Where the Manufacturing Footprint Is Moving: The New Winners of the China+1 Shift

A 3-Part Bridge Connect Mini Blog Series: Part 2

As the logic of China+1 becomes mainstream, the real question is: where exactly is global manufacturing relocating — and why do certain destinations emerge while others stall? The answer is layered, and in board-level supply-chain planning it matters more than many firms assume.

In this section we trace the rising manufacturing hubs — by region and sector — that are attracting the bulk of “plus-one” deployment. We show not a wholesale exodus from China, but a nuanced redistribution of assembly, sub-assembly and export platforms. For executives in telecoms, ICT, infrastructure or defence-tech, the map reveals where strategic overhangs accumulate, and where real opportunity lies.

The Overarching Trend: Multi-Node, Regionalised Value Chains

Global supply-chain analyses over the past five years confirm that the “China+1” strategy has morphed into what some analysts call “China + multiple” or “distributed manufacturing.” z2data.com+2CKGSB+2

Rather than abandoning China, many firms are simply expanding into alternate geographies. The objective is not cost-arbitrage alone, but resilience, flexibility, market access, regulatory hedging and supply-chain optionality. beroeinc.com

This trend aligns with structural shifts in global macro-economics: rising wages in China, volatile trade policy, post-pandemic logistic fragility, and increased regulatory scrutiny of supply-chain provenance. z2data.com

In practice, what this looks like is a polycentric manufacturing architecture. Upstream components (PCBs, raw materials, sub-assemblies) often remain China-centric, while downstream stages (final assembly, packaging, testing, export) are distributed across a ring of alternative hubs — sometimes multiple for a single product line.

The result: supply-chain resiliency without forsaking China’s depth. And for global firms, optionality without sunk-cost “all-or-nothing” moves.

Who Are the New “+1” Winners — and What They Offer

Here we examine some of the main beneficiaries of the China+1 shift today:

Vietnam: Electronics and Assembly Hub

• In 2024, Vietnam’s electronics exports reached US$126.5 billion — more than one-third of the country’s total exports. VietnamExportData+2B-Company+2

• Foreign Direct Investment (FDI) into Vietnam’s manufacturing sector hit around US$25.35 billion in 2024, with a 9.4% increase year-on-year. mpi.gov.vn+1

• High-tech investment surged: in H1 2025, electronics, computing and optics accounted for a significant share of new manufacturing FDI. VietNamNet News+1

• Vietnam is increasingly shifting from simple final assembly to higher-value work: printed circuit boards, sensors, optical components — functions that previously had few alternatives outside China. jtmasia.com+1

Implication for supply-chain strategy: Vietnam offers a mature “plus-one + value-chain up-shift” alternative. For companies in telecoms, ICT, or hardware — including data-centre, network equipment, or even battery/storage/energy-related assembly — Vietnam now delivers beyond simple labour arbitrage: it offers real assembly AND semi-assembly capability, underpinned by substantial FDI-backed capacity.

However, supply-chain leads must recognise that for many of these Vietnamese-assembled products, components and upstream inputs still flow from China — so diversification remains partial, not full.

India: From Assembly to Component-Rich Manufacturing (with Caveats)

• In 2023, India’s electronics production reached US$102 billion, with sub-assemblies and component demand of about US$45.5 billion. India Briefing+1

• India’s government and private sectors have articulated ambitions to leverage China+1 by attracting electronics manufacturing — but analysts warn that to capitalise fully, India must rapidly close infrastructure and policy gaps, and improve supply-chain maturity. HFS Research+2The secretariat+2

• For now, many foreign and domestic firms engage in selective “plus-one” moves: final assembly or sub-assemblies shift to India, while more complex upstream inputs (sub-components, raw materials) generally remain sourced externally — often from China. Wikipedia+2India Briefing+2

Implication: India offers a promising, long-term “plus-one plus sub-assembly” alternative, potentially extending value-chain diversification beyond assembly. It could become a strategic second node for firms dependent on regional supply, especially for markets in South Asia, Middle East and Africa. However, until supply-chain infrastructure, logistics and component-supplier ecosystems mature fully, India remains a partial hedge rather than a full replacement.

