The Hidden Costs of Moving Supply Chains Out of China

The "China plus one" strategy was intended to provide a safeguard against geopolitical friction, yet the reality of operating in Vietnam, India, and Indonesia has proven difficult. For firms like Dawang Metals and retailer Target, the shift away from Chinese suppliers often triggered unforeseen supply chain disruptions and labor shortages. Jin Chaofeng, a Chinese exporter who shuttered a facility in Ho Chi Minh City, found that even basic requirements like molds and screws still needed to be imported from China, negating the cost benefits of moving abroad. Beyond the immediate price of labor, firms are grappling with unreliable power grids in Southeast Asia and the daunting task of replicating China’s dense network of specialized equipment and logistical support. While Thailand, Vietnam, and Indonesia remain viable long-term insurance policies, companies are increasingly viewing them as backup capacity rather than wholesale replacements. This emerging reality suggests a more fragmented, hybrid model of global manufacturing. Businesses are moving toward a flexible, multi-country strategy, keeping China as the primary hub while maintaining smaller, alternative footprints to hedge against future trade volatility. As Washington and Beijing remain locked in a cycle of shifting tariff barriers, the decision to relocate is no longer just a math problem based on duty rates, but a high-stakes calculation of operational reliability.