The China Plus One (C+1) strategy is a business concept and supply chain diversification approach where multinational companies maintain their operations in China while simultaneously establishing an additional manufacturing or sourcing base in another country. The concept was coined around 2013 as a response to the risks associated with over-reliance on a single production hub, which had been China for decades due to its low labor costs and vast infrastructure.
The strategy was created to solve the problem of supply chain concentration risk, which was exacerbated by three main factors: the steady rise in Chinese labor costs, increasing geopolitical tensions like the U.S.-China trade war, and the severe supply chain disruptions exposed by the COVID-19 pandemic. The mechanism involves companies actively diversifying their capital and production to other developing economies, such as India, Vietnam, Thailand, and Mexico, to mitigate the impact of sudden policy changes, tariffs, or lockdowns.
The C+1 strategy is not a formal act or provision but a macro-level phenomenon that connects directly to national initiatives in alternative destinations, such as India's Production-Linked Incentive (PLI) scheme and the Make in India program, which are designed to attract this foreign investment. The strategy has gained significant urgency and has recently shifted from a contingency plan to an operational reality. For example, the percentage of global iPhones assembled in China fell from 99% in 2021 to 81% in 2024, with industry projections aiming for a reduction to around 50% by 2027. This shift demonstrates the ongoing implementation of the China Plus One strategy, with India emerging as a key alternative destination.