The world of global manufacturing and sourcing has seen some big changes in recent years. More and more companies are moving beyond China to set up new operations in other countries. This is what’s now widely known as the China+1 strategy.
1. 76% of U.S. companies with operations in China have explored or implemented a China+1 strategy by late 2023
Why this stat matters
Three out of four U.S. companies are no longer just thinking about diversifying — they’re doing it. And that means this isn’t just a trend. It’s a major strategic shift. The reasons are clear: trade tensions, rising labor costs in China, and the impact of COVID-19 lockdowns.
For U.S. businesses that have been relying heavily on Chinese suppliers, this shift is a way to avoid being caught off guard. Diversifying helps you protect your supply chain, especially when the global situation becomes unpredictable.
What this means for your brand
If you’re a U.S.-based company still relying only on Chinese manufacturing, this stat should be a wake-up call. You’re behind 76% of your peers who are already taking steps to reduce their risks.
You don’t need to shut down your China operations. That’s not what China+1 is about. It’s about balance. Start small—consider moving one product line, or even a part of your assembly process, to a second location.
Actionable advice
- Run a supply chain risk assessment to understand how much of your production depends on China.
- Identify the parts of your production that are easiest to move elsewhere (like packaging, assembly, or simple manufacturing steps).
- Research alternative countries based on your product type. For example, India for electronics, Vietnam for textiles, or Mexico for automotive.
- Talk to peers, suppliers, and advisors who’ve already made the shift. Learn what worked and what didn’t.
- Build a small local team or hire a consultant with expertise in setting up operations abroad.
Start with one location, test it, and scale from there. This approach helps you learn without risking too much up front.
2. 52% of European firms active in China initiated China+1 diversification moves between 2020–2023
Europe is shifting too
It’s not just the U.S. Even European businesses are making moves. Over half have already started implementing the China+1 strategy. And while Europe doesn’t face the same political tensions with China as the U.S., the concerns are similar—supply chain disruptions, rising costs, and too much dependency on one country.
For European brands, there’s also the added pressure of aligning with sustainability goals and ethical sourcing. With labor and environmental concerns in parts of China, shifting to countries with better records or more transparency helps meet these goals.
What your company should consider
If you’re in Europe and haven’t started diversifying yet, now is the time. But your approach might be different. European companies often prioritize supplier relationships, quality, and compliance. So, it’s important to choose new locations that match those values.
Don’t just chase cheap labor. Look for countries where you can build long-term supplier partnerships that align with your brand values and customer expectations.
Actionable advice
- Evaluate the ESG (Environmental, Social, and Governance) standards of your current suppliers and compare them to options in countries like Poland, India, or the Philippines.
- Leverage trade agreements—many EU countries have favorable trade deals with Vietnam and India that make it easier to import goods.
- Partner with local industry associations in the new country to help ease your entry.
- Reassess logistics and shipping routes. Diversification may come with longer shipping times, so you’ll need to plan inventory accordingly.
- Train your procurement team to work across cultures and legal systems—they’ll be the ones keeping things running smoothly.
3. 41% of Japanese manufacturers have shifted partial operations to Southeast Asia since 2020
Why Japan is moving fast
Japan has always had a close economic relationship with China. But now, nearly half of its manufacturers are moving part of their production to countries like Vietnam, Thailand, and Indonesia. Why? Because they’ve realized that being too dependent on one country makes them vulnerable.
Southeast Asia offers both cost advantages and geographic proximity, which makes it easier for Japanese companies to shift without big disruptions.
How this affects your strategy
Japanese companies are known for their precision, quality, and long-term planning. If they’re diversifying, it means they’ve already found sustainable, effective ways to do it. That’s a great signal for your own planning.
Look at the countries Japanese firms are choosing and explore if they could work for you too.
Actionable advice
- Study what Japanese competitors in your industry are doing. Where are they moving? What suppliers are they using?
- Set up a cross-functional team to map out a diversification timeline—from supplier research to pilot production runs.
- Consider establishing a regional hub in Southeast Asia to serve multiple countries. This can reduce shipping costs and improve customer service.
- Negotiate contracts with built-in flexibility. This allows you to increase or decrease orders depending on how your new supply chain performs.
- Factor in workforce skills. Some countries may need training programs to meet your quality standards—budget for that upfront.
4. 34% of German multinational firms reallocated some supply chain operations from China to other Asian markets post-2022
A deeper look at the German model
Germany is Europe’s manufacturing powerhouse. So, when a third of its multinational firms begin shifting operations out of China, it says a lot about where the market is heading.