Mexico: Near-shoring, North-America Proximity and Supply-Chain Resilience for the Americas

• In 2023, Mexico overtook China as the U.S.’s largest merchandise trading partner — evidence of a major shift in near-shoring dynamics. BCG Global+1

• Analysts describe Mexico as a key hub for near-shoring, driven by lower logistics costs, proximity to the U.S. market, preferential trade under regional agreements, and favourable labour arbitrage. Bank for International Settlements+2sixmexico.com+2

• “Nearshoring 2.0” is not limited to low-value manufacturing; sectors such as semiconductors, aerospace, medical devices, and advanced industrial goods are increasingly part of the diversification wave. Mexico Business News+2Stiftung Wissenschaft und Politik (SWP)+2

Implication: For firms targeting the Americas — especially data-centre hardware, telecom equipment, or ICT infrastructure serving U.S. customers — Mexico offers a viable “plus-one” option. It reduces geographic distance, shortens logistics, mitigates exposure to tariffs or supply-chain disruption in Asia, and provides supply-chain proximity to the end market. In a world of resurgent protectionism and unpredictable trade policies, near-shoring through Mexico may become essential for North-America-facing supply lines.

Thailand: Automobiles, EVs and Component Relocation — A New Industrial Node

• Thailand remains a major automotive production centre in Southeast Asia — in 2024, the country produced around 1.47 million vehicles (both domestic and export). data.thaiauto.or.th+2EOS Global Expansion+2

• With rising global demand for electric vehicles (EVs) and battery-powered mobility, Thailand has repositioned itself. Recent reforms to its EV-industry policy (EV 3.5) offer tax relief, export flexibility, and incentives aimed at attracting battery and EV-component manufacturing. ASEAN Briefing+2KPMG+2

• Multinationals and Chinese OEMs have responded: investment into battery manufacturing plants, EV assembly lines, and supply-chain relocation for electric drivetrains and battery modules has increased significantly in 2025. CleanTechnica+2ASEAN Briefing+2

Implication: For sectors overlapping energy, storage, power systems, battery supply, electric mobility — including those relevant to telecom-infrastructure (e.g. backup power systems, battery banks, DC-UPS, off-grid solutions) — Thailand offers a regional “plus-one” manufacturing node. Firms producing or sourcing battery-based hardware can diversify away from Chinese manufacturing to a stable and incentivised hub in Southeast Asia.

In addition, the shift signals that “plus-one” diversification is not limited to consumer electronics or low-cost goods — it increasingly touches heavy manufacturing, energy systems, and high-value supply chains.

Why These Hubs Are Winning: Comparative Advantages

From the corporate and board-level vantage point, these countries exhibit a recurring set of advantages, which explain their rising attractiveness:

• Cost arbitrage + skilled labour pools: Labour cost remains lower than in China (in many cases), yet labour pools are large and increasingly skilled — especially in electronics assembly (Vietnam, India) or automotive battery/EV components (Thailand, Mexico).

  
  

• Policy incentives and FDI-friendly regimes: Governments in Vietnam, Thailand, India and Mexico are actively courting foreign investment with tax breaks, incentives, export facilitation, and simplified compliance frameworks. supplychainstrategy.media

  
  

• Proximity to end-markets & logistic efficiencies: For firms serving North America or Latin America, Mexico offers proximity; for global supply hubs serving Europe, the Middle East, Africa, or Asia-Pacific, Vietnam, Thailand and India offer geographic and logistic advantage versus China-only sourcing.

