China Plus One: Logistics of Moving Production to Thailand

Many Chinese manufacturers, and foreign companies that buy from China, are adding production in Thailand. The reasons vary: customers asking for a second source, tariffs and trade measures aimed at goods from China, access to ASEAN markets, or simply spreading risk. Most of the attention goes to land, incentives and labour, but whether the new factory works in practice is often decided by logistics. Components still have to come from China, at least at first. Machinery has to be moved and installed. Inputs have to enter Thailand under the right customs regime, and finished goods have to leave with documents showing where they were made. This guide walks through the logistics questions behind a China plus one move to Thailand: site choice, inbound components, BOI privileges, free zones and bonded warehouses, machinery relocation, export origin and the documentation that supports it, and how to phase the move. It does not cover investment approvals, company law or tax in detail; for those, work with the Thailand Board of Investment (BOI) and your legal and tax advisers.

What is China plus one, and why does logistics decide whether it works?

China plus one is a sourcing and manufacturing strategy in which a company keeps production in China but adds at least one other country, such as Thailand, to reduce dependence on a single base; logistics decides whether it works because the new site still depends on Chinese inputs and must prove its own origin.

The term covers a range of set-ups. At one end, a buyer simply qualifies a Thai supplier alongside its Chinese ones. At the other, a Chinese manufacturer builds or leases a factory in Thailand and moves part of its production, sometimes whole lines. In between are contract manufacturing arrangements, joint ventures and final-assembly plants fed by components from China.

In almost every version, the Thai operation starts with a supply chain that still runs through China. Components, moulds, sub-assemblies, packaging and spare parts often continue to come from existing Chinese suppliers until local sourcing is developed, and in some industries that never fully happens. So the new factory is not an independent unit; it sits at the end of an international inbound flow and the start of an outbound one.

That creates three logistics tests. The first is reliability: can components arrive steadily enough to keep the line running, with buffers sized for the transport mode and its variability? The second is cost of the inbound regime: are inputs paying import duty, or entering under a scheme that relieves it for export production, and can the company manage the records that scheme demands? The third is origin: when the finished product leaves Thailand, does it qualify as Thai under the rules of the market it is going to? A move that passes the first two but fails the third may find that its exports are treated as Chinese anyway. The decision tree after this section shows how these questions should shape the site choice.

Which logistics questions should you answer before choosing a site?

Before choosing a site, decide where most output will be shipped and by which mode, where inputs will come from and how, and which customs regime inputs will use; the answers point to specific locations, estates and port connections.

Thailand's industrial base is concentrated in a few areas, and each has a different logistics profile. The Eastern Economic Corridor (EEC), covering Chachoengsao, Chonburi and Rayong, sits close to Laem Chabang, Thailand's main deep-sea container port, and Map Ta Phut, which serves heavy and petrochemical industry. Estates around Bangkok and in the central region are closer to Bangkok Port and Suvarnabhumi Airport for air cargo. Northern and north-eastern locations are further from the main seaports but closer to the land routes towards Laos and southern China.

Useful questions for any shortlist:

• Where does output go? If most finished goods are exported in containers, distance and road access to Laem Chabang matter more than almost anything else. If output is sold mainly in Thailand, distance to customers and distribution centres matters more.
• Where do inputs come from? Sea freight from Chinese ports to Laem Chabang is the default for volume. If inputs come from southern or south-western China and timing matters, the China–Laos railway and the R3A road route through Laos may be options, which changes the picture for northern sites.
• Which inbound regime will you use? If you plan to hold imported inputs without paying duty for export production, check whether the estate has an IEAT free zone, whether a bonded warehouse is practical, or whether BOI privileges will cover your inputs.
• What do utilities, waste and permits require? Not strictly freight, but factory licensing, environmental requirements and utilities affect timing as much as transport does.

Estate operators, including those run by or co-developed with the Industrial Estate Authority of Thailand (IEAT), can describe their port access and zone options. Ask them specific questions about the trucks, containers and customs procedures your product will need, not just about land.

How will components keep moving from China to the Thai factory?

Most volume moves by sea from Chinese ports to Laem Chabang, with rail through Laos and road via the R3A route as options for some inland Chinese origins and urgent loads; the right mix depends on cost, volume and how much buffer stock you can hold.

Once production starts, the inbound flow becomes routine work that has to run every week. For most factories the backbone is sea freight: full container loads for regular, high-volume inputs, and consolidated LCL for smaller lines or new suppliers. Sea freight from China to Thailand is frequent and well served, but it is still subject to schedule changes, port congestion and rollovers, especially around Chinese holidays. Plan buffers for those, not just for the average voyage.

