In 2026, the smartest Australian importers aren't abandoning China — they're adding Vietnam to the equation. Here's why the China Plus One strategy is gaining urgency and exactly how to implement it without disrupting your supply chain.
For years, "just source it from China" was the default answer for any Australian business importing manufactured goods. And honestly? It still makes sense for a lot of product categories. But in 2026, the smartest Aussie importers aren't abandoning China — they're adding a second country to the equation. That country, more often than not, is Vietnam.
The China Plus One (C+1) strategy isn't new. It's been a buzzword in global supply chain circles since the mid-2010s. What's changed is the urgency. US tariffs on Chinese-made goods now exceed 100% on some product categories. Geopolitical tensions have elevated the risk of single-source supply chains from a theoretical concern to a very real one. And Australian businesses — whether they're importing textiles, electronics, furniture, or industrial components — are waking up to the fact that diversification isn't a nice-to-have anymore. It's table stakes for building a resilient business.
This guide explains what China Plus One actually means in practice, why Vietnam has emerged as the premier alternative manufacturing hub for Australian firms, and exactly how you'd go about splitting your supply chain without blowing up the cost efficiencies you've worked hard to build.
The China Plus One strategy is straightforward in concept: you keep China as your primary manufacturing and sourcing partner, while simultaneously building production or sourcing capacity in at least one other country. You're not replacing China — you're insulating yourself against the risks that come with having all your eggs in one basket.
Those risks are not hypothetical in 2026. According to data released by the US Department of Commerce in February 2026, US imports from China dropped to $308 billion in 2025 — the lowest level since 2009 and a 42% decrease from 2018 figures. That's the ripple effect of tariff escalation, nearshoring incentives, and supply chain restructuring playing out in real time.
Australian businesses don't face the same tariff penalties as US buyers. But the indirect effects are significant. When major US retailers shift sourcing from China to Vietnam, Bangladesh, India or Mexico, it creates two simultaneous pressures: Chinese factories compete harder on price and quality for remaining international business, while Vietnamese factories face capacity constraints as global demand surges. The window to establish good factory relationships in Vietnam is now — before the capacity crunch gets worse.
There's also a more fundamental reason to diversify: resilience. A factory fire, a sudden regulatory change, a weather event, or an unexpected shipping disruption in a single-source supply chain can bring an entire product line to a standstill. A well-structured C+1 model gives you options.
When businesses talk about China Plus One, they talk about several destination countries — India, Mexico, Indonesia, Thailand, Bangladesh. But for Australian importers specifically, Vietnam has emerged as the standout option. Here's why.
Vietnam sits approximately 7–10 days by sea from Australian east coast ports, comparable to China. Unlike nearshoring options popular in the US (Mexico, Central America), Vietnam doesn't add meaningful freight complexity for Australian buyers. Your supply chain rhythm stays largely intact.
Both Australia and Vietnam are signatories to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as well as RCEP (Regional Comprehensive Economic Partnership). This means reduced import tariffs on a wide range of goods manufactured in Vietnam for import into Australia — a significant cost advantage over sourcing from countries without these agreements in place.
Vietnam's manufacturing sector isn't the low-end assembly operation it was a decade ago. Today, the country has deep capability in textiles and garments, footwear, electronics assembly, furniture, processed goods, and increasingly, precision manufacturing. Major global brands — Samsung, Nike, Apple suppliers — have been operating in Vietnam at scale for years, which has driven significant improvement in factory standards, labour skills, and quality control systems.
Average manufacturing wages in Vietnam remain substantially lower than in coastal Chinese manufacturing hubs like Guangdong and Zhejiang, though the gap is narrowing. For labour-intensive categories — textiles, apparel, handcrafted goods — Vietnam offers compelling unit economics.
Australia is among the top 20 foreign investors in Vietnam, with 712 registered FDI projects and approximately US$1.9 billion in registered capital. That means there's an established ecosystem of Australian businesses already navigating the market, logistics infrastructure is developing, and the diplomatic relationship is strong.
Not every product category makes sense to shift to Vietnam. Understanding where the country genuinely excels is critical before you invest time and money into building a new supplier relationship.
Vietnam is the world's third-largest garment exporter after China and Bangladesh. For Australian fashion brands, activewear labels, corporate uniform suppliers, or any business importing clothing and fabric goods, Vietnam is an obvious first conversation. Ethical manufacturing standards are often more consistent and auditable than in some other low-cost sourcing markets — something increasingly important to Australian consumers and under the supply chain management lens.
