3 Best China Sourcing Alternatives in Asia: Where to Source in 2025

The supply chain landscape of 2025 has fundamentally changed. After years of U.S.–China trade tensions, the U.S. enacted major tariff policy changes in early 2025 that are accelerating the push for supply chain diversification. 

In April 2025, a sweeping 10% “Liberation Day” tariff was placed on all U.S. imports, on top of existing China-specific duties, driving effective tariffs on many Chinese goods above 50% (source). The U.S. also signaled even steeper levies on China (over 100% tariffs in some cases) amid an escalating trade war (source). 

Facing these surging import costs and rising geopolitical risks, businesses that once relied heavily on China are urgently adopting “China+1” (or +N) sourcing strategies. In short, diversifying your supply base across Asia is no longer optional – it’s a strategic necessity (source).

Fortunately, several Asian countries have emerged as reliable manufacturing hubs offering competitive advantages in cost, capacity, and capability. This article will examine five of the best China alternatives in Asia – Vietnam, India, and Cambodia – and how companies can build flexible multi-country sourcing strategies in 2025. 

We’ll highlight updated data and real-world examples for each country, compare their strengths in a summary table, and discuss how to leverage global sourcing partners to navigate the complexity of multi-country supply chains.

Challenges and Risks of a China-Only Sourcing Strategy in 2025

Relying solely on China for product sourcing in 2025 exposes businesses to a host of strategic risks. This reality has become more pronounced amid recent trade upheavals and long-term structural shifts. 

Below, we outline the key challenges undermining a China-only supply chain, clearly illustrating why companies are increasingly pursuing diversification across Asia to protect their operations and margins:

Trade War Tariffs & Import Cost Volatility:

U.S. tariffs on Chinese goods remain at elevated levels, and 2025 brought further escalations. A new baseline tariff policy has driven effective duty rates on many Chinese-origin products well above 25%, with some items now facing combined import taxes exceeding 50% (source). These surcharges directly erode profit margins and force price hikes. 

China’s retaliatory tariffs in response have only added to the instability, threatening higher costs and supply interruptions on both sides of the Pacific (source). The unpredictable tariff environment makes a purely China-centric sourcing strategy financially perilous.

Rising Geopolitical Tensions & Export Controls:

Heightened U.S.–China strategic frictions are translating into real supply chain risks. The U.S. has tightened export controls on advanced technology (such as semiconductor chips), and China has hit back by restricting exports of critical raw materials. For example, in late 2024, Beijing banned shipments of key minerals like gallium, germanium, and antimony to the U.S., just after Washington expanded limits on China’s chip sector (source). 

This tit-for-tat undermines supply stability, sparking concern that other essential inputs (e.g., rare earths, battery metals) could be targeted next (source). Geopolitical flashpoints also raise the specter of sudden sanctions or transport disruptions. In short, souring relations inject a significant uncertainty premium into China-only sourcing.

Rising Labor Costs Erode China’s Cost Advantage:

The low-cost labor engine that fueled China’s manufacturing boom is no longer a sure thing. Labor costs in China have more than doubled over the past decade (source). In 2023, the average manufacturing wage in urban China reached roughly ¥72,000–104,000 (US$10–15k) per year, growing ~6–10% annually (source) (source). 

As wages, land, and compliance costs continue rising, China’s price competitiveness versus other Asian countries has diminished. Manufacturers in Vietnam, India, and Southeast Asia often now enjoy lower unit labor costs, meaning companies that stick solely with China may face narrowing margins in the long run.

Regulatory and Compliance Complexity:

Operating in China entails navigating an increasingly complex regulatory landscape. Firms face evolving domestic regulations – from environmental emission limits to data security laws – which can change with little warning and disrupt production. (Notably, sudden power rationing in 2021 to meet energy targets forced week-long factory shutdowns in several provinces (source), catching many manufacturers off guard.) 

