China plus one
Topic: Secondary Activities: Manufacturing and Industrial Location · NCERT: Beyond NCERT
Meaning
China plus one is a strategy in which global companies keep their factories in China but add production in at least one more country. Firms do this to spread risk. The risks include rising Chinese wages, tariffs (such as those in the US-China trade war from 2018), COVID-19 lockdowns and political tension. Popular "plus one" choices are Vietnam, India, Mexico, Malaysia and Thailand. India has tried to attract this shift with Production Linked Incentive (PLI) schemes from 2020-21 and with industrial corridors.
Example
Apple's suppliers still make phones in China. They have also set up plants near Chennai in Tamil Nadu and Bengaluru in Karnataka, so India became the "plus one" for part of their production.
Don't confuse with
- Reshoring: reshoring means bringing factories back to the company's home country. China plus one keeps the Chinese plants and adds a third country.
- Nearshoring: nearshoring means moving production close to the main market, for example US firms moving to Mexico. That can be one form of China plus one, but it is defined by distance from the market.