Sourcing

Moving production out of China

Vietnam, India and Mexico, honestly compared. Including the part most guides leave out: assembly relocates far more easily than the component supply chain does, and if your reason for moving is duty, whether it works is a legal test you can settle in advance instead of discovering on an invoice.

What actually moves The three countries
The honest version

The China plus one strategy, honestly: for most importers this is China +0.5

People start looking for alternatives to China manufacturing for four different reasons, and the phrase China plus one suggests a second, independent supply chain. What has actually happened across most categories is that final assembly, packaging and finishing moved, while the components, the raw materials, the tooling capability and a good deal of the ownership stayed exactly where they were.

That matters commercially, because a factory in Vietnam waiting on Chinese subassemblies is still exposed to Chinese lead times, Chinese new year, and Chinese supply disruption. And it matters legally, because it is precisely the fact pattern that decides whether your goods count as Vietnamese at the US border.

None of which is an argument against moving. It is an argument for being clear about which problem you are solving, because the answer changes what a good move looks like.

Five things to be clear about

What moves, what does not, and what that costs you

Read the second and third of these together. They are the whole reason this page exists and the reason it is written alongside our tariffs and origin reference rather than as a country comparison on its own.

How origin is determined Vetting a new supplier
  1. Assembly moves. The component supply chain often does not.The pattern across most categories is that final assembly, packaging and finishing relocate while the higher-value upstream work, the tooling capability, the component ecosystem and the raw materials stay in China. Industry reporting has started calling this China +0.5, and it is an accurate description of most moves rather than a criticism of them.
  2. Which means the origin question is not automaticGoods take the origin of the last country where they were substantially transformed: where processing produced a new and different article with a different name, character or use. Simple assembly of Chinese components frequently is not that. A product can be genuinely made in Vietnam in every commercial sense and still be Chinese for customs purposes.
  3. So the tariff saving is a legal question, not a logistics oneIf duty exposure is the reason for the move, the move only works if origin actually changes. That is determinable in advance, in writing, by requesting a binding ruling from CBP before you commit tooling and volume. Doing it afterwards means finding out by invoice.
  4. There are good reasons to move that have nothing to do with tariffsConcentration risk is real on its own terms: a single country, a single port, a single new year shutdown, a single policy decision. Vietnam and India offer genuine cost positions in specific categories. Mexico offers a transit time that changes your working capital. All three are sound reasons and none of them depends on the origin question.
  5. Moving is not free, and the first order is the expensive oneNew tooling or moving existing tooling. New samples and a new golden sample. A supplier who has never made your product. A quality history of zero. Freight lanes and a customs broker relationship you have not tested. Budget the first order as a first order, because that is what it is.
The three that come up

Vietnam vs China manufacturing, plus India and Mexico

Each is genuinely better than the others at something, and none of them is generally better. The figures below are indicative ranges drawn from sourcing-industry reporting rather than from official statistics: enough to shape a shortlist, not enough to plan a delivery date on.

Vietnam

The most established alternative and the one with the most Chinese manufacturers already operating in it, which cuts both ways: the capability is real and often the ownership, management and component supply are still Chinese.

Strong in
Apparel, footwear, furniture, electronics assembly, textiles.
Transit to the US
Roughly 25 to 30 days by sea to the US.
Labor cost
Below China for equivalent work, though the gap has narrowed materially and continues to.
MOQ flexibility
Generally flexible, and tightening as capacity fills.

The catchIndustrial zone occupancy has run high enough that custom tooling lead times have lengthened and the best terms went to early movers. Ports at Ho Chi Minh City and Haiphong are improving and congested.

India

Genuine depth in specific categories and a domestic market large enough that suppliers are not solely export-dependent, which changes how they treat a small foreign buyer.

Strong in
Textiles and garments, chemicals, pharmaceuticals, some consumer electronics, metal fabrication.
Transit to the US
Roughly 28 to 35 days by sea to the US; better than Vietnam to Europe.
Labor cost
The lowest of the three, materially below Vietnam for comparable skill levels.
MOQ flexibility
Medium flexibility, with a very large supplier base across categories.