Moreover, global compliance pressures add another layer of risk. Strict Western import rules, such as the U.S. Uyghur Forced Labor Prevention Act, have led to thousands of detained shipments (source), as companies must ensure no part of their Chinese supply chain involves forced labor. Meeting such due diligence requirements is costly and challenging, especially when sourcing exclusively from China. 

The overall regulatory burden, both within China and internationally concerning China-origin goods, makes single-country sourcing far more complex and fraught with legal risk than in the past.

Intellectual Property & IP Security Concerns:

Long-standing concerns about intellectual property protection continue to weigh on China-centric manufacturing. Companies often worry that their product designs or technology could be copied or appropriated when they rely on Chinese contract manufacturers or joint venture partners. 

The issue is not just theoretical – estimates suggest Chinese IP theft costs the U.S. economy anywhere from $225 billion to $600 billion each year (source). This risk is especially acute for innovative small and midsize firms that lack the leverage to enforce IP agreements. A China-only strategy may expose them to having their competitive advantages undercut if proprietary know-how “leaks” and local competitors emerge. Diversifying production to locations with stronger IP regimes (or splitting critical processes across countries) can help mitigate the chance of losing control over one’s technology.

Supply Chain Disruptions & Concentration Risk:

The COVID-19 crisis laid bare the dangers of over-concentrated supply chains. When China faced lockdowns and logistical paralysis, companies worldwide saw their supplies of critical goods dry up almost overnight. Bottlenecks that started in China rarely stayed in China, rippling across global markets (source). 

For instance, Apple’s reliance on a single massive Chinese complex for iPhone assembly backfired in 2022 – COVID restrictions at the Zhengzhou plant threatened to cut iPhone output by up to 30% during the holiday season (source). 

More broadly, China accounts for roughly 29% of global manufacturing output (source), so any local shutdown (whether from a pandemic, natural disaster, or political event) can trigger worldwide product shortages. The pandemic’s early PPE shortages illustrated this vividly: China was the largest exporter of protective gear, supplying nearly half the world’s masks and gowns pre-2020 (source). 

When Chinese factories halted, hospitals everywhere struggled to get critical supplies. Such concentration risk is inherent if a supply chain is overly dependent on one country. It underscores the importance of building redundancy and geographic spread into sourcing networks for resiliency.

Each of these challenges reinforces the same conclusion: a “China-only” sourcing model in 2025 is increasingly high-risk and potentially unsustainable. Whether due to tariff shocks, political crossfire, rising costs, or operational disruptions, the business case for diversifying supply chains has never been clearer. 

Many firms have responded by adopting a “China+1” strategy – supplementing Chinese production with operations in other Asian countries – or even “China+Many” regional expansions to spread their risk. U.S. import data shows a decisive shift over the past five years away from China and toward suppliers in Vietnam, Thailand, India, Mexico, and others (source). 

By expanding into alternative sourcing hubs, companies can buffer against China-specific volatility while tapping competitive advantages in other markets. The bottom line is that sourcing diversification is no longer optional; it is now a strategic necessity (source) for businesses aiming to navigate the current environment. Embracing a more distributed 

Asia-focused supply base will help firms maintain continuity, control costs, and protect their IP, ultimately bolstering supply chain resilience for the long term.

Vietnam: Asia’s Rising Manufacturing Powerhouse

Vietnam has rapidly transformed into a manufacturing powerhouse and a top alternative to China. Long known for its booming apparel industry, Vietnam is now a major producer of electronics, machinery, furniture, and more. In 2024, Vietnam’s export turnover reached $405.5 billion, a remarkable 14.3% jump from the prior year (source) – highlighting how global demand is shifting to Vietnam. The country has capitalized on trade tensions by attracting foreign investment and manufacturing relocation waves.

Key Advantages:

Vietnam offers a young, relatively low-cost workforce and an increasingly skilled talent pool in industries like electronics. Major tech firms have flocked here – Samsung employs ~100,000 workers and produces over half its smartphones in Vietnam, and suppliers for Apple have ramped up production of AirPods and components. 