Post-2022, these firms have looked toward countries like Vietnam, India, and Malaysia—not just for cheaper labor, but for more supply chain control and resilience.
The hidden lesson here
German firms are methodical and conservative. They typically avoid big changes unless the data supports it. So this shift is likely based on careful analysis and long-term thinking.
They’re also known for high standards in quality, safety, and engineering. So if these countries are passing the German test, they’re probably capable of supporting most global brands.
Actionable advice
- Use the same metrics German companies do—compare lead times, product quality, and supplier financial stability.
- Invest in local QA (quality assurance) teams in your new markets. This ensures you maintain high standards from day one.
- Build a dashboard to monitor performance of new suppliers so you can compare them directly to your China-based partners.
- Don’t wait for a crisis to diversify. The best time to build a Plan B is before you need it.
- Focus on knowledge transfer—train your new suppliers and build strong communication channels.
5. 67% of Fortune 500 companies have diversified their sourcing beyond China as of 2023
The big players are making moves
When two-thirds of the world’s largest companies start changing where they get their materials, it’s not a minor adjustment. It’s a wave. These companies are investing heavily in new supplier relationships, building new factories, and in some cases, setting up entire production hubs outside China.
This isn’t just a trend among startups or mid-size businesses trying to save a buck. These are massive corporations with complex supply chains that took years to build. And yet, they’re still choosing to diversify.
What this means for smaller or mid-sized companies
If Fortune 500 companies are doing this, it sends a clear message: staying dependent on one country—no matter how good it’s been in the past—is risky. This is especially true after COVID-19, port closures, and growing geopolitical pressures.
But the good news is, these companies have already paved the road. You don’t have to reinvent the wheel. You can follow their blueprint.
Actionable advice
- Study recent case studies from Fortune 500 brands in your industry. What countries are they entering? What challenges are they facing?
- Use supplier directories from major trade shows (like those in Singapore or Bangkok) to identify potential vendors outside China.
- Ask your current Chinese suppliers if they have operations in other countries—they often do, and this could be the easiest way to begin.
- Set realistic goals. You don’t need to match the scale of a Fortune 500 company—just take one step at a time.
- Keep communication clear and documentation tight when you bring new suppliers onboard. This protects you legally and operationally.
6. 79% of global apparel brands have adopted a multi-country sourcing strategy that includes alternatives to China
Fashion leads the way
The apparel industry has always been sensitive to cost, time-to-market, and political shifts. That’s why it’s often one of the first industries to move when global conditions change.
With nearly 80% of apparel brands now adopting multi-country sourcing, this sector is showing everyone how flexibility wins. From Vietnam to Bangladesh to Turkey, fashion brands are making sure they’re never caught off guard again.
What this tells you if you’re in or outside the apparel sector
Even if you’re not in fashion, there’s a lot to learn here. Apparel brands operate on tight margins, short timelines, and seasonal cycles. If they can manage production across three or four countries, so can you.
Their approach also shows the power of having multiple options—if one supplier fails, another can step in.
Actionable advice
- Map your current sourcing by country and product type. Are you overly dependent on one supplier or region?
- Consider a dual-sourcing model where two countries supply the same product. This adds flexibility without doubling costs.
- Visit regional textile expos or supplier fairs. Seeing materials and meeting partners in person will speed up trust-building.
- Stay updated on labor laws and minimum wage changes. These can quickly affect margins, especially in labor-heavy industries like apparel.
- Build long-term contracts with performance clauses. These create accountability without locking you in unnecessarily.
7. 29% of U.S. tech hardware firms set up new manufacturing facilities outside of China in the last 2 years
The shift in tech manufacturing
Nearly a third of U.S. hardware companies have already taken action—not just exploring, but physically building new facilities. That’s a huge investment, and it shows how serious the shift has become.
Tech firms are especially vulnerable to trade restrictions and political tensions. Tariffs, chip bans, and export controls have made it clear that relying solely on China is risky.
This shift is more than just cost-saving
This move is often driven by the need for security, stability, and access to government incentives. Countries like India and Malaysia are rolling out red carpets for tech companies, offering tax breaks and faster permits.
Actionable advice
- Review local incentive programs in countries like India’s PLI (Production-Linked Incentive) scheme or Vietnam’s investment zones.
- If you produce tech components, consider Mexico or Eastern Europe to also be closer to your end markets.
- Don’t go it alone. Work with a local joint venture partner who understands the market and regulations.
