Still relying on a single Chinese supplier? That strategy carries real risk in 2026. Here's your practical guide to implementing a China Plus One dual-source strategy as an Australian SME.
The global trade map has been redrawn in the last 18 months, and if you're an Australian business owner still relying on a single supplier in China, I'm going to be straight with you: that strategy carries more risk right now than it ever has.
Look, China isn't going anywhere as a manufacturing powerhouse. It remains the world's factory, and for most product categories, it's still unmatched in capacity, speed, and value. But the events of 2025 and 2026 — from the US imposing 145% tariffs on Chinese goods to global supply chain bottlenecks and surging freight volatility — have made one thing crystal clear: putting all your eggs in one basket is a dangerous game for Aussie SMEs.
That's where the China Plus One strategy comes in. It's not a complicated concept, but getting it right can be the difference between a business that thrives in volatile markets and one that gets caught out. Let's get into it.
China Plus One (C+1) is a supply chain diversification approach where you maintain your existing manufacturing or sourcing base in China while simultaneously building capability with at least one additional supplier or manufacturing country.
The idea isn't to abandon China — far from it. It's to reduce your dependence on a single source so that geopolitical events, factory disruptions, port strikes, or tariff changes don't bring your entire supply chain to a halt.
Think of it like this: if you only bank with one bank and that bank has a system outage, you're stuck. If you bank with two, you've always got a backup. Same principle, higher stakes.
According to HKTDC Research, Australian businesses are increasingly adopting C+1 strategies in response to the tariff environment and supply chain disruption that has characterised global trade since 2024. Australia's total annual imports reached nearly $310 billion in 2025, but the share sourced exclusively from China has been gradually declining as savvy importers wake up to the risk.
Talking about supply chain diversification has been on the agenda for years. But in 2026, the urgency is real — and the businesses that have already started are pulling ahead.
Here's what's driving it:
US-China tariff spillover. The US imposed 145% tariffs on Chinese goods in early 2025. While Australian businesses aren't directly subject to US tariffs, the knock-on effects are significant. Chinese factories previously focused on US orders are now hunting for new clients — which means production capacity is shifting, pricing is changing, and factory relationships that once felt stable are now in flux. We covered this in depth in our post on how Trump's tariffs are reshaping Australian importing in 2026.
New global trade investigations. In March 2026, the US Trade Representative initiated new Section 301 investigations targeting "structural excess capacity" in manufacturing across Vietnam, India, Cambodia, Thailand, Indonesia, and dozens of other countries. While these don't directly affect Australian importers, they signal that supply chain disruption isn't going away — and every sourcing country is potentially in the crosshairs. Diversification itself needs to be built on solid, vetted relationships, not just a shift from one dependency to another.
Rising Australian import complexity. DAFF biosecurity requirements, stricter compliance scrutiny at Australian customs, and increasing freight cost volatility are making it harder to be a reactive importer. If you're single-source and something goes wrong, your options are limited and expensive.
Freight and capacity competition. With global importers scrambling to diversify away from China, alternative manufacturing hubs — particularly Vietnam — are experiencing surging demand. The businesses that get in early build relationships and lock in capacity. Those who wait end up in a queue.
The most common C+1 destination for Australian businesses right now is Vietnam — and for very good reason.
Vietnam attracted over $36 billion in foreign direct investment in 2025, primarily in electronics, semiconductors, footwear, and apparel. The Hanoi–Ho Chi Minh City manufacturing corridor has rapidly scaled up in capacity, particularly for furniture, textiles, electronics assembly, and consumer goods. For Australian importers, Vietnam offers a compelling package:
Australia already has 712 active FDI projects in Vietnam with total registered capital of approximately USD $1.9 billion — and that number is growing fast. Our Vietnam Sourcing page has more detail on the specific product categories and what Vietnamese factories do best.
Beyond Vietnam, some Australian SMEs are also exploring India — particularly since 100% of Indian goods became duty-free under the ECTA trade agreement as of January 2026 — as well as Thailand, Indonesia, and Bangladesh depending on their product categories.
