Since 2000, particularly in the aftermath of the 2008 global financial crisis, China's ‘world factory’ has undergone dramatic transformation in response to the changing business environment at global, national, local and firm levels. A rich body of literature has examined the spatial transformation of manufacturing firms from coastal to inland China, while little attention has been paid to the market shift engaged by export‐oriented firms, particularly from exports towards China's domestic market. Taking electronics industry as a case, this study examines the process and trajectories of production relocation and market rebalancing of electronics firms during the period of 1998 and 2009. Drawing upon the global production networks (GPNs) framework, particularly the evolutionary strategic coupling, decoupling and recoupling dynamics, the study argues that China's ‘world factory’ has been restructured through divergent decoupling of electronics production and exports from coastal regions, for example, the Pearl River Delta (PRD) on the one hand, and selective recoupling with a small number of cities in inland regions and Yangtze River Delta. The spatial expansion of electronics exports and changing ratio of exports to sales outputs among various provinces elucidates the emerging attempts at developing domestic market‐oriented production networks, yet with limited penetration to the domestic market. Through transition from structural coupling to selective recoupling, electronics firms like Foxconn, a Taiwan‐based contract manufacturer for global lead firms, for example, Apple, have strategically leveraged among diverse regional production networks in China. The findings of the study could enrich the developing literature of GPNs, particularly the dynamic strategic coupling, decoupling and recoupling in the evolution of regional production networks in the changing global economy.