CHINA-PLUS-ONE STRATEGY

Context: World Bank president said India has a three-to-five-year window to cash in on the China+1 opportunity as companies seek alternative manufacturing sites to diversify supply chains.

• India has proven more resilient and emerged from the pandemic relatively stronger than others.

China-plus-one strategy

• Origin: Coined way back in 2013, it is a global business strategy.
• China-Plus-One, or just Plus One: It refers to a strategy in which companies avoid investing only in China and diversify their businesses to alternative destinations.
  • The “China, plus one” strategy is about still using the resources allocated in China, but adding lower wages to the mix.
  • Due to rising labour cost in India, manufacturing firms are diverting some of the resources to low cost economies while still using their facilities in China as shifting entire production at once is not possible.
• Measures taken by the government:
  • Amalgamation of Labour laws: into four codes will help expand manufacturing and attract investments
  • Promotion of a culture of resolution: with the Insolvency and Bankruptcy Code and Arbitration and Conciliation (Amendment) Act, 2019.
  • Sector level manufacturing: The government has launched Production-Linked Incentive scheme which proposes a financial incentive to boost domestic manufacturing and attract large investments in the White Goods manufacturing value chain