- If building a facility isn’t feasible, start with a contract manufacturing arrangement. It lets you test the waters with minimal risk.
- Build redundancy in high-risk components like semiconductors or batteries. Having two sources, even at a higher cost, can save your supply chain.
8. 45% of global automotive brands now source parts from Vietnam, India, or Mexico in addition to China
The new auto supply chain map
Automotive brands used to be deeply tied to China for everything—from wiring harnesses to dashboards. But nearly half now also rely on India, Vietnam, or Mexico. This shows a major shift in how global carmakers think about their supply chains.
This move is about more than cost. It’s about resilience. After 2020, automakers realized that one delay in China could halt production lines around the world.
Lessons for non-auto sectors
Even if you’re in electronics, furniture, or consumer goods, the same principle applies. If the auto industry—which requires precision and consistency—can diversify globally, so can your business.
Actionable advice
- Identify core vs. non-core components in your supply chain. Start diversification with the non-core ones.
- Review logistics routes and customs processes in your target country. These often get overlooked but can delay your entire plan.
- Consider Mexico if your primary market is North America. It offers NAFTA advantages and proximity.
- Don’t forget quality control. Automotive firms often embed QA engineers in supplier facilities—this might be worth considering for key products.
- Keep a “Plan C” in your back pocket. Some automakers now maintain backup suppliers they don’t use but have vetted and contracted, just in case.
9. 88% of India-based manufacturing zones report increased inquiries from multinationals seeking alternatives to China
Why India is on every boardroom’s radar
India has emerged as the top contender for companies adopting China+1. With its large labor pool, improving infrastructure, and government support, it’s not surprising that nearly 90% of its industrial zones are seeing a surge in global interest.
From Apple to Samsung, global brands are investing millions into Indian factories, especially for electronics, pharma, and textiles.
What this means for your strategy
If you haven’t looked into India yet, now is the time. But keep in mind, India is a big country with wide variations in regulations and infrastructure depending on the state.
Choose your region carefully. Tamil Nadu and Karnataka are great for electronics. Gujarat and Maharashtra shine in chemicals and manufacturing.
Actionable advice
- Start with a feasibility study focusing on your sector and target Indian states.
- Partner with Indian industrial associations—they often provide faster access to land, labor, and legal help.
- Take advantage of “plug-and-play” parks—ready-to-use manufacturing zones with built-in utilities and compliance setups.
- Plan for training. While labor is affordable, you may need to invest in upskilling for complex processes.
- Factor in cultural alignment. Indian suppliers value long-term relationships, so invest time in face-to-face interactions where possible.
10. 62% of Taiwan-based contract manufacturers opened new facilities in countries other than China
Taiwan’s quiet diversification strategy
Taiwan’s contract manufacturers play a huge role in global electronics. Think of names like Foxconn—they’re the engine behind products used around the world.
Now, over 60% of these companies are actively setting up shop outside China. That includes India, Vietnam, and even the U.S.
This move is big. These companies once made nearly everything in China. Now, they’re spreading out to manage costs and avoid risks from political tensions between China and Taiwan.
What you can learn from this
Taiwanese manufacturers are logistics experts. They’ve mastered how to run lean, efficient supply chains. If they’re shifting out of China, it’s likely because they’ve seen red flags—and you should pay attention.
Actionable advice
- Look into Taiwanese manufacturing partners with operations outside China. Many now offer “China+1” packages.
- Set up pilot production runs in multiple locations and compare outputs. Use this data to inform long-term decisions.
- Understand local tax structures. Countries like India and Vietnam offer different incentives depending on the sector and export focus.
- Evaluate the digital capabilities of each supplier. Can they provide real-time tracking, documentation, and QC data?
- Don’t forget customs compliance. Your import/export process must change to match each country’s requirements.
11. 40% of South Korea’s top 100 export firms reduced reliance on China by expanding into ASEAN
South Korea shifts toward ASEAN
South Korean exporters are known for their efficiency, especially in industries like semiconductors, steel, electronics, and automotive. But what’s interesting here is that 40% of their top exporters have decided to reduce their reliance on China—not by pulling out entirely, but by building a stronger presence in ASEAN countries like Vietnam, Indonesia, and Thailand.
They’re not just reacting to political pressure. They’re responding to business needs: lower labor costs, stronger trade agreements, and the ability to reach new markets faster.
This trend shows real intent
Korean firms typically plan long-term. They don’t make supply chain decisions based on fads. That means this isn’t a short-term move. It’s a shift in global trade strategy.
