Winners of “China Plus One” | ASEAN Five: From Becoming the “+1” to Becoming Themselves

By Jiuri in Tokyo

From 2022 to 2024, China invested an average of about $10 billion a year in ASEAN. By 2026, capital flows were shifting more visibly toward Southeast Asia as companies accelerated supply-chain diversification under the “China Plus One” strategy.

Five countries have emerged as distinct beneficiaries.

Vietnam has won through scale, Malaysia through technology, Thailand through industrial transformation, Indonesia through resource strategy, and Cambodia through latecomer advantage.

Together, they form the core ASEAN map of “China Plus One.” But they now face the same question: what happens when the relocation dividend fades?

The next stage is no longer about becoming someone else’s “+1.” It is about building industries that can grow on their own.

The First Step to Growth: Cost Advantages Do Not Last Forever

Cambodia represents the most extreme version of the low-cost model. Industrial land and labour remain significantly cheaper than in several neighbouring markets, while preferential trade arrangements have helped exporters lower tariff costs.

Vietnam also built much of its early “China Plus One” appeal on competitive manufacturing costs.

But those advantages are already weakening.

Wages are rising, infrastructure costs remain uneven, and preferential trade treatment can be reduced or withdrawn. In Cambodia, parts of the EU’s Everything But Arms preferences have already been suspended, while Vietnam has seen rising labour costs and increasing pressure on low-margin contract manufacturers.

Cost is often the first reason factories move.

It is also the easiest advantage to lose.

For ASEAN economies, genuine growth has to begin before the cost gap closes.

The Main Obstacle: Foreign Investment Does Not Automatically Create Local Strength

Vietnam’s export performance illustrates the problem.

Exports reached $266.5 billion in the first half of 2026, but foreign-invested companies accounted for almost 80% of the total. Domestic firms contributed only about one-fifth, and their exports declined even as foreign-invested exporters expanded.

Cambodia is even more dependent on external capital. China has remained its largest trading partner and investment source for more than a decade, while Chinese-funded companies dominate several special economic zones.

Malaysia has a stronger domestic industrial base, particularly in semiconductors, after decades of investment by companies such as Intel, AMD and Micron. Even there, however, the key question remains whether local firms can move up the value chain alongside multinational companies.

Foreign investment can lift GDP, employment and exports.

But the ownership of profits, technology and industrial capabilities is a different matter.

Relocation can be driven by foreign capital. Sustainable growth requires local capacity.

The Policy Window Is Also Closing

Thailand shows how powerful policy incentives can be.

Its EV programmes pushed automakers toward local production, helping attract seven major Chinese carmakers and turning Thailand into one of Southeast Asia’s fastest-growing electric-vehicle manufacturing centres.

Yet subsidies are gradually being reduced, localisation requirements are tightening, and regulators are paying more attention to product standards and after-sales services.

Indonesia has taken an even more assertive path.

After receiving more than $14 billion in Chinese investment in its nickel industry over the past decade, Jakarta began cutting mining quotas, tightening pricing rules and increasing control over exports.

Its objective is no longer simply to attract more investment. Indonesia wants better-quality investment, greater domestic value capture and eventually more influence over global nickel pricing.

Both cases reveal the same reality: policy advantages have a shelf life.

The long-term test begins when subsidies, tax breaks and preferential rules are no longer enough.

Infrastructure and Talent Will Decide the Next Stage

Each of the five economies also faces structural constraints.

Malaysia’s semiconductor expansion is running into shortages of experienced engineers and R&D talent, even as many entry-level workers compete for jobs.

Thailand has a mature automotive sector, but charging infrastructure remains a bottleneck for faster EV adoption.

Cambodia still faces relatively high electricity costs and uneven water and wastewater infrastructure outside major industrial zones.

Vietnam continues to wrestle with the gap between its export-oriented foreign-invested sector and weaker domestic companies.

Indonesia, meanwhile, risks undermining investor confidence if regulations change too quickly after large amounts of capital have already been committed.

The five countries therefore have different strengths—and different weaknesses.

Vietnam won through scale, but remains dependent on foreign-invested exporters.

Malaysia won through technology, but faces a talent bottleneck.

Thailand won through transformation, but cannot rely on subsidies forever.

Indonesia won through strategy, but greater regulatory intervention could discourage investors.

Cambodia won through latecomer advantage, but must upgrade before its cost and tariff benefits disappear.

“China Plus One” has given ASEAN a window of opportunity.

The real winners will be the economies that use that period not only to receive factories and investment, but to build domestic suppliers, technology, talent and infrastructure of their own.

The next chapter of ASEAN manufacturing will depend on whether these countries can turn imported momentum into indigenous industrial roots.

Commentary | Becoming Their Own Light

Becoming the “+1” describes the present.

Vietnam’s scale, Malaysia’s technology, Thailand’s transformation, Indonesia’s strategy and Cambodia’s latecomer advantage are five different ways of benefiting from supply-chain relocation.

Becoming themselves describes the future.

The relocation dividend will eventually weaken. The decisive question is no longer whether a country can attract the next factory or order, but whether that investment leaves behind local technology, domestic companies and a sustainable model of growth.

The five ASEAN economies are now moving along the same path: from becoming the “+1” to becoming themselves.

Whether they succeed will depend on how much they can build before the window closes.