Vietnam’s pro-trade policies have led to extensive free trade agreement (FTA) networks (including deals with the EU and membership in CPTPP and RCEP), which boost export competitiveness. 

In fact, Vietnam has no additional U.S. tariffs on its goods (unlike China), giving it a pricing edge for American importers. 

The government also offers generous tax holidays and incentives for priority sectors and economic zones (source) to encourage foreign manufacturers. 

These factors, combined with infrastructure improvements, have made Vietnam a go-to hub for diversified sourcing.

Vietnam Supply Chain Success Stories

Global companies are investing heavily in Vietnam to expand production. 

In April 2025, LEGO opened its second Asian plant, a $1 billion factory in southern Vietnam, to move production closer to Asian consumers and avoid supply disruptions (source).  The new factory and a regional distribution center exemplify how firms use Vietnam to reduce cost and risk by localizing supply chains. 

Likewise, Vietnam’s electronics exports are soaring – in 2024, electronics and computer exports hit $72.6 billion (up 26.6%) (source) – as companies like Google, Microsoft, and Dell shift production of phones, data centers, and PCs from China into Vietnam. 

These trends underscore Vietnam’s role as an agile, capable alternative for a wide range of products.

Vietnam Manufacturing: What to Watch Out For

Vietnam’s explosive growth does come with challenges. 

Wages have been rising annually (though still lower than China’s), and high demand for skilled labor in hotspots like Ho Chi Minh City and Hanoi can lead to labor shortages or turnover. 

While improving, infrastructure is under pressure—ports and roads face congestion as trade volumes surge. Vietnam also relies on imported raw materials (often from China) for many industries, which can pose supply continuity risks. 

Nonetheless, most businesses find that Vietnam’s advantages far outweigh the hurdles, especially with the right local partners to navigate capacity and logistics constraints.

India: The Emerging Giant for Diversified Sourcing

India is leveraging its massive scale and government support to become a key pillar in China-alternative strategies. 

With the world’s second-largest population and a large English-speaking workforce, India offers unparalleled long-term capacity growth. 

The Indian government’s push for “Make in India” and manufacturing self-reliance – backed by Production-Linked Incentive (PLI) schemes in electronics, pharmaceuticals, solar, and more – has started to bear fruit. India’s exports hit record levels in recent years (over $420 billion in goods exports in FY2022), and the country is aggressively courting manufacturers relocating from China.

Key Advantages:

Scale and talent are India’s greatest strengths. 

Companies can tap into hundreds of millions of workers across skill levels, from assembly line operators to engineers. While average wages are higher than in Vietnam or Cambodia for basic labor, India’s productivity in certain sectors and huge talent pool can offset costs for more advanced manufacturing.

The country has established strengths in automotive, pharmaceuticals, chemicals, textiles, and is rapidly growing capacity in electronics and smartphones. Importantly, India has a huge domestic market of 1.4 billion people – this means manufacturers setting up in India can achieve economies of scale by serving local demand in addition to export markets. 

India’s improving ease of doing business (through reforms in taxation, business registration, and infrastructure development) and its robust legal/IP protection framework add to its appeal for foreign investors.

Real-World Sourcing Strategies Used by Global Companies in India:

No story illustrates India’s rise better than Apple’s accelerating shift into India. In 2025, Apple began shifting a significant portion of iPhone assembly for the U.S. market from China to India, driven by tariff pressures (source). Apple is in urgent talks with partners Foxconn and Tata, aiming for India to produce the majority of iPhones sold in America by 2026 (source). Already, India contributes about 18% of global iPhone output (versus 75% in China) (source), and Apple’s suppliers have opened massive new plants there.

 In spring 2025, a new Tata Electronics factory in Tamil Nadu started building iPhones, and Foxconn’s $2.6B factory in Karnataka is coming online (source) – together expected to create 50,000+ jobs. Apple even shipped 600 tons of iPhones (worth $2 billion) from India to the U.S. in a month to avoid looming tariffs (source). 

