China dominates global manufacturing, producing a staggering US$5.65 trillion in value-added industrial output in 2024—making it the world’s largest manufacturing hub for 15 consecutive years. For global manufacturing businesses—whether you produce electronics, machinery, textiles, or consumer goods—entering China offers a chance to tap into a massive market, a skilled workforce, and a strong supply chain. However, doing so is not without its hurdles, be it navigating regulatory complexities to standing out among fierce competition.

This guide explores both common opportunities and challenges you may face in physically and or digitally expanding into China.

You’ll find in each section a breakdown addressing:

Physical expansion to China - this is defined as setting up a production facility, warehouse, or distribution center to manufacture goods directly in the market.

Digital outreach to China - this is defined as marketing and/or selling products online to Chinese consumers. It also includes opportunities related to digital engagement with partners and suppliers with online platforms as the primary means of connecting with the local market.

TL;DR: China’s US$5.65 trillion manufacturing sector offers unmatched opportunities for global businesses in 2025— competitive labor costs, a skilled workforce, and over 1 billion internet users for digital sales. Expand manufacturing in China physically with factories in hubs like Shenzhen, or tap into digital outreach via platforms like Alibaba and Tmall. Success hinges on navigating strict regulations, IP risks, and China’s unique online ecosystem. Strategic planning and local expertise are key to unlocking China manufacturing opportunities, whether building plants or boosting e-commerce sales.

Disclaimer: This guide is informational and does not constitute legal advice. Chinafy is not a legal or corporate advisory entity, and, given that every business is different, we suggest consulting with your internal legal counsel if you would like advice on any legal or compliance-related concerns, or alternatively we can connect you with one of our partners.

Let’s dive into some of the opportunities China could offer your manufacturing business and what you’ll need to consider.

What are the biggest opportunities for manufacturing businesses in China in 2025?

1. Tap into the world’s largest manufacturing market

China’s sheer scale is unbeatable when it comes to manufacturing. With a population exceeding 1.4 billion and a growing middle class, demand for manufactured goods—from consumer electronics to industrial machinery—is massive. In 2024, industrial output hit US$5.65 trillion, and 2025 projections suggest continued growth as urbanization and consumption rise.

Opportunity for physical expansion: Setting up a manufacturing plant or distribution center in China cuts shipping costs and speeds up delivery to local customers. High-growth regions like the Pearl River Delta (e.g., Shenzhen, home to Huawei) or Yangtze River Delta (e.g., Hangzhou, home to Alibaba) are prime spots due to their industrial clusters and infrastructure. Producing consumer electronics in China can serve both domestic and export markets efficiently.

Opportunity for digital outreach: Selling through cross-border e-commerce platforms like Alibaba’s Tmall Global or JD.com that handle logistics, payments and regulatory compliance is one way to reach Chinese consumers digitally. For example, a foreign furniture manufacturer could sell directly to Chinese households without needing a physical presence in China.

2. Leverage a skilled and cost-effective workforce

China’s labor force is vast and skilled, with average manufacturing wages around 103932 CNY (~US$14,000) annually in 2023, compared to around US$54,000 per year in the US, based on hourly averages. Combined with technical expertise in areas like electronics and machinery, it’s a draw for production efficiency.

Opportunity for physical expansion: Manufacturing businesses looking to expand to China can open factories to capitalize on the skilled and cost-effective workforce. For instance, electronics manufacturers can produce goods at lower costs than in Western markets, especially in tech hubs like Shenzhen.

Opportunity for digital outreach: Global businesses can source products from Chinese manufacturers to sell online globally and back to China, keeping prices competitive. A U.S.-based toolmaker, for example, could contract Chinese factories and market the goods via e-commerce.

3. Benefit from established supply chains

China’s supplier network is a global benchmark, offering everything from raw materials to components at scale. This reduces production delays and costs, especially in industries like automotive parts or consumer goods.

Opportunity for physical expansion: Setting up near supplier hubs—say, Ningbo for shipping or Dongguan for electronics—can streamline operations. A machinery manufacturer could source steel locally and assemble on-site, slashing lead times. Expanding physically into China also positions businesses closer to the rapidly growing Asia-Pacific market.