Land routes have become a real alternative for some flows. The China–Laos railway connects Kunming with Vientiane, and cargo can be transferred towards Thailand at the border; the R3A road route links Yunnan with northern Thailand through Laos. These options can suit inputs that originate in south-western China, or urgent shipments, but they involve transit procedures through Laos and border handling, so they need a forwarder who manages the full route. Our guides to China–Laos railway freight and R3A road freight explain the mechanics. Air freight remains the emergency option for urgent parts, tooling and samples.

A few practices make the inbound flow more resilient:

• Standardise documents. Use consistent product descriptions, HS codes and part numbers across Chinese suppliers' invoices, so clearance is predictable and matches your BOI or bonded records.
• Consolidate at origin. If you buy from many Chinese suppliers, a consolidation point in China can turn many small shipments into fewer containers with one set of documents.
• Size buffers to the mode. Hold more stock for inputs that move by sea and have long lead times; hold less where a land or air fallback exists.
• Plan for Form E where duty is paid. If inputs are imported duty-paid, a valid Form E under the ASEAN–China FTA can reduce duty on eligible goods, so build its issue into the supplier process.

How do BOI privileges affect imported machinery and materials?

A Thailand Board of Investment (BOI) promotion can exempt or reduce import duty on approved machinery and on raw materials used to make exported goods, but only for items on approved lists and with stock and export reporting through the BOI's systems.

The BOI is the government agency that grants investment promotion in Thailand. For many manufacturing projects that relocate from China, a BOI promotion is part of the plan, and two of its customs privileges matter most for logistics: import duty exemption on machinery for the promoted project, and import duty exemption on raw and essential materials used to produce goods for export. The exact privileges depend on the activity, location and conditions in the promotion certificate, so read your own certificate rather than relying on general descriptions.

In practice, the privileges change the import process rather than removing it. Machinery and materials still go through Thai Customs clearance, but the import declaration uses the BOI privilege, which must match what the BOI has approved. For materials, the company usually keeps an approved list of materials with quantities linked to production formulas, imports against that list, and later reports exports to reconcile what was used. If the records do not reconcile, duty and penalties can become payable on the difference.

That has three logistics consequences. First, product descriptions and HS codes on supplier invoices must match the approved lists closely, so the purchasing team, the supplier and the customs broker need the same master data. Second, materials imported under the privilege are for the promoted export production; using them for domestic sales or moving them elsewhere has consequences and needs to follow BOI procedures. Third, timing matters: the privilege needs to be in place before the shipment is cleared, so start the approvals early enough that the first containers do not have to be cleared duty-paid while you wait. Our guide to BOI import duty exemption and freight covers how the privilege is used at clearance. Confirm current procedures with the BOI and your customs broker.

Free zone, bonded warehouse or duty-paid import: which inbound regime fits?

A free zone suits export manufacturing inside a zoned estate, a bonded warehouse suits a factory outside a zone that wants duty suspended on stored inputs, and duty-paid import with FTA preferences suits mainly domestic sales or simple set-ups; BOI can sit alongside these.

BOI is not the only way to relieve duty on inputs. Thailand also has customs regimes that suspend duty while goods are held for processing or re-export, and the right choice depends on where the factory is, how much is exported and how much record-keeping the company can sustain.

A free zone is a designated area where imported goods can be stored and processed without paying import duty and VAT while they remain in the zone. There are two main types relevant to factories: free zones inside industrial estates operated under the Industrial Estate Authority of Thailand (IEAT), and Customs free zones approved by the Thai Customs Department. Goods that leave the zone for export do not attract Thai import duty; goods that leave for the Thai market are treated as imports at that point. Our guides to what a free zone is and to IEAT free zones versus Customs free zones explain the difference.

A bonded warehouse is a licensed facility where imported goods are held under customs control with duty suspended until they leave. Manufacturing bonded warehouses allow processing inside the bonded premises. They can suit a factory that cannot locate in a free zone but exports much of its output. The trade-off is strict stock accounting and customs supervision.

Duty-paid import is the simplest regime: inputs are cleared normally, duty and VAT are paid at import, and FTA preferences such as Form E under ACFTA or RCEP can reduce duty on eligible goods. For a factory that sells mainly in Thailand, or one whose inputs face low duty anyway, this may be the most practical choice. Thailand also has schemes to refund duty on imported materials used in exported goods; ask your customs broker whether they fit your flows. The matrix after this section compares the main options; our guide to free zones versus bonded warehouses goes deeper.

How do you move machinery and production lines from China to Thailand?

Treat the machinery move as a project cargo job: survey and document every item, plan dismantling, packing, lifting and transport, clear customs with BOI privileges where approved, and schedule reinstallation so production gaps are covered by stock or by the Chinese plant.