This unprecedented scaling speed shows how India is now central to high-tech supply chains. Beyond tech, global companies like Toyota, Siemens, and Samsung have announced significant new investments in India’s manufacturing and R&D capabilities, underscoring confidence in its future.

India Supply Chain Complexities and Risks:

India’s path to becoming a manufacturing hub is not without obstacles. Infrastructure development is still uneven – while metro areas have improved power, ports, and highways, interior regions can suffer from outages or logistics delays. 

While improving, the bureaucratic process in India can be complex; companies often cite regulatory red tape and longer lead times to set up operations compared to Southeast Asia. Additionally, India is not part of many free trade agreements – exporters may face higher import tariffs into key markets (e.g. no FTA with the U.S. or EU, unlike Vietnam). 

To mitigate this, many firms produce in India mainly for its domestic market or to avoid U.S. tariffs while using other Asian countries to reach Europe or the Asia-Pacific markets. 

Despite these challenges, India’s sheer potential and proactive reforms make it an indispensable element of a multi-country sourcing strategy in 2025.

Cambodia: Low-Cost Niche Player Moving Up the Value Chain

Cambodia has emerged from relative obscurity to become a significant niche Asian manufacturing base, especially for apparel, footwear, and travel goods. With one of the lowest labor costs in the region and a young workforce, Cambodia has attracted manufacturers of labor-intensive goods that seek alternatives to China (and even to higher-cost Vietnam). 

While smaller and less industrialized than the other four countries discussed, Cambodia is noteworthy as an agile, specialized sourcing location. It’s now starting to climb the value chain into light electronics assembly and automotive components, often with Chinese investment.

Key Advantages: 

The clear advantage is cost—Cambodia’s minimum wage for garment workers is around $200 per month, a fraction of China’s. 

This ultra-competitive labor cost has made it a hub for garment production, supplying many Western brands. In fact, Cambodia now accounts for 15% of Nike’s apparel manufacturing globally (as of 2024) (source), highlighting its role in big-brand supply chains. 

The country also benefited from trade preferences: it enjoyed duty-free access to the EU under the Everything But Arms (EBA) initiative, and many of its exports to the U.S. were duty-free under GSP (when active). While some EU preferences have been partially withdrawn due to political issues, Cambodia remains an essential base for duty-sensitive goods like travel bags and luggage. 

Notably, Cambodia carved out a niche in travel goods when U.S. tariffs hit Chinese-made backpacks and suitcases. Many producers shifted to Cambodia to avoid those tariffs, leveraging a special U.S. trade preference for travel products. 

Beyond apparel, Cambodia’s proximity to Vietnam and Thailand enables it to plug into regional supply chains; several special economic zones (SEZs) on the Thai and Vietnamese borders allow firms to import materials, assemble in Cambodia, and export with minimal friction. 

Logistics costs and times from Cambodia to the U.S./EU are similar to those from Vietnam, given its access to deep-sea ports (Sihanoukville) and improvements in road connectivity to neighboring countries.

Who’s Manufacturing in Cambodia Today?

Impressively, Cambodia is now attracting investment in industries once thought beyond its scope. 

In 2025, China’s EV leader BYD broke ground on a new electric vehicle assembly plant in Cambodia with a planned capacity of 10,000 vehicles per year (source). Located in the Sihanoukville SEZ, this $32 million facility will assemble EVs from imported kits, and is expected to start production by late 2025 (source). This move by BYD – its second Southeast Asian plant after Thailand – signifies that Cambodia is on the map for more than just garments. 

The country has also seen Japanese and European companies set up small electronics assembly lines; for instance, Sony and Minebea have had operations making electronic components and small motors in Cambodia’s industrial parks. 

Still, the garment sector remains the backbone: companies like H&M, Adidas, and Puma source heavily from Cambodian factories, and the sector has brought jobs and export earnings that underpin the economy.

Cambodia Sourcing Risks and Infrastructure Gaps

Cambodia’s challenges are significant as the least developed of the five countries. Infrastructure is developing – power outages were common in the past (though improving now with new power plants and grid upgrades funded by foreign aid and China’s Belt & Road Initiative). 

