China Plus One: a UK importer's guide to a second supplier

What China plus one actually means

China plus one is the practice of keeping your Chinese supply base while building a second source in another country, rather than replacing China outright. The point is not that China has stopped being good at manufacturing. It is that having every unit you sell come from one country, and often from one factory in it, is a concentration of risk that has become uncomfortable for a lot of UK businesses.

It is worth being clear about what problem you are solving. If your concern is price, a second country may not help, because China's cost advantage in most categories is built on a supplier ecosystem that does not exist elsewhere at the same density. If your concern is resilience, tariffs, customer questions about dependence, or simply having a credible alternative when you negotiate, then a second country can earn its place.

The tariff argument, which is real for UK buyers

There is no UK trade agreement with China, so goods of Chinese origin pay the standard rate of duty with no preferential option, and some categories carry anti-dumping duty on top of that.

Several plausible alternative countries are in a different position. The UK has a trade agreement with Vietnam, and since the UK's accession to the CPTPP entered into force in December 2024, preferential terms are also available with members including Vietnam, Malaysia, Japan, Singapore, Brunei, Chile, New Zealand and Peru.

The catch is that preference is not geography. To claim a preferential rate the goods have to meet the agreement's rules of origin, which generally require substantial processing in that country rather than final assembly of Chinese components. Shipping Chinese parts to a third country, screwing them together and shipping them on does not usually confer origin, and claiming preference you are not entitled to is a compliance problem that comes back with interest.

So the tariff case is genuine but conditional. Before you plan around it, check the rule of origin for your specific commodity code and confirm the supplier can actually produce a valid origin declaration.

What moves easily, and what does not

Labour-intensive assembly with widely available inputs moves most readily: garments, footwear, simple furniture, basic homeware, packaging, some electronics assembly.

What moves badly is anything that depends on a deep local supplier network. Electronics with many specialised components, precision tooling, anything requiring fast iteration between a factory and dozens of nearby subcontractors: these are hard to replicate because the advantage was never the factory alone, it was everything within an hour of it.

Expect the second country to be slower at first, to have less English-speaking commercial capability in some markets, and to have less depth if you need to change something quickly. Expect minimum order quantities to be higher relative to capability, because the supplier base is thinner.

And expect a hidden dependency: many suppliers outside China buy their components and materials from China. A second country is not automatically a second supply chain, and it is worth asking directly where the inputs come from.

The honest cost of a second source

You will duplicate work. A second specification review, a second sample cycle, a second audit, a second set of compliance evidence in your name, possibly second tooling. If your product is tooled, that is the single biggest line in the plan, and it is the point at which owning your existing tooling in writing becomes very valuable.

You will also split your volume, which weakens your position with both suppliers. A buyer with a small order in two places can matter less than a buyer with a larger order in one, so it is worth deciding deliberately whether the second source is a real production line or a maintained option.

For many UK SMEs the sensible version is asymmetric: keep the bulk in China, run a genuine but smaller line elsewhere, and keep it warm with real orders rather than an occasional enquiry. An alternative you have never actually bought from is not an alternative.

A realistic sequence

Start by working out what you are actually exposed to. Which products come from a single factory, which of those you could not replace within a season, and what a three-month interruption would cost. That list is usually shorter than the general anxiety suggests, and it tells you where to spend.

Then check the tariff position for those specific products, including the rule of origin in any agreement you would want to use.

Then run a genuine trial: a real order, measured against the standard your existing supplier already meets, not against a fresh specification. This is the part buyers do worst, because a first order elsewhere is usually quoted keenly and produced attentively, which tells you very little about the second year.

And keep the option alive. Resilience decays. A second source you have not ordered from in eighteen months is a phone number, not a plan.

When to leave it alone

If you have one supplier who performs, your volumes are modest, and a delay would be survivable, the cost of duplication may simply exceed the risk you are removing. Diversification is not free and it is not automatically correct.

In that case the cheaper resilience measures are the ones to do first: own your tooling in writing, hold buffer stock through the Chinese New Year period, keep your specification and compliance file complete enough that another factory could quote from it, and know who your second choice would be if you ever needed to call them.