What China+1 Means for Telecom, ICT Infrastructure and Defence-Tech Boards

A 3-Part Bridge Connect Mini Blog Series: Part 3

For companies operating in telecom, network infrastructure, satellite, data-centre hardware, defence-adjacent industries or other high-complexity, high-risk sectors, China+1 is not just a supply-chain tactic. It is increasingly a strategic imperative. The reasons are structural and multi-dimensional: shifting trade regimes, geopolitical risk, regulatory scrutiny, investor pressure — and a new baseline expectation of resilience and supply-chain diversification.

Here we explore the implications in depth: what’s changing, what should be done — and where the traps lie.

Why Telecom & ICT Infrastructure Are Especially Exposed — and Why China+1 Matters

The sectors you know well — telecom networks, data-centre infrastructure, satellite systems, critical-communications — are among the most exposed to supply-chain, regulatory and geopolitical risk. Several dynamics converge:

Geopolitical pressure and regulatory risk: As has been widely documented over the past decade, many governments and regulatory bodies in the US, EU, UK, Australia and other allied jurisdictions have imposed restrictions on the use of equipment from certain Chinese vendors in critical telecom infrastructure — citing security concerns, data integrity, and national-security risk. Wikipedia+2PwC+2

These concerns are not hypothetical. They translate into procurement bans, exclusion from public-sector contracts, higher scrutiny on vendor supply-chains, and reputational — or even legal — risk.

Supply-chain fragility and dependencies: As recent global events have shown (pandemics, trade wars, sanctions, logistical disruptions), a supply-chain concentrated in a single geography represents a systemic vulnerability. For telecom and ICT hardware, this often matters even more, because components are complex, vertically integrated, and often sourced globally. McKinsey & Company+2Rhodium Group+2

Furthermore, even if final assembly shifts outside China, upstream dependencies — chips, PCBs, modules, raw materials — may remain rooted in Chinese supply networks, undermining the resilience gains of relocation. Rhodium Group

Investor, insurer and customer expectations are shifting: As supply-chain risk becomes more visible, investors, insurers, and large enterprise or government customers increasingly demand assurances — supply-chain diversity, provenance, traceability, redundancy. For critical-infrastructure operators, being able to demonstrate robust, multi-geography sourcing becomes a competitive and compliance advantage. PwC

Given these pressures, for telecom-industry boards and leadership, China+1 is less a “nice to have” than a baseline requirement — a structural hedge, and often a pre-condition for large contracts, public-sector procurement or infrastructure financing.

Opportunities: What China+1 Enables for Telecom / Defence-Tech & Infrastructure Firms

Adopting China+1 (or a broader multi-node supply strategy) can deliver material strategic benefits. Here are the main ones — and how they play out in real business scenarios.

• Risk reduction and resilience by design

Building manufacturing or assembly nodes outside China — or adding secondary supply-chain partners — creates redundancy. Should Chinese supply-chains be disrupted (tariffs, export controls, geopolitical tension, logistic disruption, natural disaster, regulatory blacklisting), firms with diversified supply-chains can continue operations — with alternate sourcing, alternate production, alternate logistics.

For telecom and ICT hardware OEMs, this reduces the risk of project delays, component shortages or forced substitutions — which in mission-critical deployments (networks, data centres, defence systems) can be catastrophic.

• Regulatory and compliance flexibility

For operators bidding for government or regulated contracts — public-network deployment, national defence, secure communications, GNSS-resilient infrastructure — having a diversified supply chain is increasingly being seen as a compliance asset. If parts of the supply-chain (especially upstream components) remain tied to a politically sensitive country, that may disqualify the firm. A credible multi-jurisdiction supply-chain reduces that risk.

In industries subject to export-controls, sanctions, or procurement restrictions, supply-chain traceability, auditability, and multi-source sourcing are becoming as important as technical specs. China+1 helps meet those expectations.

• Market-access agility and tariff/ trade-policy risk mitigation

With trade policies, tariffs, and export regimes in flux globally, manufacturing location becomes a strategic lever. Producing (or final-assembling) in a tariff-friendly or politically neutral country can preserve access to critical markets, avoid punitive tariffs or origin-based restrictions, and enable smoother market entry.