  
  

• Diversification of geopolitical risk: Spreading manufacturing across multiple jurisdictions reduces the risk tied to a single geopolitical hotspot. With rising export controls, sanctions risk, and supply-chain scrutiny, multi-node supply chains are becoming corporate imperatives, not optional contingencies. thediplomat.com

  
  

• Scalability and upgrade paths: Many “plus-one” countries are no longer offering only final-assembly capabilities. They are building capacity for sub-assemblies, components, PCB manufacturing, battery modules, and higher-value production — enabling real value-chain diversification rather than superficial relocation. jtmasia.com

  
  

• In short: these hubs give firms the flexibility to re-architect their supply chains — not just move them — and to evolve incrementally rather than commit to a full “exit-China” scenario.

What This Means (and Doesn’t) for China-Origin Dependency

It’s critical to recognise what the current wave of manufacturing relocation does not accomplish — at least not yet.

• Upstream components often remain China-centric. Even as final assembly migrates to Vietnam, India or Mexico, many of the key inputs — chips, PCBs, raw materials, sub-assemblies — continue to come from Chinese industrial ecosystems. The shift is often in geography of final integration, not in the fundamental supply-chain architecture. VietnamExportData

  
  

• Full “de-China-isation” remains elusive. As of 2025, there is little evidence that global supply chains have engineered a wholesale migration away from China’s upstream capabilities. What we see instead is diversification of manufacturing nodes, not wholesale supply-chain migration.

  
  

• New risks arise. Relocating to new geographies introduces fresh dependencies: supply-chain maturity, labour-market instability, logistics bottlenecks, regulatory risks, infrastructure gaps, and management complexity. Firms must weigh these trade-offs.

  
  

Thus, for many global firms the current state is less “China replaced” and more “China complemented.” The supply-chain becomes multi-geographic, modular, and hedged — a design that values optionality and risk mitigation over maximum cost-efficiency.

Strategic Lessons for Corporate, Telecoms, ICT or Defence-Tech Boards

What should decision-makers draw from this evolving landscape? Here are key take-aways for strategic supply-chain and vendor-management planning:

1. Map the full supply-chain, not just final assembly. When evaluating supplier resilience or “China-plus” strategies, boards should demand full transparency: where components are sourced, where sub-assemblies are made, where testing and packaging occurs. Only then can real diversification risk be assessed.

   
   

2. Prioritise multi-node architectures. Relying on a single “plus-one” hub is less robust than designing multi-node value chains. For critical sectors — telecom radios, data-centre racks, satellite hardware, battery storage modules — having at least two or more alternate manufacturing nodes significantly increases resilience.

   
   

3. Align manufacturing hubs with market-access and regulatory strategy. For firms serving different geographies (Americas, EU, Middle East, Asia), strategic placement of manufacturing hubs can deliver tariff advantages, regulatory hedging, and faster time-to-market.

   
   

4. Build long-term supplier relationships and invest in capacity-building. Diversification is not a one-off exercise. It requires investment in new supply-chain ecosystems, continuity of quality, vendor stability, local compliance, logistics networks. Boards should treat plus-one manufacturing as a long-term strategic infrastructure.

   
   

5. Use supply-chain diversification as a strategic differentiator. For businesses competing for contracts — especially in regulated, critical-infrastructure, telecom or defence sectors — the ability to demonstrate a geographically diversified, resilient supply chain could become a competitive edge. It signals risk awareness, compliance readiness, and strategic robustness to customers, regulators, and insurers.

Conclusion — The China+1 Winners Are Not Replacements, But Strategic Complements

The evidence shows clearly: global manufacturing is not decoupling from China in a wholesale, dramatic way. Instead, firms are building layered, distributed, modular supply-chains.

Places like Vietnam, India, Mexico and Thailand are not emerging as replacements for China — at least not yet — but as complementary hubs that absorb assembly, sub-assembly and export capacity, while leaving China’s upstream dominance intact.

For companies and boards in telecoms, ICT infrastructure, data centres, battery/energy-storage, satellite systems, or defense-adjacent hardware, this trend presents a powerful strategic opportunity: to re-architect supply-chains for resilience, optionality, regulatory compliance and market access — without the disruption and cost of a full exit from China.

In other words: the future of manufacturing is not “China or elsewhere.” It is “China and elsewhere.”