If South Korea’s most successful exporters are doing this, it’s a strong signal that ASEAN nations are becoming the new manufacturing hubs to watch.
Actionable advice
- Focus on ASEAN countries that already have a strong trade relationship with your country. This reduces customs headaches and speeds up delivery.
- Consider starting with shared manufacturing spaces or co-packing facilities in ASEAN before launching your own factory.
- Visit industrial clusters in Vietnam or Indonesia—they often provide bundled services like logistics and compliance help.
- Keep an eye on regional free trade agreements like RCEP (Regional Comprehensive Economic Partnership), which includes most ASEAN nations. These can reduce duties and speed up trade.
- Test your ASEAN suppliers with small-volume orders first. Evaluate them across quality, timeline, and communication before scaling.
12. 53% of electronics supply chains have added at least one alternative country to their China-based operations
Electronics companies are adapting fast
More than half of all electronics supply chains have already made moves to diversify. That means phones, laptops, chargers, components—you name it—are increasingly being made in more than one country.
Why is this happening so quickly in electronics? It’s a high-risk, high-reward sector. Delays can destroy product launches. Political or pandemic-related disruptions can cost millions. So the pressure to find a backup plan is intense.
What other industries can learn
Electronics companies face some of the strictest requirements when it comes to quality, speed, and innovation. If they can run global operations with multiple sources, it means the systems and tools exist—and you can borrow those playbooks.
Actionable advice
- Look into supplier management software that allows real-time tracking across different countries.
- Evaluate contract manufacturers in countries like India, Malaysia, and Mexico. Many already specialize in electronics assembly.
- Understand your component map. Which parts are highest risk? Can you dual-source those to reduce dependency?
- Build parallel processes—don’t just move sourcing, but also move testing, QA, and packaging to new sites.
- Make your internal teams adaptable. Your procurement, legal, and logistics teams will all need training to manage a multi-country model effectively.
13. 48% of global pharma firms implemented China+1 strategy post-COVID disruptions
COVID changed everything for pharma
The pharmaceutical industry took a massive hit during COVID. With China under strict lockdowns, many pharma firms couldn’t get the ingredients or packaging they needed. That led to delays in medication supplies—something that impacts real lives.
Nearly half of all global pharma brands responded by implementing a China+1 strategy. That means moving some production, API sourcing, or packaging operations to other countries like India, Hungary, or Brazil.
This shows how high the stakes are
When life-saving drugs are delayed, the importance of supply chain resilience becomes clear. Pharma companies can’t afford to rely on just one country. The risks are just too high.
Actionable advice
- If you’re in health or medical products, prioritize redundancy in your ingredient supply chain.
- Look into India for API sourcing—it’s already a global leader and has growing support infrastructure.
- Work with regulatory consultants early. Pharma is a heavily regulated sector, and switching suppliers requires paperwork and approvals.
- Track geopolitical risk as part of your sourcing decisions. Health regulations often follow politics more than economics.
- Consider digital twins of your supply chain. This helps you simulate what happens if one country shuts down—and gives you a backup plan.
14. 70% of U.S. executives believe China is becoming less favorable due to geopolitical tensions
Perception drives decisions
When 70% of U.S. executives believe that China is becoming a less favorable place to do business, it changes investment flows. Perception doesn’t need to be reality to affect business—it just needs to be strong.
And in this case, it’s not just a vague sense of discomfort. We’re talking about rising tariffs, restrictions on technology transfers, and pressure from shareholders to reduce dependency.
Why this matters for you
Even if you’re not in the U.S., what American executives believe impacts global supply chains. These execs influence how multinational teams source, manufacture, and distribute goods.
Their shift in mindset is accelerating the move toward China+1 at a global scale.
Actionable advice
- Keep your board and stakeholders updated on your diversification plans. It shows you’re proactive—not reactive.
- Build internal briefings on geopolitical risks so your team can make informed decisions.
- Diversify your revenue base along with your sourcing. If most of your sales are in the U.S., your supply chain needs to reflect U.S. regulatory preferences.
- Look for grants or subsidies available for companies moving operations to politically stable countries.
- Maintain a media-monitoring system. Public sentiment can influence consumer behavior, which in turn affects sourcing preferences.
15. 32% of surveyed supply chain executives moved at least 20% of their sourcing out of China
It’s not just talk—there’s real movement
This isn’t about making announcements. It’s about taking action. Nearly one-third of supply chain leaders have already shifted a significant portion—20% or more—of their sourcing away from China.
