“Made in China” is becoming “made by China”—all over the world.
Faced with higher Western tariffs and weak demand at home, many Chinese factories are moving abroad, making everything from appliances to automobiles everywhere from North and South America to Eastern Europe.
More Chinese companies could be coming to the U.S., after President Trump and Chinese leader Xi Jinping reached a deal in Beijing this month to establish a new bilateral “board of investment.”
Yet many leaders, especially in the U.S. and Europe, worry the Chinese businesses are bringing China’s brutal rat-race competition with them, potentially crushing local incumbents and curbing salaries.
Gotion, a Chinese battery maker, planned to build a $2.4 billion plant in Michigan, but the project is at a standstill after years of local opposition over the company’s Chinese roots. Another Chinese battery maker, CATL, has had to settle for licensing its technology to companies such as Ford, which is building a $3 billion plant in Michigan to make CATL-designed batteries.
In Brazil and Hungary, electric-vehicle seller BYD has been dogged by complaints that Chinese migrant workers hired to build its factories were subject to labor rights violations, including what Brazilian authorities called slavery-like conditions. Some European Union officials fear BYD’s new plant in Hungary could undermine carmakers across the continent, threatening an industry that accounts for 7% of EU economic output and 13 million jobs.
BYD says it stopped working with its contractor for the Brazil factory and that it has zero tolerance for violations of human rights and labor laws across its operations. It has also said its Hungary business will create thousands of jobs, boost the local economy and support local supply chains.
“Our target is to be a more global manufacturer,” said BYD Executive Vice President Stella Li at a conference this month. “To build up more capacity overseas is the trend, is the business plan.”
CATL also has projects under way in Hungary, Indonesia and Spain. Household-appliance maker Midea, which has built production facilities in Brazil and Thailand, recently announced a partnership with Stockholm-based Electrolux to jointly run manufacturing operations in South Carolina and Mexico.
While local leaders often welcome such investments, critics fear China’s manufacturers could gain access to lucrative consumer markets without generating as much local employment or economic value as the firms they threaten to replace.
Several dozen Democratic lawmakers recently urged Trump to bar Chinese automakers from building cars in the U.S. and called for a ban of Chinese cars made in Mexico or Canada, saying, “We must not cede the American auto industry to a strategic competitor intent on global dominance.”
Details of the new U.S.-China investment board remain scant. A senior U.S. official said in the run-up to the recent Trump-Xi summit in Beijing that it would allow the two governments to consider Chinese spending plans in the U.S. and wouldn’t interfere with existing entities that screen investments for national-security risks, such as the Committee on Foreign Investment in the U.S.
Some economists say it will be hard to keep Chinese manufacturers at bay. After decades in which China churned out much of what the world consumed from within its vast borders, its factories now face overcapacity, cutthroat competition and weak domestic consumption. That has driven down prices and eroded profits, making owners wary of investing at home and eager to expand abroad.
Last year, Chinese outward direct investment rose 7.1% compared with a year earlier. A measure of domestic investment fell 3.8%, the first annual decline on record, according to government data.
Going overseas
Over the long term, economists say China’s push to expand its factory floor worldwide could entrench its position as the dominant force in global manufacturing. Chinese businesses call it chuhai in Mandarin, meaning “going overseas.”
Some policymakers believe the investments could help reinvigorate local manufacturing industries. When Japanese carmakers expanded in the U.S. in the 1980s and 1990s, it forced U.S. carmakers and suppliers to adopt new approaches that ultimately made those companies more resilient and benefited car buyers.
In Mexico, Chinese investment in industries such as the automobile sector generated more than 100,000 jobs from 2020 to 2023, according to one analysis.
“What we need is more Chinese foreign direct investments in Europe, in some key sectors, to contribute to our growth, to transfer some technologies and not just to export towards Europe,” French President Emmanuel Macron said at the World Economic Forum this year.
In 2024, Chery Automobile, China’s top car exporter, helped to rescue a small factory in Barcelona that struggling Japanese automaker Nissan no longer wanted. It took a 40% stake in a joint venture that invested 400 million euros, equivalent to $468 million, to relaunch production under the historic Spanish brand Ebro.
For locals, the venture has been a success. It directly employs roughly 1,600 staff, many of them previously laid off. It has set records for the growth of a car brand in Spain, boosting shares of Ebro EV Motor, the startup that controls the JV.
But EU Executive Vice President Stéphane Séjourné has criticized the arrangement, arguing it doesn’t help European industry. Under the hood, the technology and parts are mainly from China, though Ebro wants to increase the share of local content over time.
Séjourné is the driving force behind a EU plan to require some products, including cars, to contain a certain share of European components to qualify for public procurement or support.
The initiative, launched in March as the Industrial Accelerator Act, also attaches strings to foreign direct investment from China that is worth more than €100 million, equivalent to $116 million, in areas such as EVs, batteries and solar panels.
If the act makes it through the EU legislative process into law, Chinese companies in these sensitive sectors will need to commit to hiring locals for at least half their European staff, and pledge to transfer technology and buy European parts.
Chery didn’t respond to requests for comment.
Rising tensions
A number of Chinese carmakers are in discussions with European rivals about using their factories to build vehicles locally for the European market. Jeep maker Stellantis this month said it planned to build EVs with two separate Chinese companies in Spain and France. Ford and Geely are in discussions about a potentially similar deal in Spain, and have also discussed whether the collaboration might extend to the U.S.
Letting out spare factory space helps struggling European carmakers cover their high overheads. But analysts worry it also gives Chinese manufacturers an easier route into Europe, potentially bringing the intense levels of competition characteristic of China’s auto market to Europe.
Locals have also raised other concerns. In Hungary, residents and environmental groups protested the arrival of CATL and other battery makers, concerned about the projects’ environmental impacts.
In Brazil, authorities alleged last year that some Chinese workers hired to build BYD’s factory worked seven days a week and slept on beds without mattresses. One dormitory had one toilet for 31 people, they found.
Kelly Rao, founder of Jumpstart Asia Consulting, a Georgia-based staffing firm that has worked with Chinese firms investing in the U.S., said Chinese companies often struggle to adapt to local norms, especially around labor practices. Working overtime is commonplace in China, but is strictly regulated in the U.S.
“You cannot use the Chinese way,” Rao said.
Appliances overseas
Midea, the home appliance maker, grew into one of the world’s largest manufacturers of air conditioners and other appliances after its founding in southern China in 1968, mostly making products for other brands.
But it wasn’t until late 2023 that it really committed to selling products under its own brand and growing overseas, a strategy aimed at making Midea more resilient in the face of global trade tensions.
It opened a roughly $100 million factory in Brazil making refrigerators and washing machines in 2024. Its subsidiary, Welling Auto Parts, opened its first overseas manufacturing facility in Mexico last year.
“Domestically, incremental growth has stalled, stock growth is shrinking and a wave of new competitors is flooding in,” Midea Chief Executive Paul Fang said in a 2025 interview with Chinese publication LatePost. “That’s why we must look outward.”
Midea’s overseas sales have soared. For Western competitors, it has meant more tension, squeezing their profits and forcing some to consolidate or bail out of certain markets.
Electrolux, which makes Frigidaire brand refrigerators, has lost market share in the home appliance industry over time to Chinese firms. Its recently announced joint venture with Midea is designed to help shore up its North American business, by using Midea’s manufacturing know-how to try to gain share in the higher-margin laundry category and improve the cost-competitiveness of its refrigeration products.
In return, Midea gets a bigger foothold in the U.S.
Write to Hannah Miao at hannah.miao@wsj.com and Stephen Wilmot at stephen.wilmot@wsj.com