The catchLogistics is the constraint rather than manufacturing. Port congestion, inconsistent inland trucking and layered tax compliance add time and friction that can eat the labor saving. Build longer windows than the factory quotes you.

Mexico

The only option where transit time changes how you can run the business: smaller, more frequent replenishment, far less cash tied up in inventory on water, and the ability to react to demand inside a month. USMCA is a separate and stricter origin regime with its own rules of origin worth understanding on its own terms.

Strong in
Automotive and parts, appliances, medical devices, aerospace, consumer goods for the North American market.
Transit to the US
Days, not weeks: road freight to the US measured in roughly 4 to 8 days, which is a different kind of supply chain rather than a faster version of the same one.
Labor cost
Higher than Southeast Asia, reflecting proximity to North American labor markets.
MOQ flexibility
Generally flexible.

The catchSkilled labor for complex electronics assembly is genuinely constrained. Higher unit labor cost has to be paid for by the inventory and speed savings, which for some products it comfortably is and for others it is not.

Transit figures are port-to-port or border-to-border and are not door-to-door. As our freight guide sets out, the measured time from cargo being ready to a container leaving the destination port runs well over double the sailing time on the China lanes, and the same gap applies here. Plan on the door number.

The one that is different in kind

Nearshoring to Mexico

Vietnam and India are alternatives to China that work the way China works: you order, you wait weeks on the water, you hold inventory against that lead time. Mexico manufacturing is a different shape of business, and the reason is four to eight days of road freight instead of four to six weeks of ocean.

What the transit time actually changes

Not the freight bill. The working capital. When replenishment takes days, you can order smaller quantities more often, hold far less stock against the lead time, and react to what is actually selling inside a month rather than committing to a guess two quarters out. For a business whose problem is cash tied up in inventory on water, that can be worth more than a lower unit price.

It also changes what a mistake costs. A quality problem discovered in a Mexican run is a conversation and a corrected shipment. The same problem in a container that sailed six weeks ago is a container of stock you own.

Where Mexico is genuinely strong

Automotive and parts, appliances, medical devices, aerospace, and a widening range of consumer goods aimed at the North American market. The industrial base in states like Nuevo León and Jalisco is real and has absorbed serious investment.

Where it is not

Skilled labor for complex electronics assembly is a genuine constraint, and unit labor cost is higher than Southeast Asia. Mexico is rarely the answer if your decision is driven purely by unit price. It is frequently the answer if it is driven by speed, inventory cost, or the ability to reorder.

USMCA is a separate origin regime, and stricter

Preferential treatment under USMCA is not the same test as the substantial transformation rule that governs ordinary country of origin. It has its own rules of origin, its own regional value content thresholds and its own certification requirements, and qualifying for it is a specific exercise rather than a consequence of manufacturing in Mexico. Assuming that assembling in Mexico automatically confers USMCA benefits is the local version of assuming that assembling in Vietnam automatically changes your origin.

How origin is determined Talk about a second source
Operationally

Six things that change when you move

The sequence is the same everywhere. What changes is which parts you can no longer take for granted, and the last one on this list catches almost everybody.

Vetting starts over, and the registries differ

The China playbook does not port. Vietnam, India and Mexico each have their own company registries, their own business license formats and their own way of distinguishing a factory from a trading company. The principle holds, the specific checks change.

Inspection coverage is thinner and costs more

The major inspection firms operate in all three, and inspector density outside the main industrial clusters is lower than in the Pearl River Delta. Expect longer scheduling windows and more travel on the invoice.

Tooling ownership becomes urgent

If tooling exists in China and you are moving, whether you own it and can physically move it stops being a clause and becomes a project. If you cannot move it, you are paying for new tooling and should price the move that way.

Lead times lengthen before they shorten

A new supplier's first run takes longer than an established one's, in any country. Add sampling rounds you would not need with an incumbent.

Component lead times may still run through China

Which means Chinese New Year can still be on your critical path even though your assembly plant is in Vietnam and open. Worth mapping before you assume the calendar problem is solved.

Payment and banking practices differ

Terms, instruments and what is normal all vary by country. Do not assume the 30/70 against inspection you negotiated in Shenzhen is the local norm anywhere else.