This shows a deep level of commitment. Moving even 5% of a global supply chain is a huge task. Moving 20%? That’s a major strategic project.
The takeaway for your company
Diversification isn’t just something to think about for the future. It’s already happening now—and at scale. If you wait too long, you’ll be playing catch-up, potentially paying more and getting worse service than your competitors who moved first.
Actionable advice
- Identify the easiest 20% of your sourcing to move. These could be non-critical components, seasonal products, or parts with multiple global suppliers.
- Run a pilot project with a second-country supplier. Measure the difference in cost, delivery time, and quality.
- Create a cross-functional task force involving logistics, procurement, legal, and finance to manage your move smoothly.
- Update your contracts. Ensure flexibility in quantity and timing while maintaining penalties for underperformance.
- Benchmark your performance monthly. Compare your diversified sourcing model to the original China-centric model, and fine-tune over time.
16. 56% of semiconductors firms report plans to establish plants in India or Southeast Asia
The chip industry is going global
Semiconductor companies are the backbone of everything from smartphones to cars. And more than half of them are now actively planning to open new plants in India or Southeast Asia. That’s a powerful signal that these regions are ready for high-tech manufacturing.
These companies aren’t moving just because of cost. It’s about risk. U.S.-China tensions have made chip production a politically sensitive area. So, semiconductor brands are building a backup plan—and India, Malaysia, and Vietnam are top of the list.
If you rely on chips, you need to pay attention
Whether you manufacture electronics or use chips in your products, these moves can affect your timeline and pricing. If your suppliers move, your supply chain will need to adjust too. You don’t want to be the last to react.
Actionable advice
- Start by identifying where your chips come from today. Are they all from China-based foundries?
- Build relationships with chipmakers in India or ASEAN now—even if you’re not switching yet.
- Talk to your tech partners about how their sourcing is evolving. Get ahead of shifts that will affect you downstream.
- Consider long-term contracts with diversified suppliers to lock in supply.
- Stay close to policy developments. Countries like India are offering huge subsidies to chip companies, which could open up partnership opportunities for you.
17. 22% of multinational conglomerates completely exited China between 2020 and 2023
Some companies are all in on the exit
For one in five global conglomerates, diversifying wasn’t enough. They exited China entirely. That’s a bold move, but for some sectors—like defense tech, sensitive electronics, or industries facing sanctions—it was necessary.
While this approach won’t work for everyone, it highlights the growing concern over overdependence. For these companies, the cost of staying outweighed the cost of leaving.
Should you consider a full exit?
It depends on your industry and risk profile. A full exit is extreme, but in some cases, it’s the right call. If your business is constantly disrupted by Chinese regulations or facing backlash from customers or governments, it might be time.
Actionable advice
- Run a full cost-benefit analysis comparing operating in China vs. fully relocating.
- Look at your customer base. Are they demanding “Made elsewhere” labels? Are you losing sales due to perceptions?
- Consider a phased withdrawal. Shut down in stages, giving time for alternative sites to ramp up.
- Think long-term. If political tensions continue or worsen, what would it cost to stay? What would it save to leave?
- Talk to companies that have already exited. Learn from their transition strategies and mistakes.
18. 73% of companies investing in Vietnam cite China+1 as a driving strategy
Vietnam is the new frontier
Nearly three-quarters of companies putting money into Vietnam say they’re doing it to reduce reliance on China. And for good reason—Vietnam offers low labor costs, strong trade agreements, and a growing talent pool.
It’s become a hub for everything from garments to electronics. The government is business-friendly, and there’s a growing infrastructure for export-driven manufacturing.
Why Vietnam may be your best next step
Unlike some alternatives, Vietnam has scale. It has experience working with global brands, and it’s improving fast in logistics and compliance.
This makes it an ideal China+1 destination, especially for businesses looking for a plug-and-play setup.
Actionable advice
- Identify which of your SKUs could be made in Vietnam without quality or timeline concerns.
- Visit one of Vietnam’s industrial parks—they often offer full-service packages, including workforce, customs help, and office space.
- Factor in raw material supply. Vietnam imports a lot, so make sure the logistics work for your product.
- Consider dual-sourcing from both China and Vietnam. This gives you flexibility without overcommitting.
- Align with local partners early. Joint ventures or partnerships help you clear red tape and navigate regulations faster.
19. 80% of garment exports from Bangladesh and Vietnam are for brands previously sourcing from China
Fashion is rewriting its supply chain
It’s not just that brands are moving away from China. It’s that the volume of exports from places like Bangladesh and Vietnam now reflects a total shift in trust.
