Global Sourcing Evolution: How ‘China Plus One’ is Redefining Procurement

Sahil ShahPresident & CEO of MESH Works•
Global Sourcing Evolution: How ‘China Plus One’ is Redefining Procurement

Many companies have employed a China Plus One strategy in Sourcing to mitigate risk across global supply chains. According to McKinsey, in 2023, FDI decreased in China by 17%, while in the rest of Southeast Asia increased by 20%. Additional tariffs, trade barriers, and intellectual property concerns could be even more significant and drive more manufacturing out of China into other parts, like Southeast Asian countries and India. Countries like Vietnam and Indonesia are rising rapidly and are expected to continue to increase.

Nearshoring vs. Global Sourcing

For a Procurement strategy, the best combination will always be a mix of nearshore production with strong global sourcing & supply chain networks. This allows organizations to leverage the benefits of both price & availability worldwide.

Choosing which products to nearshore or continue sourcing globally becomes the key question for organizations to answer. In some cases, for high-running or critical parts, it could make sense to dual source production from 2 different regions to reduce risk.

When should I dual-source vs re-source?

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How to find new suppliers?

Companies use many different channels, such as events and shows, and traditional channels, like Google search and business registries, to find new suppliers. Sourcing, validating, and qualifying potential suppliers’ capabilities requires much time.

When looking for new suppliers, qualifying suppliers across various functions is essential to ensure they align with your expectations regarding design, development, mass production, quality, and engineering changes.

MESH Audits are a 45-question sourcing audit that covers manufacturing processes, plant layout, equipment, engineering, quality, and logistics. This allows buyers to quickly and easily validate the supplier’s capabilities.

Conclusion:

In today’s complex supply chain landscape, companies adept strategies like China Plus One to reduce risks and improve resilience. With shifts in foreign investment and rising opportunities in Southeast Asia, businesses are exploring nearshoring and global sourcing to strike the right balance.

Deciding when to dual-source or re-source depends on risk mitigation, cost, and capacity needs. Meanwhile, finding reliable suppliers requires thorough vetting to ensure they meet quality and production standards. Tools like MESH Works can streamline this process, helping businesses make more innovative, confident sourcing decisions for long-term success.

Written by Sahil Shah, President & CEO of MESH Works.

Want to expand your business by leveraging MESH? Book a Free Demo Now.

Frequently Asked Questions

Q 1. What is the China Plus One (C+1) sourcing strategy?

Ans. China Plus One is a procurement strategy where companies diversify manufacturing by adding at least one country outside China. This reduces dependency, lowers geopolitical risk, and strengthens supply chain resilience.

Q 2. Why are companies accelerating China Plus One strategies?

Ans. Declining FDI in China, which is down 17% in 2023, along with higher tariffs, rising labor costs, and concerns about intellectual property are prompting companies to source more from Southeast Asia, India, and other emerging markets.

Q 3. What is the difference between nearshoring and global sourcing?

Ans. Nearshoring brings production closer to the home market. This improves speed and makes logistics more reliable. Global sourcing takes advantage of lower costs and a broader network of suppliers around the world. Most companies use a mix of both strategies to balance cost, risk, and availability.

Q 4. When does it make sense to dual-source vs. re-source?

Ans. Dual-sourcing works best for parts that are used often or are critical, as having backups lowers risk. Re-sourcing happens when a supplier fails to meet quality, capacity, cost, or stability standards. The decision depends on how much risk you can handle and what your supply chain priorities are.

Q 5. How do companies find new suppliers in a China Plus One strategy?

Ans. Businesses use trade shows, online directories, Google searches, and sourcing platforms. However, supplier validation takes time and skill. Tools like MESH Works make this easier by offering pre-vetted suppliers and organized capability audits.

Q 6. What is a MESH Audit and how does it help supplier evaluation?

Ans. A MESH Audit is a 45-question assessment that looks at manufacturing processes, machinery, quality systems, engineering abilities, plant layout, and logistics. It helps buyers quickly see if a supplier meets the necessary production and quality standards.

Q 7. Which regions are emerging as alternatives to China for manufacturing?

Ans. Vietnam, Indonesia, India, and Mexico are experiencing fast investment growth because of lower costs, beneficial trade agreements, and increased industrial capacity.

Q 8. How does China Plus One improve procurement resilience?

Ans. By diversifying their suppliers, companies lessen their dependence on one country. They avoid tariff impacts, minimize production risks, and achieve better pricing through competition across regions. To support your diversification efforts, check our free global sourcing resources.

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