Is your China+1 a strategy—or just a comforting illusion?
The idea behind China+1 is simple: diversify your supply chain to reduce risk. In other words, don’t put all your eggs in the same basket. Makes sense!
If you’re considering moving part of China supply elsewhere to mitigate risk, then ask yourself.
𝐀𝐌 𝐈 𝐑𝐄𝐀𝐋𝐋𝐘 𝐑𝐄𝐃𝐔𝐂𝐈𝐍𝐆 𝐑𝐈𝐒𝐊?
If your non-China suppliers are reliant on capital and raw materials from China and/or are in the same geographic region, then it is highly likely that any China supply disruption will impact on your non-China supply.
𝐂𝐀𝐍 𝐈 𝐀𝐅𝐅𝐎𝐑𝐃 𝐓𝐎 𝐁𝐔𝐘 𝐀𝐓 𝐀 𝐇𝐈𝐆𝐇𝐄𝐑 𝐏𝐑𝐈𝐂𝐄 𝐓𝐇𝐄𝐍 𝐌𝐘 𝐂𝐎𝐌𝐏𝐄𝐓𝐈𝐓𝐎𝐑𝐒?
𝙄𝙛 𝙣𝙤𝙣 𝘾𝙝𝙞𝙣𝙖 𝙨𝙪𝙥𝙥𝙡𝙮 𝙞𝙨 𝙢𝙤𝙧𝙚 𝙚𝙭𝙥𝙚𝙣𝙨𝙞𝙫𝙚, then you are paying more now, in return for mitigating a possible future supply impact.
If you have only moved a portion (say, 20%) then you are still going to be at least 80% impacted by a future supply disruption anyway.
Bottom line:
To have an effective China+1 strategy your alternative supply must be:
→ Same or lower cost than China.
→ Not geographically or economically tethered to China.
If not, you are adding cost and complexity for no real benefit.
china sourcing
Is your China+1 a strategy—or just a comforting illusion?
To have an effective China+1 strategy your alternative supply must be: → Same or lower cost than China. → Not geographically or economically tethered to China. If not, you are adding cost and complexity for no real benefit.
IAA
In Asia Advantage
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