China Plus One

"China Plus One" is the business strategy to avoid investing only in China and diversify business into other countries. Developing from the overconcentration of business interests in China, it may be done for reasons of cost, safety, or long-term stability. It has also been described as a 'macro-level phenomenon'

U.S. supply chains are adopting a “China Plus One” strategy as they shift away from an over-reliance on trading partners in that single country and strive to include more Asian, North American and European markets in response to the pressure of recent trade wars and the coronavirus pandemic, according to an analysis by commercial real estate giant CBRE.

China is and will remain one of the largest US trade partners. However, amid recent disruptions of supply chains, many companies will adopt a more diversified “China Plus One” strategy, an increasingly common strategy for manufacturers that have the bulk of Asian operations in China but want to reduce dependency on the manufacturing giant, in large part to limit the impacts of tariffs.

This trend has already started, as China-to-US exports decreased 12.7% in 2019 and total trade between the countries was down $100 billion year-over-year. Countries that have benefited from this shift include Taiwan and Vietnam, the US’ fastest-growing trade partners. Total trade between the US and the Southeast Asian nations increased in 2019 by $18.7 billion and $9.1 billion respectively, says CBRE. Countries outside of Asia such as Mexico have seen increased activity as well.

Needless to say, trade with China is here to stay along with the well established supply chains to and from the country.  However, over time, companies will begin the process of complimenting these production lines and supply chains as a “hedge” against any future supply chain disruptions to and from China. JUSDA is perfectly positioned to help organizations with their China Plus One strategy since our transportation and logistics networks circle the globe, in and outside of China.