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You can reduce dependence on China without abruptly moving production: map the inputs and operations most likely to interrupt output, qualify genuinely independent alternatives, then shift work in controlled stages. Keep the China footprint where it still makes operational sense; measure resilience by whether the business can keep producing through a disruption, not by how many countries appear on a sourcing map.

Should you move production out of China?

Not necessarily. China-Plus-One means adding manufacturing or supply-chain capacity beyond China while retaining a presence there, according to a UK government evidence summary. It is one way to diversify, not a requirement to exit China or a guarantee of resilience.

The scale of global concentration helps explain why manufacturers are reassessing dependencies, but it does not identify the right alternative for any one company. In its 2 June 2025 summary of the Supply Chain Resilience Review, the OECD reported 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 rise driven almost entirely by non-OECD countries. Over the past 25 years, China’s contribution to countries’ significant import concentration rose from 5% to 30%, while the combined contribution of the United States, Germany and Japan fell from 30% to 15%. These are aggregate measures, not company-level exposure estimates.

The same OECD summary says strategic manufacturing has high foreign exposure in both directions: 26% of its inputs come from abroad and 27% of its output depends on foreign final demand. Its modelling also found that policies to relocalise supply chains could reduce global trade by over 18% and global real GDP by more than 5%, without consistently improving resilience; GDP stability would decline in more than half of the economies analysed. Those scenario results are not forecasts for an individual manufacturer, but they caution against treating domestic production as an automatic cure for risk.

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How do you identify what to diversify first?

Start with the disruption that would matter to your operation, not with a list of countries. Identify inputs, components and production steps whose loss would stop or materially impair output. For each, document the business impact, how likely a disruption is, and whether a suitable substitute is available. Make the ranking criteria explicit: the OECD notes that there is no commonly agreed definition or established method for measuring trade dependencies.

  • Disruption risk: What could interrupt supply or production, and how exposed is this input or step?
  • Business importance: What happens to output, customers or other operations if it is unavailable?
  • Substitutability: Can another source or process meet the actual product and process requirements?

Use those factors to focus supplier research and qualification effort on business-critical dependencies rather than spreading resources evenly across every purchase.

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Which diversification strategy fits each exposure?

Compare possible responses against the same operational questions: Is the alternative independent of current upstream sources? Can it meet the requirements? What qualification work will it need? How will logistics, borders, cost, working capital and destination-market rules affect the operation? The best mix depends on the product, market and company constraints; the sources do not establish a universally best destination.

Approach What it changes What to examine Trade-off or caution
China-Plus-One or another international supplier Adds supply or production outside China while retaining a China presence. Supplier independence, qualification effort, available capacity, logistics and cost. A new direct supplier may rely on the same upstream sources as the existing one (OECD, 2024; UK government evidence summary).
Nearshoring Moves an operation to a nearby country. Available capability, distance-related delays and access to the destination market. Proximity alone does not remove supplier concentration or upstream exposure (OECD, 2024).
Friend-shoring Shifts trade toward allies or like-minded countries. Regulatory alignment, geopolitical exposure and supplier capability. The strategy label does not establish that a supplier is independent or qualified (OECD, 2024).
Reshoring Brings a supply-chain node back to the home country. Domestic capability, concentration, cost and the origin of upstream inputs. Relocalisation does not consistently improve resilience in OECD analysis (OECD, 2025).
Inventory or stockpiling Holds a buffer of product or inputs against interruptions. Lead-time uncertainty, disruption duration, shelf life and carrying cost. No universal stock level is established; set buffers for the product and its risks (OECD, 2023).

These approaches can be combined. For example, a company might retain its current China production, qualify a second international source for a critical component, and use inventory for a separate input with a long replenishment lead time. That is a planning pattern, not a recommendation for any particular product.

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How do you qualify a second source?

A second Tier 1 supplier is not a dependable contingency until you understand whether it can continue supplying during the disruption that would affect the first. OECD’s 2024 supply-chain review warns that backup suppliers can share raw-material or other upstream dependencies. It also notes that reshoring a direct supplier can move exposure upstream instead of removing it.

  1. Map the proposed supplier’s dependencies. Ask about shared raw materials, components, sub-tier suppliers, logistics routes and other common points of failure. Compare those against the existing source.
  2. Confirm product and process capability. Check that the alternative can meet the actual specification and production requirements. A different location or supplier name is not evidence of a usable substitute.
  3. Define readiness evidence before relying on the source. Set product- and process-specific evidence such as accepted output, traceability, required approvals, and a tested order and logistics flow.
  4. Validate the handoff while the current operation remains in service. Treat the alternate source as a production and quality change. Establish how orders, information, materials and responsibilities will move between the sources before shifting work.
  5. Decide how the source will be used in normal conditions and during disruption. Establish the conditions under which the second source receives work and how the business will activate it if the primary source is interrupted.

The available guidance does not prescribe a universal pilot duration, acceptance threshold or transition timetable. Set those controls for the product, process and approvals involved rather than assuming a generic schedule will fit.

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How can you transition without disrupting operations?

Keep the existing production path operating while the alternative is being assessed and validated. Move only when the evidence defined for readiness has been met, and coordinate the change with the teams responsible for quality, production, procurement and logistics. For each transition, identify who approves the change, what must be true before volume shifts, and how the operation will respond if the new path cannot deliver as planned.

Plan for the work the added source creates as well as the risk it is meant to reduce. OECD’s 2024 review notes that multiple suppliers can increase supply-chain complexity, and that backup suppliers do not necessarily mitigate single-source risk. A contingency that adds coordination or depends on the same constrained upstream source can leave the original vulnerability intact.

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How do you keep the plan useful over time?

Supplier maps can become stale as suppliers change their own sources or capacity. Keep visibility current for critical relationships, and use contingency planning to test common-cause disruptions rather than assuming sources will fail independently. The OECD recommends ongoing analysis to identify business-critical suppliers, with management attention and joint contingency plans focused on those relationships.

Revisit the priority list when the product, process, supplier network or operating conditions change. Record what each alternate source can provide, what it depends on, and the conditions under which it is ready to take work. This keeps the plan tied to actual production capability rather than a static count of suppliers or countries.

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