization will no longer follow a simple “China headquarters + overseas factories” structure, but function as a distributed resource allocation network.
R&D centers may be located in Shenzhen, Shanghai or Suzhou.
Manufacturing hubs could be in Vietnam, Hungary or Mexico.
Supply chain management centers might be based in Dubai.
Marketing and operations centers may reside in Germany or the US.
Financing platforms could be established in Singapore or Hong Kong.
Regional headquarters may be situated in Saudi Arabia, the UAE or Europe.
Enterprises need to build not just new low-cost manufacturing bases, but a global value network spanning R&D, manufacturing, supply chains, marketing, capital, compliance and branding.
Most importantly, Chinese enterprises must shift from risk avoidance to risk management.
Many enterprises previously expanded overseas to seek regions with looser regulations, lower costs and more favorable policies. This logic will become increasingly risky in the future.
Mature global enterprises do not seek risk-free locations, but build capabilities amid risks.
These capabilities include geopolitical judgment, international legal compliance, global tax planning, IPR governance, ESG management, cross-cultural organizational skills, public relations expertise and the ability to engage with host governments and societies.
Such capabilities will gradually become core components of enterprises’ international competitiveness. In short, future success in globalization will depend not only on production capacity, costs and orders, but on governance, compliance and trust-building capabilities.
History shows that every restructuring of the global order eliminates some enterprises while forging new global leaders.
Chinese enterprises stand at such a historical juncture. Remaining stuck in the cycle of evading scrutiny via third countries and relocating production to low-cost nations will lead to entanglement in new trade barriers, compliance reviews and policy risks.
Yet by leveraging this round of global industrial chain restructuring, enterprises can transform from trade-based globalization to investment-driven globalization, from manufacturing-focused globalization to value chain-centric globalization, and from cost advantages to innovation advantages. This will usher in a true era of globalization for Chinese enterprises.
The Vietnam Section 301 investigation is a specific incident, yet it reveals a deeper reality: the old era of globalization is ending, and a new one is taking shape.
The future belongs to enterprises that integrate into the world, create value, build trust and assume responsibility—not those that merely exploit policy arbitrage opportunities. For Chinese enterprises, this represents both a challenge and a historic opportunity to redefine global strategies.
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