Over the past few years, the most significant structural change in the power tool and outdoor power equipment industry has not been in product technology roadmaps or new product launches, but rather in the geographical relocation of manufacturing bases. Between 2025 and 2026, countries such as Vietnam and Thailand are progressively becoming key nodes for global manufacturing of power tools and outdoor power equipment. This trend is not a strategic choice of any single company, but an industry-wide phenomenon driven by tariff policy adjustments, changes in the international trade environment, and the restructuring of global supply chains.
Grinding, cutting, and polishing are the core application scenarios for power tools, and the abrasive tool industry has always been closely linked with the power tool industry. This industrial migration directly brings about a regional shift in supporting demand, a re-establishment of supply relationships, and potential changes in market shares.
Tariff policy adjustments become the main driver
The primary impetus for this round of manufacturing base relocation comes from changes in tariff policies. Since 2025, the United States has imposed additional tariffs on various goods imported from China, with power tools and outdoor power equipment placed in higher tariff categories, forcing relevant companies to rebuild production capacity overseas to maintain their North American market share. At the same time, Vietnam's revised Investment Law took effect in March 2026, implementing a "set up the enterprise first, then obtain approval" process outside the negative list, significantly shortening the landing cycle for foreign-invested enterprises and further strengthening Vietnam's appeal as a regional manufacturing hub. At present, the industry has initially formed a relocation pattern across Vietnam, Thailand, and Mexico, with the core objective being to adapt to U.S. tariff policies and ensure supply to the North American market.
Power tool OEMs accelerate their Southeast Asian expansion
Several leading companies have continued to expand their production capacity in Vietnam and elsewhere in recent years. Chervon Holdings has been building its presence in Vietnam since 2019, and by 2025, it had established a closed-loop local production system covering raw material procurement, assembly, testing, and shipping. In January 2026, its Vietnam New Energy Smart Manufacturing Industrial Park was officially inaugurated; according to internal estimates, Vietnam's capacity can temporarily cover approximately 50% of its export demand to the United States.
Great Star Industrial has established a multi-site presence in Vietnam, Thailand, and Cambodia. Phase III of its Hai Phong base in Vietnam commenced construction in 2025, and upon full completion of all five phases, its export target to the U.S. is set to reach USD 1 billion, with the company's overseas production capacity already exceeding 50%. TTI's Vietnam production value share has increased significantly by 2026, with its global production capacity distributed across China, Vietnam, and Mexico; the Vietnam plant is extending its functions from capacity transfer to engineering and technical support. Greenworks' Vietnam base had become its largest production base by 2026, accounting for about 60% of shipments, and the company continues to expand its Phase II project.
Mid-sized companies are also following suit at a notable pace. Jinfeda's Vietnam factory commenced production in January 2025, with two production lines and a workforce of just over 100 employees, taking on OEM orders covering international brands such as Bosch, Makita, and Dewalt. According to company disclosures, domestic orders shrank by nearly half, but after the Vietnam plant began operations, overseas orders doubled, resulting in an overall increase in total orders. Kaichuang Electric's project in Vietnam, with an annual production capacity of 800,000 handheld power tools, commenced production in mid-2025 and achieved sales revenue of RMB 56.1719 million in 2025. Tengya Precision announced in March 2026 its plan to raise funds through a private placement for its Vietnam power tool intelligent manufacturing project. In Thailand, Pride has announced in July 2026 its plan to increase capital in its Thai subsidiary by no more than RMB 423 million to build a 7-million-unit annual production project for DC lithium-ion power tools, with a construction period of five years.
Supply chain supporting industries follow suit
The industrial chain migration is not limited to final assembly; suppliers of core components are also accelerating their layout. Zhengbang Intelligence was approved in April 2026 to build its own production base in the Saigon Hi-Tech Park in Ho Chi Minh City, with a total investment of no more than USD 20.5 million, forming a global supply chain system that combines domestic R&D with overseas production. Beishida's Vietnam production base completed its first container shipment in April 2026, moving from the construction phase to mass delivery.
Demand changes facing the abrasive tool industry
The impact of the relocation of power tool manufacturing bases on the upstream abrasive tool industry is gradually becoming apparent.
In terms of total demand, abrasives, as consumables used in power tools for processes such as grinding, cutting, and polishing, have a market size that is highly correlated with the output of power tools. Industry convention estimates that the linkage coefficient between the abrasive tool industry (including grinding wheels, cutting discs, flap discs, sanding belts, etc.) and the output value of power tool finished products is approximately between 1:3 and 1:5. With the annual production capacity of major power tool OEMs' Vietnam bases already reaching several million units, the corresponding procurement volumes of abrasive consumables are shifting towards Southeast Asia accordingly.
In terms of supply relationships, power tool brands usually adopt a qualified supplier certification system for abrasive procurement, and once established, these partnerships tend to last for long periods. Following the relocation of manufacturing, the brand owners' procurement decision-making authority, quality acceptance checkpoints, and logistics delivery routes are all shifting towards Southeast Asia. Local abrasive suppliers in Thailand, Vietnamese domestic companies, and Japanese and Korean abrasive manufacturers with operations in Vietnam are likely to emerge as new supply options.
In terms of product structure, the growing popularity of lithium-ion cordless tools is changing the specifications and requirements for abrasive tool matching. Lithium-ion tools demand lighter weight, lower energy consumption, and higher cutting efficiency from abrasives. The R&D and testing processes for new products by power tool manufacturers have partially moved to their Vietnam bases.
Changes in orders, not a simple transfer
Many industry insiders believe that the current changes in orders are not simply a transfer from China to other regions, but rather a reconfiguration of the global supply chain. Multiple companies have reported that while orders in China have declined, export orders have actually grown after their Vietnam plants commenced production. The reason is that when brands rebuild their supply chains, they prioritize suppliers that already have production capacity in Southeast Asia, and once this binding is formed, it typically lasts for three to five years.
On the macroeconomic front, Vietnam's merchandise exports in 2025 reached USD 475.04 billion, with manufactured goods accounting for nearly 90%. The United States is Vietnam's largest export market, with export value reaching USD 153.2 billion. Exports of machinery, equipment, tools, and parts exceeded USD 55 billion, representing a year-on-year increase of 11.6%. The ongoing enhancement of Southeast Asia's manufacturing capabilities is seen more as part of a long-term industrial migration driven by trends such as lithium-ion battery adoption, cordless technology, and globalized business strategies.