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China remains the leading hub for small home appliance manufacturing despite recent fluctuations in U.S. tariffs over the past six months, prompting some small- and medium-sized exporters to consider setting up factories abroad, according to industry sources.
Six months ago, Luckyway Home Appliances planned to establish overseas facilities in Cambodia or Malaysia. However, after conducting on-site evaluations, the company decided to abandon those plans, as the General Manager explained. A significant portion of Luckyway’s electric fan exports goes to the United States, yet the company continues to manufacture entirely at its facility in Zhongshan, in southern Guangdong Province.
“The electricity supply in Cambodia isn’t reliable, and the monthly wages for Malaysian workers have increased to around CNY 3,700 to CNY 3,800 (about USD 519 to USD 533),” the manager noted. “If the difference in export tariffs between China and Malaysia isn’t significant, then building a factory in Malaysia doesn’t necessarily offer a cost advantage.”
Wages for Malaysian workers have risen approximately 7 to 8 percent over the past six months, and rental costs for factories have also gone up. The industry’s manufacturing costs and supply chain capabilities in China remain the most competitive worldwide, he added.
Another obstacle for Chinese small appliance companies expanding overseas is the lack of robust supply chain support. Hu Hai, chairman of a prominent industrial park in Mexico, highlighted that the supply chain for white goods there is significantly less developed compared to China. Mexico struggles to meet the demands of Chinese companies operating in the region.
For smaller home appliance manufacturers that do not heavily depend on the U.S. market, there is generally less motivation to establish overseas factories. Yu Xuehui, founder of a prominent appliance store in Cixi—known as China’s small home appliance hub—shared that only about 15 to 20 percent of the appliances produced in Cixi are exported to the U.S.
Local exporters tend to adopt a cautious approach toward overseas expansion, often opting to wait and monitor market conditions. “Their main strategy is to shift focus to other markets if US penetration becomes too challenging,” Yu explained.
In the Ningbo area, where Cixi is located, more than 3,000 home appliance companies operate, but only about 20 have established production bases abroad. Small appliance manufacturers generally lack the capacity for large-scale management of overseas facilities, making remote control of these plants a challenge for many.
Industry insiders emphasize that amid complex and shifting trade policies, smaller manufacturers face significant hurdles in setting up overseas factories. The key to navigating rising tariffs is to focus on product innovation and diversify market avenues.
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