The industrial base and supplier network are narrow, meaning many raw materials (like fabrics, plastics, and electronic parts) must be imported, often from China, which can cause dependency. 

There are also political and compliance concerns; buyers must be mindful of labor rights and governance issues. Cambodia’s government has a checkered human rights record that led to some sanctions (hence the partial suspension of EU trade perks). 

From a purely operational standpoint, companies will find that local managerial and technical talent is limited; many factories rely on foreign experts or training to maintain standards. 

Thus, Cambodia is best utilized as part of a multi-country strategy: for example, it can be used to produce simpler, high-labor-content items (apparel, basic electronics assembly) while relying on nearby Thailand or Vietnam for components and on partners to manage quality control. 

When managed well, Cambodia can significantly lower average production costs and provide tariff advantages as part of a regional production network.

Comparative Summary of China+1 Alternatives in Asia

To decide which country (or combination of countries) fits your sourcing needs, it’s useful to compare their key strengths and potential drawbacks at a glance. Below is a summary of Vietnam, India, and Cambodia on critical factors for sourcing in 2025:

Table: A comparison of five leading sourcing alternatives in Asia, summarizing their primary strengths and challenges for foreign manufacturers.

Each country brings something different to the table. Many companies are finding that a balanced regional portfolio – for example, high-volume electronics in Vietnam, specialty mass-market apparel split between Vietnam and Cambodia, and new product lines launched in India – can collectively reduce costs and risks better than any single-country strategy.

Building a Resilient Multi-Country Sourcing Strategy with the Right Partner

Shifting from a mostly China-centric supply chain to a multi-country operation is a complex undertaking. Success lies in being strategic and flexible – aligning each product or component with the country best suited to produce it, and being able to pivot when disruptions hit one location. 

Global sourcing companies can be invaluable allies in this process, offering on-ground expertise and coordination across different countries. By partnering with an experienced sourcing firm, businesses can navigate local nuances, ensure quality, and remain agile without needing to establish a full physical presence in each location themselves.

Why Use a Sourcing Partner?

Managing suppliers in multiple countries presents challenges such as vetting reliable factories from afar, understanding local regulations, handling language barriers, and coordinating logistics across borders. A seasoned sourcing partner provides:

• Local supplier knowledge: They maintain vetted networks of factories in each country and can quickly match the right supplier for your needs. For example, if you suddenly need to shift an order from China to India or Vietnam, an on-ground team can identify which factory can take over with minimal lead time.
• Quality control and compliance: Sourcing companies station quality inspectors on the factory floor to catch issues early and ensure your standards are met consistently across all locations. They also navigate compliance checks, audits, and lab testing for different country standards.
• Logistics and consolidation: A partner can manage international shipping, customs clearance, and even warehouse consolidation, allowing you to ship products from multiple Asian countries in one coordinated flow to your destination. This optimizes freight costs and transit times.
• Tariff and policy guidance: In the volatile trade environment of 2025, experts will keep you updated on tariff changes, export restrictions, and trade agreements. They can also help with strategies like tariff engineering (e.g., slight product modifications to qualify for lower duties) and diversification planning to minimize duty impact.
• Single point of contact: Perhaps most importantly, a global sourcing firm provides a single accountable point of contact. Instead of your team juggling midnight calls with suppliers across time zones, the partner’s account manager streamlines all communications. This makes multi-country sourcing far more manageable for your organization.

Case Study: East West Basics (EWB) – Navigating Complexity Through Experience

To illustrate the value of a sourcing partner, consider East West Basics (EWB) – a global sourcing company with over 26 years of experience in Asia (EWB Supply Chain Diversification Services). EWB initially built its foundation in China, but as the sourcing landscape shifted, it strategically expanded into Vietnam, Cambodia, and India (source). Today, EWB operates with a team of 50+ experts on the ground in those countries, plus a U.S.-based client services team. This presence means EWB can walk into a supplier’s facility in Ho Chi Minh City or New Delhi on a client’s behalf immediately.

