In 2026, the China Plus One strategy isn't just for multinationals — it's becoming the operational reality for mid-sized Australian businesses that want to protect their margins and build genuine supply chain resilience.
For years, "China Plus One" has been the strategic buzzword that large multinationals talked about while Australian SMEs quietly got on with ordering from Alibaba and hoping for the best.
That's changed. Rapidly.
Between escalating US-China trade tensions, COVID-era supply chain lessons, and a new generation of viable manufacturing alternatives across Southeast Asia, the China Plus One strategy has gone from boardroom theory to boots-on-the-ground necessity — even for smaller Australian importers.
This guide breaks down what China Plus One actually means in practice, whether it's right for your business, and how to approach it without doubling your workload or your risk.
China Plus One (also written as China+1) is a sourcing and manufacturing strategy where a business deliberately moves some of its production or procurement out of China — without abandoning China entirely — by adding at least one other country to its supply base.
The "plus one" is typically a lower-cost Asian market: Vietnam, India, Indonesia, Bangladesh, Thailand, or Mexico. The idea is to reduce concentration risk while retaining China's scale advantages for product categories where it remains unbeatable.
It's not about replacing China. It's about not being entirely dependent on it.
Most Australian importers are more exposed to China-concentration risk than they realise. If your top product lines all ship from a single Chinese province, or all move through the same freight lanes, you're one tariff hike or factory shutdown away from a very bad quarter.
Here's what's driving Australian businesses to act:
Even though Australia isn't the US, American tariff policy reshapes global manufacturing flows. When US buyers shift orders out of China, it creates pricing pressure, factory capacity shifts, and freight rate changes that Australian importers feel too.
In 2026, the tariff environment remains highly unpredictable. Businesses that diversified their supply base in 2023–2024 are now in a much stronger negotiating position than those who waited.
For a detailed breakdown of the current tariff landscape and what it means for Australian importers specifically, see our companion piece: US Tariffs in 2026: What Australian Importers Need to Know Right Now.
Chinese New Year disruptions, port congestion in Shanghai and Ningbo, and periodic COVID-era lockdowns exposed how fragile single-country supply chains can be. Diversifying even 20–30% of production to Vietnam or Thailand can create meaningful buffer capacity.
Increasingly, Australian retailers and institutional buyers are asking questions about labour standards, environmental practices, and supply chain transparency. Vietnam, in particular, has made significant progress on labour certification (BSCI, SA8000) and is often seen as a cleaner story than some Chinese regions.
China is no longer the cheapest option across the board. Rising labour costs in coastal manufacturing hubs like Guangdong and Zhejiang have made Vietnam, Indonesia, and India genuinely competitive on price for a growing list of product categories — especially apparel, footwear, furniture, and basic electronics accessories.
Before you start shifting everything, be clear-eyed about where China remains the right answer.
China maintains decisive advantages in:
A mature China Plus One strategy keeps China for these categories while shifting others.
The most popular China Plus One destination for Australian importers. Strong for apparel, footwear, furniture, homewares, and increasingly electronics assembly. Good infrastructure, improving logistics, and a government actively courting foreign manufacturers.
Epic Sourcing has teams on the ground in Vietnam and has been helping Australian clients transition appropriate product lines there since 2022.
Strong for textiles, pharmaceuticals, chemicals, and automotive components. Improving rapidly for electronics. The domestic market is enormous, which attracts investment and raises manufacturing standards. Lead times and quality consistency remain variable — supplier vetting is essential.
Competitive for furniture, textiles, rubber products, and palm oil derivatives. Logistics infrastructure is improving but still lags Vietnam and Thailand. Strong for sustainable and natural material categories.
Higher cost than Vietnam but better infrastructure, higher quality standards, and strong automotive/electronics supply chains. Good for mid-to-premium product categories where quality consistency is critical.
Dominant in garments and basic textiles. Limited diversification beyond apparel. Strong for high-volume, price-sensitive clothing categories.
The biggest mistake is treating this as an all-or-nothing transition. It's not.
Map out which products, categories, and suppliers carry the most concentration risk. Start with the SKUs where a supply disruption would hurt most.
Look for products that are:
Don't switch suppliers cold. Run your new country sourcing in parallel with existing China production. Compare quality, lead times, and real landed costs — not just factory quotes.
Vietnam isn't a plug-and-play substitute for China. Supplier quality, factory standards, and logistics vary enormously. Remote sourcing without local verification is how Australian businesses get burned.
This is where working with a sourcing partner with actual in-country teams — not just a local agent — makes a real difference. Book a discovery call with Epic Sourcing to discuss how we approach Vietnam qualification for Australian clients.
Be honest about the full cost picture before you commit.
None of these are reasons not to diversify — they're reasons to plan carefully and phase the transition.
Honestly? It depends on your product mix, volumes, and risk tolerance.
If you're importing $50K per year of a single product line from one factory in Guangdong, China Plus One probably isn't your priority. Focus on supplier relationships and backup options within China first.
If you're importing across multiple categories at meaningful volumes, with any US market exposure, or if you're selling to retailers who are starting to ask supply chain questions — it's time to start building your Plus One capability now, before you're forced to do it in a crisis.
The businesses that will navigate the next supply chain disruption most smoothly are the ones building diversified, resilient supply bases today.
We've published a detailed breakdown of Vietnam as a manufacturing destination specifically for Australian importers — covering factory qualification, logistics, duty structures, and realistic cost comparisons. See China vs Vietnam Manufacturing: A Guide for Australian Importers for a side-by-side breakdown.
Ready to explore Vietnam? Our Vietnam Sourcing Guide covers everything from factory qualification to logistics.
Need help reviewing your current supply chain exposure? Get in touch with Epic Sourcing — we work with Australian importers across all categories and can help you build a resilient, cost-effective supply base.