Moving production lines is very different from shipping components. Machines may be heavy, oversized, sensitive to vibration or moisture, and sometimes need to be partly dismantled. Some will move in standard containers; others need open-top or flat-rack containers or break-bulk shipping. Lifting at the factory, inland transport in China, port handling, ocean transport, handling at Laem Chabang and the final move into the Thai factory all have to be planned as one chain.

Key steps for a typical relocation:

• Survey and inventory. List every machine with dimensions, weight, model, serial number, year and condition, and photograph it before dismantling. This becomes the basis for packing, transport and customs.
• Dismantling and packing. Mark and document how each machine is dismantled, protect sensitive parts, and use export packing suitable for sea transport, including wooden packaging that meets ISPM 15 rules.
• Transport plan. Choose container types and routing per item, arrange cranes and permits for oversized loads, and confirm port handling capabilities.
• Customs and approvals. Check whether the machinery will be imported under BOI privileges, and whether used machinery requires any additional permission or inspection for your product category. Ask the BOI and the relevant Thai agencies before shipping; rules for used machinery can differ from new.
• Reinstallation and commissioning. Plan the installation sequence in Thailand with the equipment makers or your engineers, and allow time for testing and trial production.

The most common mistake is underestimating downtime. While a line is in transit, it produces nothing. Build stock in advance, keep the Chinese plant running on that product until the Thai line is validated, or move lines in stages. Our guide to factory machine relocation logistics covers the move itself in detail.

What makes a product made in Thailand for export origin purposes?

Origin depends on the rules of the importing market and the purpose: FTA preferences use product-specific rules such as change of tariff classification or regional value content, while non-preferential origin, used for tariffs and marking in markets like the United States, generally looks for substantial transformation in Thailand.

This is the part of a China plus one move that most often goes wrong, because it is easy to assume that anything shipped from a Thai factory is Thai. It is not that simple. Every importing country decides origin under its own rules, and there are two different questions.

The first is preferential origin: whether goods qualify for reduced duty under a free trade agreement, such as ATIGA within ASEAN, ACFTA with China, RCEP, or Thailand's bilateral agreements. Each agreement has rules of origin, often product-specific, based on concepts such as a change in tariff classification between the imported inputs and the finished product, a minimum regional value content, or specific processing operations. Meeting the rule lets the exporter apply for a certificate of origin, issued in Thailand mainly by the Department of Foreign Trade (DFT), or make an origin declaration where the agreement allows it. Our guide to types of certificate of origin explains which form applies where.

The second is non-preferential origin: what country the goods are considered to come from for ordinary tariffs, trade remedies, quotas and marking. Many markets, including the United States, use a substantial transformation test, broadly asking whether processing in the last country created a new and different article with a new name, character or use. Simple operations such as packing, labelling, minor assembly or dilution generally do not change origin.

For a factory that imports most components from China, the question is whether its operations are substantial enough. Final assembly of a complex product from many parts can sometimes confer origin; screwing together a few Chinese sub-assemblies usually will not. The answer depends on the product and market, and it can be decided in a ruling or audit long after shipment. Get advice for each main product and market before investment decisions are locked in.

How do you document origin so it stands up to an audit?

Keep an origin file for each exported product from the first production run: the bill of materials with HS codes and origins of inputs, supplier invoices and origin declarations, cost sheets, production records and process descriptions, and copies of certificate of origin applications.

Origin claims are checked after the fact. An importing country can ask the exporting authority to verify a certificate of origin, ask the importer for evidence, or send questionnaires to the producer. If the Thai factory cannot show how the product meets the rule, the preference can be denied retrospectively, and for non-preferential origin, goods may be treated as Chinese with whatever duties apply to Chinese goods. Either way, the cost lands after the goods have been sold.

The defence is a file that exists before anyone asks. Good origin files have common features:

• A bill of materials per product, listing each input with its HS code, supplier, country of origin and cost. This shows whether the tariff classification changes and supports value calculations.
• Supplier evidence, such as invoices and, where inputs are claimed as originating, suppliers' declarations or certificates.
• Cost sheets that tie materials, labour and overheads to the finished product, in a form an auditor can follow.
• Production records showing that the goods were actually made in the Thai factory in the quantities exported: work orders, routing, output records and, where useful, photos of key operations.
• Certificate of origin records, including applications to the DFT and any supporting documents submitted.

Keep HS classification consistent across the file. If inputs are classified one way on import declarations and another way in the origin calculation, an auditor will notice. Update the file when suppliers, materials or processes change, because a change of component supplier can change the origin result. The checklist after this section summarises the core contents; our guides to the types of certificate of origin and to applying for one in Thailand explain the DFT process.

Why does transshipment enforcement matter for a China plus one factory?