How EWB Adds Value: EWB acts as a one-stop sourcing solution – from product design support to factory sourcing, production management, quality control, and logistics. Clients work directly with EWB’s U.S. team, who then coordinates all Asia operations internally. 

This model has helped companies seamlessly shift production across countries. For example, when tariffs spiked, EWB assisted a mid-size U.S. retailer in moving a line of wooden home décor products from China to Vietnam and India concurrently. EWB’s in-country managers identified two factories (one in Vietnam for furniture, one in India for metal components), vetted their certifications, negotiated pricing, and set up trial runs. 

During production, EWB’s quality inspectors visited the factories to catch any defects (source), and provided regular updates. The result: the retailer avoided a 25% China tariff and even saw a slight cost reduction while maintaining quality and on-time delivery – something they could not have achieved as quickly on their own.

EWB also emphasizes ethical and transparent sourcing. They only work with factories that meet strict standards for safe working conditions and fair labor. This vetting reassures clients that diversifying supply chains won’t mean compromising on corporate social responsibility. 

Moreover, EWB’s long-term relationships (over 1,000 factories across Asia in their network) often give clients access to capacity or materials that would be hard to secure independently.

In one case, a North American electronics brand needed to quickly scale up a gadget outside China. EWB tapped its Vietnam network and found an assembly partner with available SMT lines and skilled labor; within 8 weeks, production was up and running in Vietnam – a speed made possible by EWB’s groundwork and influence in the region. 

EWB’s decades of experience mean they have built a sophisticated infrastructure to support such moves, with refined processes for multi-country sourcing and extremely low defect rates (their claims rate is <0.5%).

When choosing a sourcing partner, look for companies like EWB that have a multi-country presence, a proven track record, and client testimonials from projects similar to yours. The right partner will function as an extension of your own team, advising strategically on which products to source where, handling negotiations and cultural differences, and troubleshooting issues on-site before they impact you. In a time when supply chain agility is paramount, leveraging such partnerships can mean the difference between scrambling in a crisis and thriving through proactive diversification.

Conclusion: Seizing the Opportunity – Diversify Now or Fall Behind

The year 2025 presents both a stark warning and an exciting opportunity for global sourcing. The warning is clear: over-reliance on a single country, even one as established as China, has become a liability amid tariffs, pandemics, and geopolitical shifts. The cost of inaction is rising; companies that stick to “business as usual” with China-centric procurement risk steep tariff costs, supply disruptions, and competitive disadvantage as others diversify. The U.S. tariff surges of 2025 are a flashing red light that it’s time to rethink supply chains.

Yet the opportunity has never been greater. Across Asia, countries are investing in manufacturing capacity and courting business. Vietnam, India, and Cambodia – each in their own way – have stepped up to become viable, even highly attractive, manufacturing centers. They are not just “alternatives” to China; in many cases, they offer unique benefits – whether it’s Vietnam’s agility in electronics, India’s sheer scale and talent, or Cambodia’s unbeatable costs. 

By strategically blending these strengths, businesses can build a resilient, cost-effective, and scalable supply chain for the future.

Time is of the essence. Diversifying sourcing is not an overnight task – it requires planning, partner selection, trials, and gradual ramp-up. Companies that start now, in 2025, will be in pole position to navigate whatever comes next – be it further trade disruptions, shifting consumer demand, or new regulatory regimes. 

Those who delay may find themselves playing catch-up at a significant cost.

In summary, the lesson for sourcing professionals and decision-makers is: don’t put all your eggs in one basket (or one country). Embrace a multi-country strategy to spread risk and capture new value. And remember, you don’t have to go it alone. By partnering with experienced sourcing experts (like EWB or similar firms), you can execute diversification with confidence and control. 

The world is moving toward flexible and distributed supply chain networks. China will remain an important part of the equation, but it will be just one part among many. Companies that recognize this shift and act with urgency and savvy will secure their supply lines and thrive in the new era of global sourcing.