China-plus-one strategy

China-plus-one strategy

Subject : Economy / Current Events

Context: India must reorient its trade policy to take advantage of the increasingly popular China-plus-one strategy.

Concept :

About China-plus one strategy

• China Plus One, also known simply as Plus One, is the business strategy to avoid investing only in China and diversify business into other countries.
• It was coined in 2013 as a global business strategy.
• Many overseas companies once moved operations to China due to the low cost of labor, but companies are now reevaluating their setup in this country and diversifying their manufacturing strategies.
• The driving factors range from China’s cost advantage diminishing in recent years to growing geopolitical distrust between China and the West.
• In late July, a grouping of 18 economies, including India, the US, and the European Union, unveiled a roadmap for establishing collective supply chains that would be resilient in the long term.
• The roadmap also included steps to counter supply chain dependencies and vulnerabilities. This can be seen as a part of the overall China-plus-one strategy.
• Clear winners of the China-plus-one model have been the EU, Mexico, Taiwan, and Vietnam, across sectors such as machinery, automobiles, and transport and electrical equipment.
• India, however, did not significantly benefit from this trade diversion.