80% of garments leaving these countries today used to come from Chinese factories. That’s more than a trend—it’s a transformation.
These countries have learned how to meet global standards, move fast, and deliver consistent quality. And now, they’re reaping the rewards.
Why this shift matters for more than just fashion
Even if you’re in a different industry, the same infrastructure—cutting, sewing, packing, exporting—is now available for other products too. These countries are building logistics and labor forces that serve more than one industry.
Actionable advice
- Explore crossover opportunities. A garment supplier today might be able to produce other soft goods like bags, footwear, or textiles for your brand.
- Review your logistics chain. Can your shipping provider handle routes from these countries as efficiently as from China?
- Visit your new suppliers in person if possible. Relationships go a long way in building reliability.
- Don’t assume that lower cost means lower quality. Many factories in Bangladesh and Vietnam now meet Western compliance standards.
- Add one backup supplier in Bangladesh or Vietnam for every primary one you have in China. This way, you’re never caught off guard.
20. 39% of global electronics manufacturing services (EMS) companies list India as a priority China+1 destination
EMS providers are making big bets on India
Almost 4 out of 10 EMS companies now name India as their top China+1 location. These companies assemble and produce everything from smartphones to medical devices—and they’re seeing India as the future.
Why? The Indian government is investing heavily in infrastructure, and India has a massive English-speaking engineering talent pool. Add to that the Production-Linked Incentive (PLI) scheme, and you’ve got a very attractive destination.
What this means for your electronics sourcing
If your products include circuit boards, battery packs, or custom devices, India may be the best place to diversify. EMS firms are setting up fast, and the ecosystem is growing by the month.
Actionable advice
- Talk to Indian EMS providers already working with global brands. They can offer proven processes and scalable setups.
- If you’ve worked only with Chinese EMS firms, consider having both India and China in your portfolio to compare performance.
- Leverage government incentive programs to reduce setup costs or taxes.
- Ask about end-to-end services—many EMS providers now offer sourcing, assembly, packaging, and shipping under one roof.
- Plan for ramp-up time. New facilities in India may take months to become fully operational, so start early.
21. 35% of retail chains shifted some operations from China to Mexico for proximity advantages
Mexico is gaining ground for nearshoring
Over a third of retail chains—especially those with customers in the U.S.—have started shifting parts of their operations to Mexico. Why? Because proximity equals speed. Being close to your end market allows for faster shipping, quicker response times, and less reliance on long-haul freight.
This trend, known as nearshoring, is especially popular with retailers who need to stay nimble. Fast restocks, quick trend adaptation, and fewer delays mean happier customers and healthier profits.
Why this is a smart move for North American companies
Shipping from China to the U.S. can take 3–6 weeks. From Mexico? Just a few days. That time savings is a huge competitive edge, especially in industries where trends change fast—like fashion, home goods, and consumer electronics.
Actionable advice
- Audit your shipping times and costs. Could your margins improve with faster delivery from Mexico?
- Start by moving low-complexity SKUs to Mexico. Items that don’t require complex manufacturing are the easiest to nearshore.
- Explore maquiladora zones in northern Mexico. These are special economic areas designed to simplify export manufacturing.
- If you’re a U.S.-based company, take advantage of the USMCA (formerly NAFTA) to reduce tariffs and import headaches.
- Look into bilingual support teams. Smooth communication between your headquarters and Mexican partners is key for a successful transition.
22. 61% of surveyed logistics firms see increased demand for non-China Asia-Pacific hubs
Logistics providers are shifting routes and resources
More than 6 out of 10 logistics firms are seeing a clear shift in shipping and warehousing activity away from China and into other Asia-Pacific hubs. This includes places like Singapore, Malaysia, Thailand, and the Philippines.
Logistics companies are the first to notice changes in global trade flows. If they’re investing in alternative hubs, that means they see long-term demand—not just a temporary reaction.
What this means for your distribution strategy
When logistics firms increase capacity in non-China hubs, it becomes easier and cheaper for you to make that move too. You won’t be building infrastructure from scratch—you’ll be tapping into a system that’s already adapting to new demand.
Actionable advice
- Ask your logistics provider which countries they’re expanding into. Their recommendations are based on real shipping data and demand trends.
- Compare warehouse costs and port speeds between China and potential alternatives. You might find surprising efficiencies.
- Set up regional distribution centers in new Asia-Pacific hubs to shorten delivery timelines and reduce risk.
- Use multi-modal transport strategies. A mix of air, sea, and rail from different hubs can give you more control.
