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You can reduce dependence on China without abruptly closing or moving existing operations. Start by identifying the inputs and production steps that could stop output, then qualify alternate capacity and shift work in controlled stages. Keep the China footprint where it remains useful; the goal is a supply network with viable alternatives, not relocation for its own sake.
What does diversifying beyond China mean?
It can mean adding a qualified supplier, moving some production to another country, or building a buffer for a vulnerable input. It does not necessarily mean leaving China. The UK government’s supply-chain evidence summary describes China-Plus-One as expanding manufacturing or supply chains beyond China while retaining a presence there.
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The right mix depends on the product, process, destination market, and the company’s existing supplier network. A new country is not automatically a safer source: the alternate supplier may depend on the same raw materials, sub-tier suppliers, or transport routes as the incumbent.
Why are manufacturers reassessing concentrated sourcing?
The OECD’s 2025 supply-chain review reports that the number of products sourced from a limited range of suppliers was 50% higher in the early 2020s than in the late 1990s, a trend it says was driven almost entirely by non-OECD countries. In the OECD’s measure of significant import concentration, China’s contribution rose from 5% to 30% over the past 25 years, while the combined contribution of the United States, Germany, and Japan fell from 30% to 15%.
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These are aggregate trade findings, not a forecast for an individual manufacturer. They help explain why companies examine exposure, but they do not show that a particular Chinese supplier, product, or country is unsafe. The same review says strategic manufacturing has high international exposure: 26% of its inputs come from abroad and 27% of its output depends on foreign final demand.
How do you reduce risk without interrupting production?
1. Map the dependencies that could stop output
List the materials, components, production steps, and services whose loss would halt or materially impair delivery. Rank each by disruption risk, business importance, and how difficult it would be to substitute. Record the assumptions and evidence behind the ranking so teams can distinguish verified dependencies from gaps in visibility.
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The OECD’s supply-chain interdependencies framework uses those dimensions, while noting there is no commonly agreed definition or established measurement method for trade dependencies. Treat the ranking as a company-specific decision tool, not a universal score.
2. Check whether the backup is genuinely independent
Map the alternate supplier’s upstream sources, including critical raw materials, components, sub-tier suppliers, and logistics routes. Ask which of those are shared with the current supplier and what disruption would affect both. A second Tier 1 supplier is not a dependable contingency if the same upstream failure would stop both.
The OECD’s 2024 review warns that multisourcing can add complexity and that backup suppliers do not necessarily mitigate single-source risk. It also notes that reshoring direct suppliers can shift exposure upstream rather than remove it.
3. Compare strategies against the specific exposure
Use the same criteria for each option: independence from current upstream sources; ability to meet product and process requirements; qualification effort; logistics and border exposure; likely effects on cost and working capital; and operational and regulatory requirements in the destination market. These are practical comparison criteria, not a published universal scorecard.
| Approach | What it changes | Key question to test | Important limitation |
|---|---|---|---|
| China-Plus-One or international supplier diversification | Adds supply or production outside China while retaining the China operation. | Can the added source meet requirements and operate independently of existing upstream sources? | A new supplier may share upstream dependencies with the incumbent. |
| Nearshoring | Moves an operation to a nearby country. | Does proximity improve the relevant delivery or market-access constraints, and is capability available? | Proximity alone does not remove concentration or upstream exposure. |
| Friend-shoring | Shifts trade toward allies or like-minded countries. | Does the supplier meet capability and independence requirements as well as the company’s regulatory needs? | Political alignment does not guarantee supplier qualification or supply independence. |
| Reshoring | Brings a supply-chain node back to the home country. | Is domestic capability available, and what upstream inputs would remain exposed? | Relocalisation does not consistently improve resilience and can carry wider economic costs. |
| Inventory or stockpiling | Holds a buffer of goods or inputs against supply interruptions. | How do lead-time uncertainty, shelf life, carrying cost, and potential disruption duration compare? | There is no universal stock level; the appropriate buffer depends on the product and risk. |
These approaches can be combined. For example, a company might retain its current operation, qualify an additional international source for a critical component, and hold a product-specific buffer where a rapid substitute is not feasible. The OECD’s 2023 analysis discusses inventory and supplier diversification alongside geographic options; it does not identify one best destination or combination for every firm.
4. Qualify alternate capacity before relying on it
Handle a new supplier or production location as a production and quality change, not simply a purchasing decision. Define what readiness means for the actual product and process. Depending on the operation, evidence could include accepted output, traceability, required approvals, and a successfully tested order and logistics flow.
Use staged commitments so the business can establish that the alternate source works before shifting volume away from a functioning line. The cited OECD sources support risk assessment and business-specific analysis, but do not prescribe a universal pilot length, acceptance threshold, or transition timetable. Set those controls against the company’s product requirements and customer obligations.
5. Keep the network map and contingency plan current
Supplier relationships and sub-tier sourcing can change. Assign responsibility for checking material changes to critical suppliers, and revisit the dependency map when sourcing, capacity, or logistics arrangements change. Test plausible common-cause disruptions and agree who makes allocation and escalation decisions if the primary and alternate sources are both affected.
The OECD’s 2024 review says ongoing analysis is needed to identify business-critical suppliers and that managerial attention and joint contingency planning should focus on those relationships.
Do these 3 things before closing this tab:
1Repair Windows errors before they cause bigger problems2Fix the driver behind crashes, sound loss and screen glitches3Clear out junk files and repair common Windows errorsDoes reshoring make a supply chain more resilient?
Not by itself. In its 2025 review, the OECD reports that policies aimed at relocalising supply chains could reduce global trade by over 18% and global real GDP by more than 5%, without consistently improving resilience; GDP stability would decrease in more than half of the economies analysed. These are modelled aggregate outcomes, not a company-level forecast, but they caution against treating domestic production as an automatic fix.
Reshoring may suit a particular product or operation, but its value depends on domestic capability, remaining upstream dependencies, concentration, and cost. Compare it with other ways to address the same exposure rather than assuming that distance from a supplier is the only source of risk.
Quick Recap
What should a manufacturer avoid assuming?
- Leaving China is not a prerequisite for resilience; China-Plus-One explicitly allows a continued China presence.
- A second supplier is not independent until relevant upstream dependencies have been checked.
- Nearshoring or reshoring does not automatically eliminate concentration or supply risk.
- No country can be named as universally best without knowing the product, destination market, process, and company constraints.
- There is no general transition duration, diversification cost, tariff outcome, or stock level established for all manufacturers; those depend on the specific operation and current conditions.
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