For years, Australian businesses bet everything on a single supplier country. In 2026, the China Plus One strategy isn't just smart — it's becoming essential. Here's how to do it right.
For years, I've watched Australian businesses bet everything on a single supplier country. China was the obvious choice — competitive pricing, massive production capacity, established infrastructure. And for a long time, it worked a treat.
But here's the thing: the world has shifted. Between US tariff volatility, geopolitical tension, post-pandemic freight chaos, and rising Chinese labour costs, Aussie SMEs who've kept all their eggs in one basket are starting to feel the squeeze. Enter the China Plus One strategy — arguably the smartest supply chain move you can make in 2026.
This isn't just business theory. It's what we're seeing on the ground every day at Epic Sourcing, and it's what the data is screaming at anyone who'll listen.
The China Plus One (C+1) strategy is exactly what it sounds like: you keep your Chinese supply chain relationships intact — because let's be honest, China still offers unmatched manufacturing depth — while simultaneously building a sourcing presence in at least one other country.
It's not about abandoning China. It's about not being dependent on China.
The approach gained mainstream traction after the COVID-19 pandemic exposed just how fragile single-country supply chains can be. Fast forward to 2026, and the urgency has only intensified. Average manufacturing wages in China have tripled since 2010, eroding the original cost arbitrage. Add in ongoing US–China trade tensions, new Section 301 investigations, and the knock-on effects hitting global supply chains — and suddenly, C+1 isn't a "nice to have." It's a business survival strategy.
Australian importers operate in a unique position. Unlike American businesses, we're not directly hit by US tariffs on Chinese goods — but we're absolutely not immune to their ripple effects.
1. Chinese manufacturers are shifting focus. With US buyers reducing orders from China, some Chinese factories are dropping minimum order quantities and improving pricing to attract Australian buyers. But a factory that's scrambling to fill US-shaped holes in its order book isn't necessarily the most reliable long-term partner.
2. Global freight is being reshuffled. With the US redirecting trade flows away from China, shipping routes, transit times, and freight costs are in flux.
3. Consumer sentiment is shifting. Sustainability and ethical supply chain transparency are climbing the agenda with Australian consumers. Diversifying into Vietnam often comes with stronger ESG credentials.
4. The CPTPP gives Australian businesses a real edge. The CPTPP includes both Australia and Vietnam. This means qualifying goods manufactured in Vietnam can enter Australia at reduced or zero tariff rates — a genuine cost advantage that a well-structured C+1 supply chain can capture.
When Australian businesses ask us "where do we go beyond China?", Vietnam is almost always the answer.
Vietnam attracted over $36 billion in foreign direct investment in 2025, primarily in electronics, semiconductors, footwear, and textiles. Its coastal location and proximity to Australian trade routes mean faster shipping times and lower freight costs compared to manufacturing in India or Mexico.
Labour costs: Still significantly lower than China's, particularly for labour-intensive categories like apparel, furniture, footwear, bags, and home goods.
Manufacturing quality: Vietnam's factories have matured substantially over the past decade, driven by investment from Samsung, Nike, Foxconn, and other multinationals.
Trade framework: Beyond the CPTPP, Vietnam has separate free trade agreements with the EU, South Korea, Japan, and ASEAN partners.
Proximity to Chinese supply chains: Vietnam's northern provinces sit right on the Chinese border. For many product categories, components are sourced from China and assembled in Vietnam — giving you the cost and tariff advantages of Vietnamese origin while still accessing Chinese materials.
That's exactly where having boots on the ground matters. Our Vietnam sourcing team operates in-country, building direct relationships with vetted factories and navigating the complexities so you don't have to.
Here's a practical framework:
Step 1: Audit your current sourcing portfolio. Get crystal clear on what you're currently sourcing in China. Which categories have the most exposure to supply chain risk? Start with those.
Step 2: Identify the right alternative country for each category. Don't try to move everything at once. Pick your highest-risk, highest-volume category first. Vietnam might be perfect for furniture and apparel; India might be better for certain technical goods.
Step 3: Qualify alternative factories rigorously. Visit factories. Audit them. Request samples. Check compliance documentation. Or partner with a sourcing agency that has already done this groundwork.
Step 4: Start with a pilot order. Run a parallel pilot order from your new C+1 supplier while maintaining your China relationship. Compare quality, pricing, lead times, and communication before you scale.
Step 5: Build redundancy into your planning. Make sure your alternative supplier has genuine capacity to scale up quickly if your China supply is disrupted.
This is a complex undertaking, and most SMEs don't have the in-house expertise or time to execute it well. That's the exact problem our OutSource service is designed to solve — full-service sourcing management across both China and Vietnam, with one team managing the whole picture.
Let's be straight: diversification isn't free. There are real costs to building a second supply chain.
Higher unit costs initially: Your new C+1 supplier probably won't beat your Chinese supplier's pricing right away. You're likely paying a learning curve premium until volumes scale up.
Duplicated logistics complexity: Managing two supplier countries means managing two sets of shipping lanes, customs documentation, and logistics partners.
Relationship investment: Building a reliable manufacturing relationship takes time. Expect 6–12 months before your C+1 supply chain is running as smoothly as your China operation.
The key is to be honest about these costs upfront and factor them into your business case. The risk mitigation value of a diversified supply chain is real — but so are the transition costs.
At Epic Sourcing, we operate teams in both China and Vietnam — which means we're genuinely set up to execute a C+1 strategy for Australian businesses, not just advise on it.
Whether you're just exploring the idea or ready to run a factory audit in Vietnam next month, we can help. Our SecretSource service is built for businesses that want us to identify, vet, and onboard new suppliers in alternative manufacturing hubs.
The global supply chain is being rewired in real time. Australian businesses that build resilience now will have a significant competitive advantage over those who wait. Give us a bell at gday@epicsourcing.com.au or book a discovery call.
Epic Sourcing is a product sourcing and supply chain management agency with teams in Sydney, China, and Vietnam. We help Australian SMEs source smarter, build stronger supplier relationships, and navigate the complexities of international trade.
