Supply chains are being redesigned around resilience and risk, not just headline unit cost. Multiple sources point to the same drivers: tariffs on Chinese goods, ongoing geopolitical tensions, and disruptions since the pandemic. One guide defines the China-plus-one approach as keeping China as a core manufacturing base while building secondary or backup capacity in another country where labor costs, tariff exposure, or policy risk may differ. This is presented as risk reduction, not a full exit from China, because new countries rarely match China’s upstream depth and setting up viable manufacturing typically takes one to two years, including factory qualification, supplier development, logistics setup, and quality system alignment.
Even with diversification, China remains central to many industries. A white paper notes Apple still manufactures about 90% of its devices such as iPhones, iPads, and MacBooks in China, while another source cites a JPMorgan analysis expecting Apple’s China-based production to decrease from 95% to about 75% by 2025. This mix helps explain why “plus-one” strategies persist: firms want insurance against disruptions, tariffs, currency shifts, and political uncertainty, but they also want to keep the manufacturing process know-how, talent, and accumulated supply networks that are hard to relocate. This tension makes a multi-country footprint more realistic than a sudden switch.
Why Indonesia Is Appearing in Plus-One Shortlists
Within Southeast Asia, Indonesia is repeatedly named as part of the alternative set alongside Vietnam, Thailand, Malaysia, and India. The rationale is practical: companies aim to spread production across several countries to reduce single-country concentration risk and improve continuity when one location faces constraints. Industry examples tie Indonesia directly to this trend. One source states that L’oreal invested approximately US$50 million in its Jakarta plant in Indonesia. Another source highlights that automotive and EV supply chains are also diversifying, with manufacturers expanding parts and component production into Thailand and Indonesia, and it also notes Toyota increasing investments in Southeast Asia, particularly Thailand and Indonesia.
Indonesia’s role should also be viewed in a broader ASEAN context rather than as a standalone story. A manufacturing strategy overview reports that ASEAN nations attracted a record USD 225 billion in FDI in 2024. In the same discussion of diversified manufacturing, Vietnam’s electronics exports are cited at USD 165 billion in 2023, showing how production and export capacity are spreading across the region rather than concentrating in a single “next China.” For companies evaluating a China Plus One Indonesia approach, that regional momentum can matter because supplier development, logistics options, and trade pathways often strengthen together across neighboring markets, even when capabilities differ by country.
Execution details often determine whether a plus-one expansion succeeds. One sourcing guide emphasizes that it is not simply moving to the cheapest factory and not a one-season experiment that can be reversed quickly. It also warns that total operating cost is often higher than headline labor comparisons suggest, and that quality consistency can take longer with new suppliers. At the same time, the same guidance lists clear advantages: reduced tariff exposure, better resilience against geopolitical disruption, and backup production capacity. In practice, manufacturers treat Indonesia as one part of a balanced network: keep China for scale and mature ecosystems, and add a second base to improve stability.
What does a China-plus-one strategy mean for manufacturers?
Why are companies shifting toward a China Plus One Indonesia approach?
What real investment example connects Indonesia to China-plus-one diversification?
How long does it typically take to set up manufacturing in a new plus-one country?
Are companies leaving China completely when they diversify?
