Global Companies Shifting Production Out Of China, India Emerges As Top Destination: Survey

The research, conducted by Bain & Company, highlights a notable trend of diversification away from China, with the Indian subcontinent emerging as the top alternative for executives

In 2024, 69 per cent of companies indicated they were reducing their dependence on China, up from 55 per cent in 2022.

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A new study reveals that top global companies in the US and other leading economies are rapidly shifting production out of China, driven by rising geopolitical uncertainties, increasing costs, and the potential for higher tariffs. The research, conducted by Bain & Company, highlights a notable trend of diversification away from China, with the Indian subcontinent emerging as the top alternative for executives.

The study, which surveyed 166 CEOs and COOs from major economies, found that the percentage of companies relocating operations out of China has increased significantly. In 2024, 69 per cent of companies indicated they were reducing their dependence on China, up from 55 per cent in 2022. Notably, 39 per cent of those executives are turning to the Indian subcontinent as their preferred destination. Other leading relocation spots include the US and Canada (16 per cent ), Southeast Asia (11 per cent ), Western Europe (10 per cent ), and Latin America (8 per cent ).

The shift is largely driven by growing geopolitical tensions, with the potential for a 60 per cent tariff on Chinese imports proposed by US President Donald Trump further intensifying the pressure. The study also pointed to the broader trend of “reshoring” and “near-shoring” as companies seek to bolster supply chain resilience, sustainability, and reduced carbon footprints in the post-pandemic world.

“The acceleration of reshoring trends underscores how geopolitical turbulence and pressures for sustainability are reshaping the business rationale for offshore manufacturing,” the study noted. “Companies are now focusing on operations closer to home markets to create more resilient, agile, and sustainable supply chains.”

Reshoring and Near-shoring on the Rise

Bain & Company also observed an increase in companies “reshoring” operations back to their home countries or “near-shoring” to neighboring regions. This trend is seen as a response to the disruptions in global supply chains caused by the pandemic and the increasing demand for greater sustainability.

Hernan Saenz, partner and global head of Bain’s Performance Improvement practice, emphasized that the shift towards reshoring requires careful attention from CEOs. “The question for company leaders is no longer whether to reinvent supply chains, but how to make them more cost-competitive, resilient, sustainable, and agile,” Saenz said.

Trump's Tariff Proposal Could Deal Blow to China’s Economy

If the proposed tariffs by President Trump come to fruition, they could further strain China's economy, which is already grappling with issues such as a real estate crash, rising debt, and deflation. Exports have long been a key driver of China's economy, and the increased trade barriers could dampen the flow of cheap goods from the country.

Trump’s previous term saw the imposition of tariffs on Chinese goods as part of his “America First” agenda, highlighting the risks of over-reliance on Chinese factories. Looking ahead to his second term, Trump has vowed to increase tariffs across the board, including those targeting China. At a rally in June, he stated, "We are going to be so tough, and if a country is not going to behave, we’re going to tariff the hell out of that country."

This potential tariff escalation, coupled with the shifting dynamics of global supply chains, could have lasting effects on China’s export-driven economy and prompt further adjustments from multinational companies.