In the context of China’s industrialization process not yet ending, the global value chain facing restructuring, and the trend of economic “destabilization to imagination” being obvious, does the rising factor costs exacerbate the risk of “hollowing out” of China’s manufacturing industry through the rapid growth of OFDI? Based on this, this paper uses the interprovincial panel data of 11 provinces along the eastern coast from 2004 to 2017 to study the relationship between factor cost, OFDI, and industrial “hollowing out” with reference to the standard structure model of Channery. The results show that the rise of factor costs in China does cause the phenomenon of “hollowing” of the industry, and the rise of labor costs is an important driver of the “hollowing” of the industry; factor costs can accelerate the “hollowing” of the industry through foreign direct investment. Among them, the mediation effect of labor cost accounts for the largest proportion of the total effect. We should scientifically regulate production factor costs, promote Made in China 2025, and vigorously develop high-tech industries; at the same time, we should insist on opening up to the outside world and build a trinity of “industry-business-finance” as the main structure of the foreign direct investment.