Opportunity for digital outreach: Using China’s supply chain is a cost-efficient way to fulfill online orders efficiently. A toy company could source plastic parts from China, assemble elsewhere, and sell to Chinese consumers via JD.com, benefiting from fast shipping.

4. Align with government-led incentives

China’s “Made in China 2025” initiative pushes high-tech industries—AI, robotics, EVs—with tax breaks, subsidies, and land grants, especially in special economic zones like Shenzhen or the Greater Bay Area.

Opportunity for physical expansion: Businesses can build facilities in incentivized zones to cut costs. High-tech firms (e.g., robotics) could establish a plant in Shenzhen, tapping into tax incentives like 15% CIT (compared to the standard 25%).

Opportunity for digital outreach: Albeit an indirect incentive, global manufacturers can align with government priorities for technology visibility by marketing high-tech products to Chinese consumers via platforms like Douyin.

5. Optimize for digital-first consumers

With over 1 billion internet users, Chinese consumers rely on platforms like Alibaba, WeChat, and Pinduoduo for purchases, from industrial equipment to everyday goods.

Opportunity for physical expansion: Manufacturers in China can integrate with online B2B marketplaces like 1688.com for direct sales and leverage WeChat for direct communication and deal-closing.

Opportunity for digital outreach: As well as listing on cross-border e-commerce platforms, global brands can leverage channels like Baidu SEO to drive more China traffic to their website. As many global sites face loading issues in China and have a limited digital presence by default, a fast and functioning website, China-specific marketing strategy, Baidu SEO can put you ahead of other global competitors.

See how your site loads in China

6. Maximize export potential

Note: 2025’s geo-political climate may impact some of the opportunities associated with the US e.g., Trump introducing a 10% levy on Chinese goods imported to the US.

China exported around US$3.58 trillion of goods in 2024. The same year, the US imported US$401.8 billion worth of Chinese goods, accounting for 13.5% of all US imports. China’s logistics—ports like Shanghai and high-speed rail—make it ideal for efficient exports.

Opportunity for physical expansion: Manufacturers in China have opportunities to export to countries all over the world and leverage lower costs and proximity to markets like Southeast Asia.

Opportunity for digital outreach: Use China as a hub to source and ship products worldwide via third-party logistics providers and platform partners, selling back to China or elsewhere with efficient logistics. Global manufacturers may also wish to leverage partnerships with Chinese exporters for global distribution so that the Chinese partner acts as the local arm.

7. Cater to industrial and consumer demand

China’s role as a manufacturing and tech hub drives demand for both industrial goods (e.g., machinery) and consumer products (e.g., appliances), fueled by urbanization and infrastructure projects.

Opportunity for physical expansion: There are opportunities to target industrial zones like Guangdong, Jiangsu and Zhejiang with machinery or consumer markets in Tier 1 cities like Beijing, Shanghai, Guangzhou, and Shenzhen with home goods.

Opportunity for digital outreach: Global brands can penetrate the market digitally via channels like WeChat or Baidu to sell industrial tools or consumer products online to Chinese businesses and households.

In short, China’s scale, workforce, and infrastructure make it a manufacturing magnet. Whether you’re setting up a physical presence or selling online, the potential is huge—but it’s not without its hurdles.

What challenges do manufacturing companies face in China?

1. Navigating regulatory and legal complexity

China’s business environment is heavily regulated, with rules on foreign investment, environmental standards, and labor laws. Setting up a physical entity often means registering as a Wholly Foreign-Owned Enterprise (WFOE) or joint venture.

Physical challenge: Securing permits—like environmental approvals or the China Compulsory Certification (CCC) for product safety—can take months. Partner with local legal experts to navigate the maze.

Digital challenge: Online sales require compliance with e-commerce and data privacy laws (e.g., PIPL). Ensure your site avoids restricted content and meets cross-border trade rules.

Disclaimer: This guide is informational and does not constitute legal advice. Chinafy is not a legal or corporate advisory entity, and, given that every business is different, we suggest consulting with your internal legal counsel if you would like advice on any legal or compliance-related concerns, or alternatively we can connect you with one of our partners.

