India is a Strong “China Plus One” Contender, But Supply Chain Strategies Need to Be “China Plus Many”

 

In an era of the evolving global supply chain, businesses are looking beyond China, a traditional manufacturing behemoth, for diversification. The reasoning is clear: mounting political tensions and escalating costs have driven companies to explore alternative supply chain strategies. India often surfaces as a likely contender for a “China Plus One” strategy with its vast labor force.

Yet, it faces its own challenges; despite a sizable workforce, only 14% of its economy focuses on manufacturing, compared to China’s 27%. Vietnam offers a contrasting landscape: it boasts robust manufacturing but lacks the workforce. This geographic patchwork of resources and capacities underscores a pressing need for businesses to adopt “China Plus One” or even ‘China Plus Many” supply chain strategies to fortify a global supply chain. As Dr. Craig Austin, the Associate Teaching Professor at Florida International University, suggests, resilience in today’s volatile market means having a presence in multiple locations.

Dr. Austin’s Thoughts on “China Plus One”

“There’s no question that businesses are exiting China because of the political environment, because of costs are too high. And so, it’s really, strategy of ‘China plus one’ or ‘China plus many’ places.

Many have tried to go to India. The problem with the India is like the alternatives. It has enough labor, but it doesn’t have sufficient manufacturing. Fourteen percent of its economy is devoted to manufacturing versus twenty seven percent for China.

If you go to Vietnam, they have manufacturing, but they don’t have enough labor. And so, this goes across. And so you really have to pursue a strategy of being in more places than one if you’re going to make your supply chain resilient. And that’s really the strategy.”

Article written by Cara Schildmeyer.

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