Importing countries, notably the United States, are tightening scrutiny of goods routed through third countries to avoid duties on Chinese products; a Thai factory with heavy Chinese inputs must be able to prove real manufacturing in Thailand or risk its exports being treated as Chinese.

Transshipment, in the sense regulators worry about, means goods made in one country passing through another and being declared with the second country's origin. In its simplest form, Chinese finished goods are relabelled in a third country. In subtler forms, a third-country factory performs operations too minor to change origin but still declares the goods as its own.

Because many China plus one moves are driven partly by trade measures on Chinese goods, customs authorities in destination markets pay attention to new exporters from Southeast Asia with large Chinese inputs. Enforcement tools include origin verifications, requests for production evidence, site visits, and penalties for false origin declarations. Policies in this area have been changing often, including duty rates on goods found to be transshipped, so treat any specific figure you hear as something to verify with an official source or a trade lawyer at the time of shipment.

For the Thai factory, the practical response is the same origin discipline described above, applied seriously: an honest assessment of whether the Thai operations confer origin for each market, an origin file that proves it, and consistent declarations across Thai export documents, certificates of origin and the buyer's import entries. Thai authorities also check certificate applications: the DFT has announced that, for a watch list of products exported to the United States, it verifies origin before issuing a general certificate of origin, so check with the DFT whether your product is on the current list.

Watch the commercial side too. Buyers increasingly write origin warranties and audit rights into supply contracts, and some ask for supply chain mapping down to raw materials. A factory that has built its file from the start can answer those requests quickly; one that has not may lose the customer even if its origin claim is sound. Confirm current rules for each destination market before committing volumes.

Which customs and HS code issues come up when production moves to Thailand?

The company must register with Thai Customs as an importer and exporter, classify both imported inputs and exported products consistently, and align HS codes across BOI lists, zone or bonded records, supplier invoices and origin calculations.

A new Thai factory needs its own customs footprint before the first container arrives. That typically means registering the company with the Thai Customs Department for electronic customs transactions, appointing a licensed customs broker, and, if relevant, setting up access to the BOI's systems or the free zone's procedures. Thai import and export declarations are filed electronically, so the company's master data, from addresses and tax ID to product codes, needs to be correct from the start.

HS classification sits at the centre of everything. An HS code, the Harmonized System code used to classify goods for customs, decides the import duty on each input, whether it fits the BOI approved list, whether an FTA preference applies, and how the origin rule is applied to the finished product. When production moves, new combinations of inputs and outputs appear, and classification mistakes that were invisible when the product was simply bought from China now affect duty, privileges and origin together. Our guide to what an HS code is explains the structure.

Practical steps:

• Build a classification table for all regular inputs and finished products, agreed with your customs broker, and use it in purchasing, supplier instructions and declarations.
• Consider advance rulings for products where classification or origin is uncertain; Thai Customs offers advance rulings, and some importing markets offer them too.
• Align valuation. If inputs come from related Chinese companies, transfer prices affect customs value, so make sure the pricing and documents can be explained; our guide to customs valuation in Thailand covers related-party issues.
• Plan for audits. Thai Customs can review declarations after clearance, and BOI and zone records can be reconciled against them, so keep records consistent.

How should you phase a China plus one move to keep supply running?

Phase the move: map inputs and markets, choose the site and inbound regime, complete registrations, move machinery and run trials, build the origin file and obtain first certificates, then ramp up while keeping a fallback supply from China until Thai output is stable.

Moves that go badly usually try to do everything at once. A phased plan reduces the risk of a supply gap and gives time to fix the problems that only appear when real containers start moving.

• Map inputs and markets. For each product, list inputs, current suppliers, which can be sourced in Thailand or ASEAN and which must stay in China, and the destination markets with their origin rules.
• Choose site and inbound regime. Use the logistics questions above. Decide early between BOI privileges, a free zone, a bonded warehouse or duty-paid import, because the choice affects the estate, the systems and the staffing.
• Complete registrations and procedures. Customs registration, broker appointment, BOI or zone system access, classification table and supplier document instructions should all be ready before the first shipment.
• Move machinery and run trials. Treat it as project cargo, keep the Chinese plant or stock covering demand, and validate the Thai line before committing customer orders.
• Build the origin file and get first certificates. Run the origin analysis on the first real production data, not on plans, and apply for certificates of origin only when the evidence is in place.
• Ramp up with a fallback. Increase Thai volumes step by step, keep a fallback supply from China for critical products, and review buffers as inbound routes settle.

Throughout, keep one owner for logistics data: part numbers, HS codes, approved lists and origin records drift apart quickly when purchasing, production, finance and the broker each keep their own versions. Thai Global Freight (TGF) can coordinate inbound booking from China, machinery shipments, documents and the customs handoff to your broker, so that the logistics side of the move runs to the same plan as the factory.