For telecom or ICT vendors supplying across multiple regions — Americas, EU, MEA, Asia — a diversified manufacturing footprint across “plus-one” hubs aligned with target markets helps optimise cost, compliance, delivery time and regulatory exposure.

• Competitive differentiation for bids, financing and long-term contracts

As buyers — especially governments or large enterprises — become more cautious about supply-chain risk, vendors who can demonstrate diversified, robust supply-chains will stand out. This becomes a strategic differentiator: in procurement, in investor relations, in contract negotiations, in insurance or financing conditions.

In regulated sectors (defence-tech, secure communications, critical infrastructure), this differentiation could be decisive — enabling firms to win contracts that others cannot, or avoid regulatory/legal obstacles.

• Future-proofing supply-chain architecture

Given ongoing shifts — rising geopolitical friction, cycles of export controls, new trade blocs, increased scrutiny on supply-chain provenance — building a multi-node supply-chain is also about future-proofing. Firms investing now in distributed manufacturing and supply-chain governance build an operating model resilient to emerging headwinds.

This goes beyond “assembly relocation”: it requires supply-chain mapping, multi-tier supplier vetting, compliance regimes, redundancy planning — an architecture designed for uncertainty rather than optimised solely for cost.

Risks, Complexities and Common Pitfalls in China+1 Strategy

While China+1 offers material upside, it is not a magic bullet. Executives must remain aware of inherent trade-offs, limitations, and failure modes.

• Upstream dependencies remain difficult to relocate

Even with diversified final-assembly capacity, many upstream inputs — chips, PCBs, sub-assemblies, raw materials — remain deeply rooted in China’s manufacturing ecosystem. For high-tech, high-complexity telecom hardware (optics, RF modules, semiconductors, batteries, chipset-driven devices), upstream supply chains are often global but heavily China-centric. Rhodium Group+2ITIF+2

This means that a “plus-one” factory may not insulate against all supply-chain shocks — especially those targeting components, raw materials or upstream processing. Without a comprehensive supply-chain audit and diversification beyond final-assembly, the firm remains exposed.

• Added cost, complexity, and management overhead

Multi-geography supply chains require more complex logistics, quality control across jurisdictions, regulatory compliance in multiple legal regimes, auditing, vendor management, and potentially higher overhead. Firms may pay a cost premium for resilience, redundancy and compliance.

Smaller firms, or those used to lean, centralised supply-chains, may struggle with the complexity and overhead of managing a distributed network of manufacturing partners.

• Risk of “partial diversification” being mischaracterised as full risk mitigation

There is a temptation — especially under regulatory or investor pressure — to declare “China+1 compliant” based solely on final-assembly location, without properly mapping upstream supply dependencies. That can create a false sense of security. Only a full supply-chain map — from raw materials to components to assembly to logistics to distribution — can provide real assurance.

• Geopolitical and regulatory exposure shifts, but does not disappear

Even alternate jurisdictions may carry their own political, regulatory or logistic risks. Some may lack industrial maturity, have infrastructure challenges, or be exposed to other regional instabilities. Diversification reduces, but does not eliminate, exposure — especially for sectors requiring high precision, high-quality, high-certification standards.

Strategic Actions & Governance Road-Map for Boards and Decision Makers

Given the opportunities and risks, what should boards, CXOs and strategy leads in telecom / ICT / infrastructure / defence-tech do today? Below is a recommended roadmap — a governance-grade playbook for embedding China+1 (or multi-node supply architecture) into your organisation’s strategic DNA.

1. Mandate a full supply-chain audit and mapping

   • Identify and document every tier of the value chain for critical components — upstream inputs, sub-assemblies, final assembly, logistics, QC, export.

   • Tag “single-source” or “single-geography” dependencies. Highlight those that may pose regulatory, geopolitical or logistic risk.

     
     

2. Define “resilience metrics” alongside traditional KPIs

   • Beyond cost, quality and throughput, add supply-chain diversity, node-count, geographic dispersion, vendor-diversity, regulatory diversification, and compliance risk as board-level KPIs.

   • Use those metrics in vendor selection, procurement approvals, risk management, RFP design and strategic sourcing decisions.

