Global manufacturing is repositioning — but it’s complicated

Grace Sharkey

Mon, Mar 10, 2025, 3:59 AM 6 min read

The shifting dynamics of planetary manufacturing and proviso concatenation strategies person created an unprecedented infinitesimal of alteration for logistics professionals, businesses and policymakers alike. The China Plus One strategy, which encourages companies to diversify their manufacturing footprint beyond China, has gained traction owed to rising labour costs, commercialized argumentation uncertainties and geopolitical tensions.

However, arsenic highlighted successful discussions with Dimerco Express Group executives and manufacture experts, the execution of this strategy is acold from simple. From infrastructure limitations and workforce shortages to regulatory hurdles and freight marketplace volatility, companies pursuing diversification look a multitude of challenges.

For years, multinational manufacturers person explored alternatives to China, but caller commercialized disputes and tariff policies person accelerated the transition. According to Kathy Liu, planetary income and selling manager astatine Dimerco, the strategy began with labor-intensive industries, specified arsenic textiles and footwear, moving to countries similar Vietnam and Thailand. More recently, high-value sectors, including electronics and semiconductors, person started shifting accumulation to caller markets. However, this modulation is not simply a cost-cutting maneuver; it represents a structural displacement successful planetary proviso chains that requires semipermanent readying and investment​.

One large origin is the U.S.-China commercialized war, with tariff announcements threatening to enforce up to 60% higher duties connected Chinese imports. While galore manufacturers initially sought tariff alleviation by relocating accumulation to Vietnam, India and Malaysia, commercialized compliance adept Karen Kenney warned that these alleged “tariff-friendly” locations are becoming progressively susceptible to reciprocal tariffs, making the semipermanent benefits of relocation uncertain.

“The president specifically said that folks would nary longer beryllium capable to transship goods. What helium meant by that was you won’t beryllium capable to physique a bulk of the products successful China and vessel it done different state to get immoderate benignant of tariff benefit,” Kenny explained.

Additionally, U.S. Customs and Border Protection is cracking down connected transshipment practices, ensuring that companies cannot simply reroute Chinese-made components done different state to debar tariffs​.

“CBP knows wherever merchandise components are coming from. They’ve invested successful AI programs, and they person entree to a batch of data. So adjacent if you don’t cognize wherever your products’ components are coming from, CBP does, and yet they’re going to drawback up with it,” Kenney said.