A year into efforts to diversify away from China, firms are grappling with delays, higher costs, and complex regional supply dynamics, leading many to revisit their diversification plans.
A year after the latest push to reduce reliance on China, some manufacturers are discovering that the move is harder to sustain than it first appeared. The Economic Times reported that firms which shifted orders or production to India, Vietnam and other low-tariff markets are now revisiting Chinese suppliers after running into delays, missing inputs and higher-than-expected operating costs.
The central problem is that China offers more than lower-cost assembly. Industry explainers on the China-plus-one model note that China still combines dense supplier ecosystems, skilled labour, industrial scale and dependable infrastructure in a way that is difficult to reproduce quickly elsewhere. That advantage matters most when businesses need coordinated production, fast component sourcing and limited disruption across the supply chain.
Vietnam remains an important beneficiary of diversification, and it continues to attract manufacturers because of its export-oriented base, trade links and competitive costs. Even so, the Economic Times report suggests that some companies are treating it as a partial hedge rather than a full replacement for China, with one exporter shutting a newly opened workshop in Ho Chi Minh City after struggling to source equipment and basic components locally.
India also remains firmly in the mix. Strategic assessments of the China-plus-one approach describe India as a major destination because of its policy support, large labour pool and increasingly capable manufacturing base. But the same assessments also stress that diversification works best when firms match the destination to the product category, supplier depth and logistics requirements, rather than assuming that one market can simply replicate another.
The result is a more cautious phase in supply-chain planning. The Economic Times reported that some companies are keeping production in China while holding smaller backup capacity elsewhere, rather than committing to a full relocation. That reflects a broader recalculation: once tariffs, transport, power reliability and local sourcing costs are all included, the financial case for moving may be weaker than the original rush to diversify suggested.
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