     
     

3. Develop a multi-node supply-chain architecture — not just one alternate location

   • Prefer “China + multiple hubs” (e.g. China + Southeast Asia + Near-shore or Western hub) over a single “plus one” to avoid substituting one concentration for another.

   • For mission-critical hardware (telecom radios, core infrastructure, data-centre modules, satellite components) consider dual or triple sourcing from independent supplier clusters.

     
     

4. Invest in supplier diversification, due diligence and quality control

   • Vet new suppliers rigorously — audit facilities, assess compliance (environmental, labour, regulatory), verify supply-chain provenance, build traceability.

   • Build long-term relationships, not short-term substitutions — encourage supplier capacity building, quality standard convergence, supply-chain transparency.

     
     

5. Align supply-chain strategy with market access, compliance and regulatory posture

   • When bidding for public-sector or regulated projects, design supply-chain origination accordingly (geographic compliance, neutral sourcing, disallowed vendor avoidance, provenance proof).

   • For cross-border sales, structure manufacturing footprint to optimise tariff exposure, origin-based trade advantages, and regulatory neutrality.

     
     

6. Monitor and stress-test — scenario-planning for geopolitical, logistic, regulatory shocks

   • Build supply-chain stress tests: what happens if a political sanction hits country X, if export controls tighten, if logistic routes are disrupted?

   • Maintain alternate sourcing strategies — inventory buffers, alternate vendors, dual sourcing — to ensure business continuity under adverse scenarios.

     
     

7. Use supply-chain diversification as a strategic differentiator

   • For bidding, financing, insurance, or partnership discussions, highlight diversified supply-chain as a strength.

   • For defence-tech or critical-infrastructure clients — where supply-chain provenance, reliability, and security matter — a multi-node strategy may become a requirement.

What This Means in Practice: Use Cases & Emerging Trends

Several emerging developments and corporate moves illustrate how China+1 is already playing out — and where the architecture is evolving:

• A recent global analysis shows that even amidst supply-chain reallocation, many firms maintain strong upstream ties to Chinese component supply, while shifting final-assembly and export capabilities to ASEAN or other hubs — resulting in “China-anchored upstream, diversified downstream” value chains. arXiv

  
  

• In telecom equipment manufacturing, companies are increasingly responding to pressures (tariffs, export restrictions, vendor-bans) by diversifying vendor and manufacturing footprints, using China+1 or friend-shoring/ally-shoring strategies to mitigate risk. PwC

  
  

• For firms building data-centre infrastructure, network hardware or satellite-communications gear — where reliability, supply-chain continuity and compliance are critical — supply-chain diversification is becoming part of corporate governance and risk management rather than mere procurement optimisation.

We are also seeing structural shifts in supplier behaviour: large OEMs no longer treat China+1 as contingency. They are integrating it into long-term sourcing plans, vendor onboarding, compliance frameworks, and multi-year procurement contracts.

Strategic Conclusion: For Telecom & Infrastructure Boards, China+1 Is Now a Governance Imperative

For firms operating in telecoms, ICT infrastructure, defence-tech, data-centres, satellite systems or other sectors with high supply-chain complexity and regulatory exposure, China+1 (or multi-node supply-chain architecture) is no longer optional. It is becoming a baseline requirement — for resilience, compliance, regulatory access, procurement credibility, and long-term viability.

Boards and executives who treat China+1 as just a procurement tweak will likely find themselves exposed: to supply-chain disruption, regulatory risk, vendor bans, geopolitical shocks, and compliance scrutiny.

The real strategic opportunity lies in doing more than relocating assembly: in architecting globally diversified, multi-node, traceable, resilient supply-chains, aligned with regulatory requirements, investor expectations, and market-access strategies.

In short: the “plus-one” should not be seen as a backup. It should be seen as a foundational pillar of supply-chain architecture. For mission-critical infrastructure, national-level clients, or long-term contracts, supply-chain diversification may soon become a board-level requirement — not a competitive differentiator.

For those willing to recognise and act on that reality, China+1 offers not only risk mitigation — but strategic advantage, regulatory compliance, and future-proofing in a volatile geopolitical environment.