How we would approach it

Second source first, everything later

The version of this that works is almost always a second supplier taking a portion of your volume, running in parallel with an incumbent who still ships while you learn. It gives you a real negotiating position for the first time, insures the concentration risk, and contains the cost of the first order being a first order. Moving everything at once, to a factory that has never made your product, converts a risk-reduction exercise into the largest risk you have.

Talk about a second source How sourcing works here Tariffs and origin
Questions

Frequently asked

Will moving production to Vietnam get rid of my China tariffs?

Only if the goods genuinely become Vietnamese in origin, which is a legal determination rather than a matter of where the container was loaded. The test is substantial transformation: whether what happens in Vietnam produces a new and different article of commerce with a different name, character or use. Final assembly of Chinese components frequently does not meet it. If duty is the reason for the move, get a binding ruling on origin from CBP before you commit tooling, because that answer decides whether the move is worth making at all.

Is China+1 actually working for people?

Partially, and the industry has become more honest about it. What has largely moved is assembly, packaging and final processing. What has largely stayed is the component ecosystem, the tooling capability and the upstream materials, which is why it gets described as China +0.5. That is a real reduction in some risks, particularly single-country concentration, and it is not the clean separation the phrase implies.

Which country should I look at first?

It depends on the product far more than on any general ranking. Apparel, footwear, furniture and electronics assembly point at Vietnam. Textiles, chemicals and metal fabrication point at India, with the caveat that its logistics can absorb the labor saving. Anything where speed to the US market or inventory cost dominates points at Mexico, where transit is days rather than weeks. Send us the product and we will tell you which conversation it is.

Is it cheaper than China?

On labor, usually. On landed cost, frequently not at first, and sometimes never. China's advantage is not primarily wages any more: it is supplier density, component availability, tooling speed and the fact that everything your product needs is within a short drive. Rebuilding that elsewhere costs time, and time is a cost. Look at the whole landed number over a year, not the unit price on the first quote.

Can I keep my Chinese supplier and add a second one?

That is what the strategy actually means, and it is usually the right shape. A second source in another country is insurance against concentration, gives you a real negotiating position for the first time, and lets you learn a new supply chain on a portion of your volume rather than all of it. Moving everything at once, to a supplier who has never made your product, is how a risk-reduction exercise becomes the risk.

Do you have a sourcing agent in Vietnam or India?

We work in both. The role is the same one a sourcing agent plays in China: finding the factory, verifying it exists and does what it claims, running the sampling, negotiating the terms and inspecting the run. What differs is the registry you check the company against, the inspection coverage outside the main industrial clusters, and the local norms on payment terms. Tell us the product and we will be straight about whether we have real depth in that category in that country.

Do you source outside China?

Yes. Mainland China is the primary base and we work across wider Asia, Mexico, Europe and Canada. Where we do not have depth in a category or a country we will say so rather than take the project and learn on your money.

Do you work as a Vietnam or India sourcing agent as well as China?

Yes. The work is the same shape, and the country changes what is hard about it. Vietnam has real assembly capacity and a thinner component supply chain, so the question is usually whether your bill of materials still comes from China. India is strong in some categories and slow to qualify in others. Mexico is the nearshoring answer when freight time matters more than unit cost. Tell us the product and we will tell you which of the three is actually worth qualifying.

Get started

Tell us the product and the reason

Duty, concentration risk, cost, or speed to market. They point at different countries, and knowing which one you are actually solving for is most of the decision.

  • Sourcing across China, wider Asia, Mexico, Europe and Canada.
  • The same three-stage inspection program wherever the goods are made.
  • A straight answer when we do not have depth in a category or a country.

Tell us about your project

We'll come back with a scope and a quote. If we're not the right fit, we'll say so.

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Keep reading
US Tariffs, Classification and Country of Origin Does the move change your duty? Substantial transformation, and getting a ruling before you tool. Supplier Vetting Checklist & Scorecard (Free) Vetting starts over Same principles, different registries and license formats. China Sourcing Agent & Global Product Sourcing How we source The same sequence wherever the goods are made.
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