2. Adapting to cultural and consumer differences

Chinese preferences—like collectivism or trust in local brands—differ from Western norms, and business relies on relationships (guanxi).

Physical challenge: A factory without Mandarin-speaking staff or local supplier ties might struggle. Hire local managers to bridge cultural gaps and tailor products to needs and tastes (e.g., smaller appliance sizes for compact urban homes).

Digital challenge: Failing to tailor your website to cultural differences, including preferred payment options like WeChat Pay, could significantly impact your growth in the Chinese market. Localize your online presence through research or collaboration with local agencies.

3. Facing intense local competition

China’s homegrown giants—like Haier, BYD, or state-supported firms riding the “Made in China 2025” wave—dominate the landscape. These players wield cost advantages, deep supply chain integration, and fierce brand loyalty from local consumers, making it tough for newcomers to break in.

Physical challenge: Matching local pricing or outpacing their innovation is a steep climb. To stand out, lean into what sets you apart and use global reputation wisely by targeting segments where locals haven’t locked in dominance yet.

Digital challenge: Competing for visibility on platforms like Tmall or outranking locals on Baidu demands significant investment and expertise. Their head start in ad spend and platform algorithms can feel insurmountable. Partnering with a local digital agency can level the playing field.

Read the Baidu SEO Guide for Manufacturing Businesses

4. Finding a place in China’s digital ecosystem

China’s internet is powered by giants like Alibaba, Tencent, and Baidu. This unique digital world demands adaptation, not just imitation, from foreign players.

Physical challenge: Manufacturers setting up in China can’t rely on familiar Western tools for sales or outreach. Platforms like 1688.com or WeChat are essential for B2B deals, but they can come with steep fees, Mandarin-only interfaces, and a learning curve. Bringing in local hires or consultants can smooth the transition and unlock these channels’ potential.

Digital challenge: Most global sites struggle with speed and accessibility in China, taking as long as thirty seconds to visually load if they even load at all. Chinafy can help you achieve near-native onshore performance, whether your site is hosted inside or outside of China.

5. Managing intellectual property (IP) risks

While China’s IP enforcement has tightened, the risk of theft or knockoffs still exists, especially for cutting-edge tech or unique designs. It’s a hurdle that can’t be ignored.

Physical challenge: Safeguarding your IP in a factory setting means filing patents early, segmenting your manufacturing to different plants, and keeping an eye out for similar products.

Digital challenge: Online, counterfeiters can permeate platforms like Taobao with rip-offs of your goods. Global manufacturers can team up with local IP experts who know the e-commerce legal ropes to protect your brand.

6. Overcoming supply chain and operational hurdles

China’s scale is a double-edged sword. Its vast geography and occasional global bottlenecks—like port jams or trade spats—can snarl production and shipping, especially if you’re inland or reliant on imports.

Physical challenge: Local sourcing might save time but compromise quality, while importing raw materials risks tariffs and delays. Build a nimble, localized supply chain and vet suppliers rigorously, keeping backup options ready to avoid disruptions.

Digital challenge: Online shoppers in China hate delays as much as anyone. Slow shipping can tank your reputation. Stash inventory in-country or link up with logistics pros who offer real-time tracking (think WeChat updates) to keep customers happy and loyal.

7. Adapting to shifting government policies

China’s government often moves fast and these shifts can jolt your costs or operations overnight.

Physical challenge: A sudden emissions crackdown might mean retrofitting your plant or facing fines. Stay ahead by designing flexible facilities (e.g., modular setups) and keeping an eye on policy signals from Beijing.

Digital challenge: New regulations, like the Personal Information Protection Law (PIPL), can impact your online targeting or data strategy. Hosting data locally might be necessary for your business, and your marketing needs to take cybersecurity rules into account.

China’s manufacturing market is packed with skilled labor, a billion online buyers, and unmatched scale. But it’s no easy feat. Whether you’re planting a factory in Shenzhen or pushing products on Tmall, winning means mastering regulations, localizing, and choosing the right partners. Some examples include Chinafy for web performance optimization or local Chinese marketing agencies for localization strategies.

Get in touch to see how Chinafy can support your China initiatives by making your website load fast and fully for consumers in China, or connect you with agencies to localize your approach.