Talking about diversification is one thing. Actually executing it is another. Here's a practical framework for Aussie SMEs ready to get started.
Start by mapping every product you currently source from China. For each one, ask:
This audit should give you a risk-ranked list of your sourcing exposure. Products that are high-volume, high-margin, and have no alternative supplier are your most critical diversification targets. Start there.
Not every product type makes sense to source from every country. Here's a rough guide based on what we see working for Australian importers in 2026:
You don't have to switch suppliers overnight. The goal in the early stages is to have a qualified, vetted backup that you could activate within 4–6 weeks if needed. This means getting samples, running quality assessments, completing a factory audit, and understanding the MOQ, pricing, and lead time from the alternative supplier. Our supplier verification service can shortcut this process significantly — we'll audit the factory and give you a report on whether they're who they say they are.
Potentially placing a small test order is also worth considering. The cost of a small order to validate a new supplier is trivial compared to the cost of a supply chain failure.
Once you've validated alternative suppliers, think about how to allocate volume. Common models include:
One of the biggest challenges with C+1 is that you're managing relationships across two different cultures, languages, and regulatory environments simultaneously. That's a significant overhead if you're doing it solo.
Epic Sourcing has full-time teams in both China and Vietnam — which means we can manage supplier relationships, conduct QC inspections, and handle the freight and logistics end-to-end from both countries. Our OutSource service is designed exactly for this kind of complex, multi-supplier situation, and it's the most cost-effective way for Australian SMEs to get real supply chain diversification without building the internal capability from scratch.
Assuming diversification means no risk. As the March 2026 USTR investigations show, no sourcing location is permanently immune to geopolitical pressure. Diversification reduces risk — it doesn't eliminate it. Keep watching the trade policy landscape.
Moving too fast and sacrificing quality. The biggest mistake businesses make is rushing into a new manufacturing country without proper due diligence. A fast bad sample is worse than a slow good one.
Ignoring compliance differences. Australian import compliance requirements — DAFF biosecurity, Australian Consumer Law labelling, import duties — apply regardless of where you manufacture. Make sure your new supplier understands and can meet these requirements from day one.
Underestimating lead times with new suppliers. Factories in Vietnam or India may have longer lead times than your established Chinese suppliers, particularly for the first few orders. Build buffer into your planning.
Not maintaining your Chinese supplier relationships. The worst outcome is burning your Chinese relationships before your alternatives are ready. Keep your Chinese suppliers warm even as you build alternatives.
Our teams in China, Vietnam, and Sydney are seeing a clear trend: Australian SMEs that started their C+1 journey in 2024 are now in a genuinely stronger position. They have supplier options, they're not panicking at every geopolitical headline, and they're able to negotiate better pricing because they have credible alternatives.
The businesses that are struggling? The ones who said "we'll deal with it if something goes wrong." Because when something goes wrong — and it always does eventually — you don't have time to find, vet, sample, and onboard a new supplier. You needed to do that six months ago.
If you want to talk through what a C+1 strategy could look like for your specific product category, book a discovery call with our team. We'll give you a straight read on where the opportunities are and what it would take to get there.
China Plus One isn't about abandoning what's working. It's about not being caught out when something changes — and in 2026, something is always changing.
The strategy isn't complicated. The execution is the hard part. But with the right sourcing partner, validated supplier relationships, and a clear plan, Australian SMEs can build supply chains that are genuinely resilient.
For more on managing your supply chain holistically, check out our Interim SCM service — or grab a copy of our free ebook on importing from verified Chinese suppliers if you're still in the research phase.
The businesses that thrive in uncertain trade environments are the ones who planned for uncertainty. Get started today.
Epic Sourcing is an Australian-based sourcing and supply chain management company with teams in Sydney, China, and Vietnam. We help Aussie businesses import smarter — from finding and vetting manufacturers to managing QC, freight, and the full supply chain. Give us a bell: gday@epicsourcing.com.au or call 1800 00 EPIC.
