Global Shift in Manufacturing: Study Reveals Surge in Companies Relocating Operations from China

The Bain & Company study underscores a pivotal moment for global business. Companies are rapidly recalibrating their operations to address modern challenges, paving the way for a more decentralized and resilient global economy. With 69% of businesses diversifying away from China and regions like India and North America rising as preferred alternatives, the trend marks a new era in global trade and manufacturing strategies.

A recent study by Bain & Company sheds light on a seismic shift in global business operations as companies increasingly move away from dependence on China. Based on responses from 166 CEOs and COOs across the U.S. and leading global economies, the study highlights a transformative trend driven by geopolitical, economic, and sustainability challenges. Notably, 90% of the surveyed businesses reported annual revenues exceeding $1 billion.

Key Findings: Companies Pivot from China

The study indicates a sharp rise in businesses diversifying their operations outside China. In 2024, 69% of companies reported shifting operations out of the country, a significant leap from 55% in 2022. Among the key destinations for these relocated operations, the Indian subcontinent emerged as a frontrunner, capturing 39% of business interest. Other preferred regions included:

United States and Canada: 16%
Southeast Asia: 11%
Western Europe: 10%
Latin America: 8%

Drivers of Change: Geopolitical and Economic Pressures

The analysis underscores that heightened geopolitical turbulence, sustainability imperatives, and the post-pandemic focus on supply chain resilience are reshaping global business strategies. Many companies are prioritizing “reshoring” (bringing operations back to home countries) or “near-shoring” (moving operations to neighboring regions) to address the new challenges.

The survey points out how these shifts disrupt the long-standing rationale of relying on low-cost offshore hubs. The balance is now tipping towards localizing operations closer to home markets to ensure cost-efficiency, resilience, and agility.

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Insight from Bain & Company

Hernan Saenz, Bain & Company partner and global head of the Performance Improvement practice, emphasized the importance of this trend:

“The acceleration of reshoring across key markets is a pivotal trend demanding CEOs’ attention. Businesses must move beyond questioning whether to reinvent supply chains and focus on building operations that are cost-competitive, resilient, and agile while addressing sustainability goals.”

Saenz also highlighted that the disruptions caused by the pandemic have accelerated this shift, making robust and localized supply chains a priority for global enterprises.

Impact on Global Supply Chains

1. Indian Subcontinent as a Rising Hub

India’s growing economic clout and vast workforce are drawing international businesses seeking cost-effective solutions and market proximity. Policies promoting foreign investment and infrastructure development are further enhancing its appeal.

2. North America Gains Traction

The United States and Canada are witnessing a resurgence of industrial operations due to geopolitical stability, advanced infrastructure, and increasing support for reshoring initiatives. These factors make North America an attractive option for companies prioritizing operational stability.

3. Southeast Asia and Latin America

Regions like Vietnam, Indonesia, and Thailand in Southeast Asia, along with parts of Latin America, continue to offer competitive manufacturing capabilities. Companies find these areas beneficial for diversifying risk and reducing overdependence on a single region.

Why Reshoring and Near-Shoring Are Gaining Momentum

The shift towards reshoring and near-shoring reflects an evolving understanding of operational risk. Companies are now evaluating supply chains through the lenses of:

Cost Efficiency: Beyond manufacturing costs, factors like transportation, tariffs, and labor stability are influencing decisions.
Geopolitical Stability: Businesses are minimizing risks associated with trade wars, sanctions, and regional conflicts.
Sustainability: A move towards reducing carbon footprints and complying with stricter environmental regulations.
Resilience: Building adaptable supply chains that can withstand future disruptions.

Challenges and Opportunities

While reshoring and near-shoring promise long-term benefits, they come with challenges such as higher labor costs in developed countries and the need for investments in technology and infrastructure. However, these shifts also open opportunities for countries and regions investing in business-friendly policies and workforce development.

Future Implications for Global Trade

The Bain & Company report highlights a significant reorganization of global trade patterns, likely to redefine economic relationships in the coming years. As more companies adopt localized models, emerging markets like India and Southeast Asia are poised to become key players in the global economy.

Meanwhile, Western countries stand to benefit from increased industrial activity and job creation, aligning with government goals to boost domestic economies.

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