China+1: what Vietnam and India can really do — and what they cannot
Tariffs, geopolitics, supply chain laws: the pressure to diversify is real. But between conference rhetoric and the factory floor lies a long road — and those who merely follow the trend swap known risks for unknown ones. Here is the comparison without ideology.
7 min read · For purchasing managers and CEOs
Where the alternatives are genuinely strong
Vietnam has become the first choice for labour-intensive production with manageable part variety: simple to mid-level textiles and footwear, furniture assembly, basic electronics assembly. Wages sit 30–50 % below southern China, and the EU free trade agreement (EVFTA) cuts many duties towards zero — for textiles a real cost lever versus the 12 % third-country duty.
India scores in textiles (home-grown cotton), forged and cast parts, chemicals and increasingly in electronics final assembly — with a huge domestic market as tailwind and English-speaking management. For certain product groups (towels, bedding, simple metal parts) India is simply competitive today, sometimes cheaper than China.
Where the maths does not work
The blind spot of the diversification debate is the supply chain behind the end product: components, tooling, fittings, electronic parts, packaging — in Vietnam as in India, much of this still comes from China. Your “China-free” product from Hanoi often contains 60–70 % Chinese input, with longer total lead times and one more border in the process.
Add the practical hurdles: tooling and mould making remain China’s domain (Vietnamese factories mostly have moulds made in China), supplier density for complex products is missing, quality systems are younger on average, and the good factories’ capacity is tied up by major customers — an SME with three containers a year stands further back in the queue in Vietnam than in China.
The realistic strategy for SMEs
For most, China+1 does not mean “out of China” but: making the China business resilient (second sources in other provinces, tooling ownership, buffer stocks) and diversifying in parallel where it genuinely pays per product group — textiles to Vietnam because of EVFTA, home textiles to India, complex technology stays in China. The decision basis is the full-cost calculation per article, not the headline.
Our advice from practice: start diversification with your least critical volume article, not the most complicated one — and expect 12–18 months until a new country runs smoothly. We tell you honestly per product group whether the switch holds; our focus remains China, and precisely that makes our assessment of the alternatives unsuspicious.
Common questions about China+1
How much do the duties really differ?
Considerably, depending on product group: from Vietnam many goods are duty-reduced or duty-free thanks to EVFTA (with proof of origin!), from India the normal third-country duty applies as for China, but without the product-specific anti-dumping duties that hit China on bicycles, fasteners or aluminium profiles. Caution: origin must be genuine — merely repacking Chinese goods in Vietnam is customs fraud and actively pursued by OLAF.
Do you source in Vietnam or India yourselves?
Project-based yes, via vetted partner networks — with the same standards (audit, samples, pre-shipment inspection). Our core business and team sit in China; which is exactly why we only recommend switching where it is genuinely better on full cost and risk, not because it currently sounds fashionable.
What about supply chain due diligence laws (LkSG/CSDDD)?
The due diligence duties apply regardless of country — switching to Vietnam or India does not reduce them, sometimes the opposite. What genuinely helps: documented audits, traceability and long-term supplier relationships instead of anonymous spot buying. With structured sourcing these documents accrue anyway — your due diligence file becomes a by-product, not a project.
Related topics
Calculate your diversification?
Send your product groups — we calculate China against the alternatives on full cost and risk, honestly and per article.