Vietnam produces approximately 1.3 billion pairs of shoes annually, accounting for around 10% of global production. Major brands including Nike, Adidas and Timberland have significant Vietnamese manufacturing partnerships. For Australian footwear businesses, the factory ecosystem is mature and experienced.
While China's Foshan remains a dominant furniture manufacturing hub, Vietnam — particularly the Ho Chi Minh City region and Binh Duong province — has a well-established furniture manufacturing industry. DAFF biosecurity requirements for wood products apply equally to Vietnam and China, so compliance processes are familiar.
Vietnam hosts significant Samsung and Intel operations, and the electronics assembly ecosystem has grown rapidly. While China remains ahead for highly sophisticated electronics manufacturing, simpler assembly work and consumer electronics accessories are increasingly viable in Vietnam.
Vietnam is a significant exporter of coffee, cashews, pepper, seafood, and rice. For Australian food importers, this is a meaningful category where Vietnam already has a strong track record.
Understanding the theory is one thing. Actually building a dual-source supply chain is another. Here's how to approach it without disrupting your current operations.
Before you do anything else, map your current sourcing. Which product lines come from China? What are your volumes? Where are you most exposed to single-source risk? This doesn't need to be complex — a spreadsheet mapping products to factories to risk categories is enough to get started. Understanding sourcing vs procurement distinctions helps clarify what you're actually trying to de-risk.
Don't try to move everything at once. Pick one product category — ideally one with reasonable volume, high risk exposure, or strong Vietnam manufacturing capability — and build your first Vietnam supplier relationship there. Prove the model before expanding it.
The same principles that apply to sourcing from China apply in Vietnam: factory audits, sample testing, references from other international buyers, and a clear understanding of production capacity and lead times. The added challenge is that Vietnam's supplier network is less consolidated than China's — finding the right factory takes more legwork.
Many Vietnamese factories operate primarily as OEM manufacturers (producing to your specifications) rather than the ODM model common in China (where factories offer existing designs for customisation). This affects how you approach product development and IP management. Our OEM vs ODM guide explains the distinction in detail.
One of the most common C+1 mistakes is treating Vietnam as a backup that only gets activated in a crisis. By then, your new supplier has no production history with your product, no understanding of your quality standards, and no reason to prioritise your order. The suppliers who perform best for Australian buyers are the ones where the relationship has been built over time — even if initial order volumes are modest.
Vietnam-to-Australia shipping lanes are well-established, with regular services from Ho Chi Minh City (Cát Lái port) and Hai Phong. Transit times to Sydney or Melbourne are typically 12–18 days by sea. DAFF biosecurity requirements apply to all imports regardless of origin country. Tariff and duty structures vary by product under CPTPP — engage a customs broker to identify your specific concessions.
For most Australian businesses, the optimal C+1 model isn't a clean break from China. It's a deliberate allocation:
China: High-complexity manufacturing, electronics, large-scale production runs, established product lines where quality and lead time are proven.
Vietnam: Labour-intensive products (textiles, footwear), sustainable and ethically-audited categories, categories where lower MOQs suit newer or smaller product lines, and strategic diversification against geopolitical risk.
This model lets you maintain the cost and capability advantages of your Chinese supply chain while building meaningful resilience. If something goes sideways in one market — a disruption, a policy change, a capacity crunch — you have options.
The businesses that are talking to us most urgently right now are the ones that had a close call — a delayed container, a factory closure, a quality issue that wiped out a whole product run — and realised they had no fallback. The C+1 conversation usually starts with a near-miss.
Don't wait for a near-miss.
Epic Sourcing has sourcing teams operating in both China and Vietnam, with factory relationships, quality control systems, and logistics management already in place across both markets. Whether you want to explore Vietnam sourcing for the first time or build a structured dual-source supply chain across both countries, we can help you do it properly.
Learn more about our Vietnam sourcing service, or get in touch at gday@epicsourcing.com.au to talk through your specific situation.
The supply chain world has changed. The Aussie businesses building two-country strategies right now are the ones that will be best positioned when the next disruption hits. That's not pessimism — it's just smart business.
Thinking about diversifying your supply chain into Vietnam? Talk to the team at Epic Sourcing: gday@epicsourcing.com.au or visit our Vietnam sourcing page.
