China Plus One

China Plus One, also known simply as Plus One or C+1, is the business strategy to avoid investing only in China and diversify business into other countries, or to channel investments into manufacturing in other promising developing economies such as India,[1][2][3] Thailand,[4] Turkey[5] or Vietnam.[6] For the last 20 years, western companies have invested mainly in China, drawn in by their low production costs, and enormous domestic consumer markets.[7] Developing from the overconcentration of business interests in China, it may be done for reasons of cost, safety, or long-term stability. It has also been described as a 'macro-level phenomenon'.[8][9]

Corporate C+1 strategies

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The increasing cost of doing business in China has also increased operating costs, especially for manufacturers.[10][11] The advantages of the cheap labor and market demand that China initially provided has increasingly been overshadowed by the advantages that ASEAN countries can provide. These benefits include cost control, as workers in Southeast Asian countries are generally less expensive than Chinese employees, risk diversification, and new market access into economies [12] There is also a high level of risk for investors in the Chinese transitional economy, the sources of this risk can be credited to social, and political change.[13]

Multinational corporations have been looking at countries with adequately stable governments such as India, Vietnam, Indonesia, Malaysia, Thailand, Philippines and Bangladesh .[14] Countries like Japan and United States are part of the phenomenon, with the strategy conceptualizing in businesses in these countries as early as 2008.[9] However the China Plus One strategy has its own share of difficulties, including navigating new laws, new markets, and streamlining the business over multiple locations.[15] Some say that moving out of China now is not even practical.[16] The China Plus One strategy does give China its own benefits. China is able to maintain low-end manufacturing while also growing higher-value sectors. China Plus One strategy did not reduce the number of manufacturers, nor jobs in manufacturing. It does, however, reduce the number of growth, giving other economies a chance to flourish.[17]

Following the COVID-19 pandemic, numerous Indian companies have adopted strategy to find alternative supply chains.[18] India's largest air conditioner manufacturer Voltas has started production of motors in India to reduce its reliance on China; Indian auto component manufacturers[who?] are also building the base to shift out of China, changing reliance to local vendors for some components; the same is the case for pharma companies[who?].[18]

See also

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References

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  1. ^ "As worlds fastest-growing economy at 5.8%, India bright spot: UN economist". Business Standard. 2023-01-26. Retrieved 2023-01-28.
  2. ^ "world bank: India seen fastest growing among 7 largest emerging & developing economies: World Bank". The Economic Times. Retrieved 2023-01-28.
  3. ^ "India Big Beneficiary As Companies Move Towards "China Plus One" Strategy". NDTV.com. Retrieved 2023-01-28.
  4. ^ "Latest News". Business Standard India. Retrieved 2023-01-28.
  5. ^ "The development of the "China+1" concept in the US and the EU". Retrieved 2024-04-26.
  6. ^ "Vietnam: a promising option in light of the "China plus one" Strategy". Source of Asia. 2022-07-29. Retrieved 2023-01-28.
  7. ^ Witchel, Start. "China Plus One" (PDF). Fti Journal. Philipa Symington.
  8. ^ Collins, Robert; Block, Carson (2011-02-10). Doing Business in China For Dummies. John Wiley & Sons. p. 70. ISBN 978-1-118-05094-1.
  9. ^ a b Iida, Keisuke (2017-07-06). "6.8: China-plus-one at firm level; 6.9: American foreign direct investment in China". Japan's Security and Economic Dependence on China and the United States: Cool Politics, Lukewarm Economics. Taylor & Francis. p. 156. ISBN 978-1-317-31141-6.
  10. ^ "How to Implement a "China Plus One" Strategy | Asia Briefing Events". www.asiabriefing.com. Retrieved 2020-05-26.
  11. ^ "Should India be Your China Plus One?". India Briefing News. 2019-06-07. Retrieved 2020-05-26.
  12. ^ Witchell, Stuart. "China Plus One" (PDF). FTI Journal.
  13. ^ Enderwick, Peter. "A "China Plus One" Strategy: The Best of Both Worlds?". IOS Press. Auckland University of Technology.
  14. ^ "China Plus One: Asia offers much more than just China". BCCJ Acumen. 2011-05-16. Retrieved 2020-05-26.
  15. ^ "The China plus One Strategy in Vietnam – Latest Issue of Vietnam Briefing Magazine". Vietnam Briefing News. 2018-12-05. Retrieved 2020-05-26.
  16. ^ "China Plus One in Practice". Fiducia Management Consultants. 2019-06-05. Retrieved 2020-05-26.
  17. ^ Nellan, Amrietha. "The China Plus One Strategy: A Signal Of The Next Steps Of China's Economic Development" (PDF). The University of Arizona.
  18. ^ a b Shyam, Ashutosh (2020-04-30). "India Inc wants the sum of its parts to be 'China Plus One'". The Economic Times. Retrieved 2020-05-26.
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