Vietnam a fertile spot for growing Chinese factories

Meanwhile, a new factory in Ethiopia is under construction.

It will be launched next year to make products mainly for smaller European countries.

"Vietnam will follow in the footsteps of China sooner or later and lose the advantage of cheaper labor costs with higher economic development, so it is time for us labor-intensive companies to move on," said Li.

Ministry of Commerce data showed that the total amount of foreign investment in 2012, $111.72 billion, dropped 3.7 percent, while foreign investment used by the manufacturing industry, $48.87 billion, fell 6.2 percent.

"The slight drop was created by the normal move out of medium- and large-sized manufacturing-based enterprises from China to find a better solution for making lower-cost products," said Shi Jinchuan, dean of the College of Economics at Zhejiang University.

In fact, some Chinese enterprises have kept their major businesses in China and are using Vietnam only on a trial basis for production.

Having operated a factory in Vietnam for five years, Ningbo Powerway Group kept its research and design center, sales departments, major production lines and management teams in China and moved just a few minor production lines to Vietnam.

"We still have eight factories in China to be the OEMs (original equipment manufacturers) of well-known brands, and our factory in Vietnam could be applied as a backup production base for our company to expand to a larger market," said Zheng Xiaofeng, a senior management executive for Ningbo Powerway, a global supplier of non-ferrous alloys.

Powerway's strategy is to not expand its business in Vietnam in the long term.

"Vietnam will only be a temporary stop for our enterprise to walk onto the world stage. We will continuously focus on our brand building and product designing in China to attract more overseas clients," Zheng said.