Beyond China: Dual Sourcing and the Future of Manufacturing Resilience
Written by Kfir Kedem
China has become such a manufacturing superpower that the rest of the world now relies on it. This became evidently clear during the peak of the tariff wars in 2025 and was noticed by any procurement manager working at an American company across the globe. Such a strict reliance on one country puts any supply chain at a major risk as a simple shift in policy could jeopardize the entire production and/ or trade of a company. As a result, China Plus One (also known as C+1) is becoming an increasingly important strategy.
China Plus One is a strategy that enforces the addition of at least one alternative sourcing base in order to reduce the concentration risk that comes with the reliance on China. Additionally, the dual sourcing approach gives the traditional dual-sourcing benefits of supply flexibility and price negotiation by leveraging suppliers against each other. Leveraging the capacity, any supply constraints of a single supplier can (in theory) be matched by the other supplier. Of course, in practice forecasting or at least a warning would be needed for the supplier to be able to ramp up. As such, the risk of supply chain shutdowns from a supplier shutdown is decreased. Additionally, major manufacturers – especially in the automotive industry – rely on supplier knowledge for innovation and development. Using a dual-source strategy improves the innovation output through increased exposure to supplier product development, materials research, and production techniques.
Some countries that are benefiting from the China Plus One strategy are Mexico – particularly for North American businesses, Morocco – particularly for European businesses, Vietnam, Thailand, and India. The countries are most commonly selected based on their proximity, their production capabilities, and the costs. Of course, costs are always assumed to increase as no country will be able to provide the same trained staff, clustered verticalization, and scale that China already has.
Additionally, there are hidden dependencies that are challenging to remove from China. Even the plants that are based in any of the aforementioned countries would likely need to order sub-components or tooling from China. Therefore, the dependency may be decreased but is still very much existent. With country of origin requirements and tariff limitations being transferred up the supply chain, the main challenge of Chinese dependency still remains at an alarming level.
The startup costs of adding a new supplier for the dual-source China Plus One strategy cannot be ignored either. There are the pre-qualification costs that include testing and likely some form of co-development, tooling investments, and likely an increase in unit cost due to the overall volume that each supplier produces decreasing. As such, although the risk of dependency is decreased, the costs that come with it are major. Especially when multiple key products are implemented into such a strategy.
In summary, China Plus One is not a silver bullet but a pragmatic risk‑mitigation strategy. By diversifying production and leveraging dual sourcing, companies can gain supply flexibility, negotiate better pricing, and tap into supplier-driven innovation. However, the strategy comes with clear limitations, including higher costs, infrastructure constraints, and persistent dependencies on Chinese components and expertise. For businesses, the value of China Plus One lies in reducing but not eliminating geopolitical and supply chain risk, while carefully balancing cost, complexity, and operational feasibility. As global supply chains continue to face uncertainty, implementing a well-planned China Plus One approach will remain a key tool for resilient manufacturing and procurement strategies.
Sources:
Comments