Global trade has become increasingly fragmented. Asian leaders are moving away from rigid global supply chains toward modular, regionally balanced networks.
After the Second World War, the victorious Allied powers decided through a series of agreements and treaties to standardise trade and manufacturing norms to make a global, interconnected economy. The idea was that an intertwined economy would dissuade countries from attacking each other, which is, in international relations, called the ‘commercial peace theory’. It was because of the interconnected nature of the global economy that China leveraged to become the world’s manufacturer, giving companies worldwide access to the lowest manufacturing costs and deep production capacity with unmatched consistency.
This decades-long norm has now become complicated, affected by trade tensions, pandemic-era disruptions, and geopolitical constraints that permeate every procurement decision. The response from companies has added a new term to the manufacturing vocabulary that rose above the rest: China + N.
China + N is simple yet deceptive. The idea is not to exit China altogether but for companies to add one or more locations, the “+N”. Companies do this to hedge risk by not concentrating all their manufacturing in one country but at the same time, preserving their access to China, which has the world’s most deeply integrated industrial ecosystem.
Contrary to popular belief, the origins of China + N can be traced back to the 2000s, when Japanese manufacturers began using it as a defensive adjustment. It has now become a global, increasingly mainstream allocation strategy. A 2024 survey of 180 listed European manufacturers by consulting firm BCG showed that 91% had written China + N commitments into their ESG reporting, with nearly half attaching measurable targets to the goal.
Vietnam: The Default Alternative
Vietnam has been identified as the immediate beneficiary of the China + N strategy, as companies have increasingly been taking Vietnam as a recourse. The Hanoi-Ho Chi Minh City manufacturing corridor has developed a density of electronics assembly and light manufacturing that, for certain product categories, rivals that of Guangdong province. In 2024, FDI disbursements in Vietnam reached a record $25.35 billion, up 9.4% year-on-year. By 2025, total foreign investment commitments had exceeded $36 billion, with the bulk concentrated in electronics and semiconductors.
Samsung currently produces 50% of its global smartphone output from its facilities in Vietnam. Apple has expanded its Vietnamese supplier base to 35 vendors, using the country as its primary hub for AirPods, iPads, and Apple Watches. These reflect deep, capital-intensive commitments that go beyond arm’s-length sourcing arrangements.
Despite these strategic commitments, Vietnam also reveals a structural reality that adds complexity to the narrative of an alternative source of production. Cross-border freight from Chinese component suppliers typically reaches Vietnamese facilities within three days. Therefore, the supply chain has not moved away from Vietnam but has instead become an extension of China’s infrastructure. While production in Vietnam has increased, it still depends on components being continually imported from the Chinese supply base and is not independent of it.
India: A Land With Scale, But With Caveats
India has also emerged as another major destination for a manufacturing base, especially for sectors that require both labour scale and a domestic market. Manufacturing FDI reached $19.04 billion in FY26, an 18% increase over the prior year. Apple’s trajectory is the clearest data point: it assembled approximately 55 million iPhones in India in 2025, up 53% from the previous year. iPhone exports from India crossed $23 billion, an 85% jump from 2024. India now produces roughly one quarter of Apple’s global iPhone output, including the full Pro lineup.
Yet, India struggles with the same difficulties that Vietnam does. The depth and proximity of the supply chain, encompassing components, tooling, and specialised materials, remain limited compared to China’s industrial zones. Even as assembly chains shift geographically, the underlying component supply chain remains tied to China. While India has begun importing select sub-electronic components from China and Vietnam, upstream integration remains nascent.
Modular Networks, Not Mass Exits
Organisations are not completely decoupling from China. China retains upstream depth and specialised components, including tooling and integrated manufacturing clusters. Southeast and South Asian markets are absorbing final assembly, domestic market functions, and first-tier processing of strategic materials.
This architecture costs more and is harder to manage than what it replaces. Companies navigate multiple regulatory environments, coordinate logistics across unfamiliar corridors, and accept reduced economies of scale at individual sites. The trade-off, however, is worth making, not because China has become unviable, but because concentration risk, once a theoretical concern, has become an operational one.
While the China + N label may be shorthand for hedging against geopolitical risk, the underlying shift is structural.