- Monitor shipping backlogs and customs delays. Countries with less congestion may offer smoother trade flows.
23. 26% of Chinese suppliers have opened overseas factories to retain Western clients
Chinese suppliers are diversifying too
Interestingly, it’s not just Western companies moving operations out of China—Chinese suppliers are doing it too. About one in four have opened or invested in overseas factories to serve global clients more flexibly.
This shows they’re reading the same signals: the world wants diversification, and they’re adapting to meet that demand.
How this could work in your favor
If you already have strong relationships with Chinese suppliers, you might not need to find entirely new partners. Ask them if they have facilities in Vietnam, Thailand, or even Mexico. Working with their foreign operations could be the fastest path to a China+1 model.
Actionable advice
- Reach out to your current Chinese suppliers and ask if they’ve expanded to other countries.
- Consider pilot production runs from their non-China facilities to compare quality, lead time, and costs.
- This approach allows you to maintain consistency while reducing geographic risk—a powerful combination.
- Ask about pricing models. In many cases, working with a supplier’s overseas branch comes with similar pricing, reducing cost spikes.
- Maintain dual communication channels. One for the original China base and one for the new facility ensures alignment.
24. 84% of American industrial equipment firms rated China risk as “medium to high” in 2023
Risk perception is changing the game
Nearly all U.S. firms in the industrial equipment sector now see doing business with China as risky. These risks include regulatory uncertainty, IP protection issues, cyber threats, and supply chain shocks.
While not every company has acted yet, this high-risk perception is enough to change future investment decisions. Most companies won’t expand their footprint in China anymore—they’ll look elsewhere.
Why this matters for your long-term planning
Even if you haven’t been affected yet, your suppliers, partners, or customers might. Their risk ratings affect how—and where—they do business. That ripples into your business too.
Actionable advice
- Conduct your own internal risk audit. Where are your biggest vulnerabilities in sourcing or production?
- Build a 12-month plan to reduce exposure in stages. Start with high-risk categories or products.
- Look into IP-friendly countries like Singapore or Japan for sensitive production work.
- Protect yourself contractually. Ensure your Chinese suppliers have clauses for exit, penalties, or transition if conditions change.
- Maintain up-to-date documentation. If regulatory shifts happen, having a clear paper trail helps with compliance and dispute resolution.
25. 50% of European consumer goods firms are actively reducing dependence on Chinese raw materials
A shift back to material security
Europe’s consumer goods brands are feeling the pinch. Half of them are now working to reduce reliance on raw materials from China. Whether it’s plastics, metals, or textiles, they want more control and less exposure to single-country risks.
This isn’t just about geopolitics. It’s about sustainability, traceability, and compliance. European customers and regulators demand high standards—and Chinese raw materials often come with sourcing transparency challenges.
What this means for your supply chain
If raw materials are a big part of your costs or quality, this trend matters. Diversifying your inputs protects your pricing, your customer trust, and your ability to meet legal standards.
Actionable advice
- Identify the top 5 raw materials your business relies on and trace their origin.
- Look for certified sources in countries with strong environmental and labor regulations.
- Start building long-term supplier agreements that prioritize transparency and ESG compliance.
- Use platforms like Sedex or EcoVadis to find and vet ethical suppliers globally.
- Audit your bill of materials quarterly. This keeps your sourcing aligned with your risk and compliance goals.
26. 68% of sourcing managers say tariffs on Chinese goods directly influenced China+1 decisions
Tariffs are a tipping point
When tariffs hit, margins shrink. And nearly 7 out of 10 sourcing managers have felt this firsthand. Tariffs on Chinese imports—especially in the U.S. and parts of Europe—have made certain products significantly more expensive.
What started as a political tool quickly became a supply chain disruptor. Companies suddenly found their cost structures upside-down, and moving sourcing outside of China became less of a strategic idea and more of a financial necessity.
Why this isn’t just about trade wars
Even if some tariffs are rolled back, the lesson has been learned: you can’t build your business model around assumptions that may change with an election or diplomatic fallout. Flexibility has become the name of the game.
Actionable advice
- Review your landed cost per product, factoring in all applicable tariffs. You might find some surprises.
- If a tariff-heavy product is critical to your business, prioritize diversifying its supply chain first.
- Look into preferential trade agreements your country has with alternative manufacturing regions.
- Use customs brokers or international trade consultants to model your future tax exposures under different sourcing plans.
- Diversify not just by country, but by tariff risk—spread across both low-cost and tariff-safe regions.
27. 90% of India’s mobile phone manufacturing growth is attributed to China+1 strategy
India’s tech surge is powered by global strategy shifts
The explosive growth of mobile phone manufacturing in India isn’t a coincidence—it’s a direct result of the China+1 strategy. With Apple, Samsung, and Xiaomi investing heavily in Indian factories, this once-lagging sector has caught up fast.
And it’s not just phones. This growth has paved the way for the entire electronics ecosystem—batteries, chips, displays, and accessories—to expand rapidly in India.
Why this matters even outside tech
India is showing what’s possible when a country commits to becoming a China+1 destination. If you’ve been hesitant about India, this is your signal that it’s time to look again.
Actionable advice
- Start with sectors where India has proven success—mobiles, accessories, wearables, or small appliances.
- Take advantage of government incentives. Schemes like PLI can drastically cut your startup costs.
- Build strong local teams. India has abundant engineering talent but requires cultural sensitivity and localized leadership.
- Partner with established Indian EMS providers. They often already work with big global clients and can meet high expectations.
- Test time-to-market. One of India’s advantages is speed—see how quickly your product can move from prototype to shelf.
28. 47% of global brands said they are “actively investing” in China+1 destinations
This is no longer passive exploration
Nearly half of all global brands aren’t just talking about China+1—they’re putting real money behind it. That means setting up production lines, opening new regional HQs, hiring local staff, and building long-term partnerships outside China.
This shift from strategy to action is the clearest sign that the movement has momentum. If you’re not investing yet, you could find yourself falling behind.
What does “active investing” look like?
It varies. For some, it’s about capex in new factories. For others, it’s about funding pilot programs or building long-term relationships with non-China vendors. The key is action—not just analysis.
Actionable advice
- Define what active investment means for your business. It could be as small as onboarding a new supplier or as large as acquiring a facility.
- Start allocating part of your annual budget specifically for China+1 initiatives.
- Measure ROI beyond cost. Consider risk reduction, brand reputation, and delivery agility as part of the value.
- Build internal KPIs around diversification—this gets everyone in your team aligned.
- Review success stories in your sector and use them as a benchmark for what’s achievable in your first year.
29. 33% of surveyed global executives expect to be less China-dependent by 2026
The future is already decided
One-third of executives say they will be less reliant on China within the next two years. That’s a clear, time-bound target, and it tells you something powerful: many companies already have internal roadmaps guiding them away from single-country dependency.
The key here is not urgency, but direction. These companies are moving with purpose, planning thoughtfully, and adjusting their models over time.
Why this should inspire you
You don’t need to do everything at once. But you do need to start. The companies that will be more agile and resilient by 2026 are the ones that already began diversifying in 2023 or earlier.
Actionable advice
- Set a timeline. Decide where you want to be by 2026 and break that down into quarterly or annual milestones.
- Don’t let perfect be the enemy of progress. Even a 10% shift can make a big difference in resilience.
- Track progress visibly. Internal dashboards help your team stay accountable and focused.
- Communicate with your suppliers. Let them know your direction so they can evolve with you—or risk being replaced.
- Build optionality into contracts so you can ramp up or down in different regions based on how each location performs.
30. 58% of global industrial supply chains report visibility or traceability issues in China, prompting relocation
When you can’t see, you can’t plan
More than half of all industrial supply chains say they have poor visibility in China. That means they can’t track goods, audit processes, or get real-time updates. In today’s world, where supply chain precision is everything, this is a big problem.
That lack of transparency often leads to missed delivery dates, compliance failures, and even reputational damage. It’s no wonder companies are looking for new regions where they can get clearer insights and stronger control.
This isn’t just an IT problem
It’s a business risk. And in many industries—like aerospace, medical devices, and food production—lack of traceability is a non-starter. Your entire product’s integrity depends on knowing what’s happening at every step.
Actionable advice
- Invest in supply chain visibility tools that work across borders. Platforms like SAP Ariba, Anvyl, or FourKites can help.
- Work with suppliers who allow full digital tracking—from raw materials to finished goods.
- Prioritize countries where audit access and data sharing are built into local laws or industry norms.
- Build redundancy. If one region goes dark, your alternative should still offer transparency.
- Train your team to use visibility tools. The tech only helps if your people know how to act on the insights.
Conclusion
The China+1 strategy isn’t just a buzzword anymore. It’s a global shift in how companies source, produce, and distribute products. Whether you’re running a startup or managing supply chains for a Fortune 500 company, these stats—and the real stories behind them—should drive your next moves.
