Global Supply Chain Reshoring Accelerates As Companies Diversify From China
Friend-shoring investment hits 310B. China manufacturing share declines from 28.3% to 26.1%. Vietnam, India, Mexico gain.
By CII Research Team | June 20, 2026
The global supply chain is undergoing its most significant restructuring since China joined the World Trade Organization in 2001. But unlike the post-WTO era, which was driven by cost optimization, the current shift is driven by something more fundamental: geopolitical risk. A new analysis from Thomson Reuters, published on June 18, documents how companies are moving from “just-in-time” to “just-in-case” supply chain strategies, with profound implications for China’s role as the world’s factory.
The Reshoring Reality Check
The data tells a nuanced story. Total global trade volume reached a record $32.4 trillion in 2025, according to the WTO. But the composition is shifting. China’s share of global manufacturing exports declined from 28.3% in 2022 to 26.1% in 2025 — a modest but meaningful decline that accelerated in 2026.
| Metric | 2022 | 2024 | 2025 | Trend |
|---|---|---|---|---|
| China’s share of global mfg exports | 28.3% | 27.1% | 26.1% | ↓ Declining |
| Vietnam’s share | 2.8% | 3.4% | 3.9% | ↑ Rising |
| India’s share | 2.1% | 2.5% | 2.8% | ↑ Rising |
| Mexico’s share | 2.4% | 2.7% | 2.9% | ↑ Rising |
| US manufacturing reshoring announcements | 350K jobs | 420K jobs | 380K jobs | → Stabilizing |
| Friend-shoring investment (ex-China) | $180B | $240B | $310B | ↑ Accelerating |
The $310 billion in “friend-shoring” investment in 2025 — capital deployed to build manufacturing capacity outside China — is the most telling number. It represents a 29% increase from 2024 and a 72% increase from 2022. Companies are not just talking about diversifying away from China; they are spending real money to do it.
Where the Capacity Is Going
The destinations for reshored capacity are not random. Three countries are capturing the majority of new manufacturing investment:
Vietnam: The biggest winner of the China+1 strategy. Samsung, Apple suppliers (Foxconn, Pegatron), and automotive companies have invested heavily. Vietnam’s manufacturing output grew 12% in 2025, with electronics exports leading. But Vietnam faces constraints: a population of 100 million limits scalability, and infrastructure (ports, power, logistics) lags behind China.
India: The long-term bet. India’s “Make in India” initiative has attracted $45 billion in manufacturing FDI in 2025, with Apple, Samsung, and Tata Electronics leading the charge. India’s advantage is scale — 1.4 billion people, a young workforce, and improving infrastructure. The disadvantage is bureaucracy: it takes 30-60 days longer to set up a factory in India than in China.
Mexico: The nearshoring play for North America. Mexico’s manufacturing exports to the U.S. grew 18% in 2025, driven by automotive, electronics, and aerospace. The USMCA trade agreement gives Mexico preferential access to the U.S. market, and its proximity to the U.S. reduces logistics costs. But Mexico faces security concerns and infrastructure limitations.
What China Is Doing About It
UPSTREAM: China is responding to the reshoring trend by moving up the value chain. Instead of competing on cost for low-value manufacturing (textiles, basic electronics), China is doubling down on high-value sectors: semiconductors, EVs, batteries, robotics, and advanced manufacturing equipment. The strategy is working — China’s manufacturing value-added per worker increased 15% in 2025, driven by automation and technology upgrades.
DOWNSTREAM: Chinese companies are themselves reshoring — but in the opposite direction. BYD, CATL, and other Chinese manufacturers are building factories in Hungary, Morocco, Thailand, and Mexico to serve local markets and avoid tariffs. This “reverse reshoring” is a new phenomenon: Chinese companies are globalizing their manufacturing footprint to maintain market access.
BOTTLENECKS: The reshoring trend is real but slow. Building a new manufacturing facility takes 2-5 years, and the supply chain ecosystems that make China efficient (component suppliers, logistics networks, skilled labor pools) cannot be replicated overnight. Companies that have tried to reshore quickly have faced quality issues, cost overruns, and supply chain disruptions. The practical reality is that most companies will maintain a “China+1” strategy — keeping China as the primary manufacturing base while building secondary capacity elsewhere.
What the Data Tells Us
BULL CASE: Reshoring creates a more resilient global supply chain. The diversification away from China reduces single-point-of-failure risk and creates new manufacturing hubs in Vietnam, India, and Mexico. China’s manufacturing sector adapts by moving upmarket, maintaining its competitiveness through technology rather than cost.
BEAR CASE: Reshoring is a net negative for global efficiency. Manufacturing in Vietnam or India costs 20-40% more than in China, and the quality is often lower. The duplication of supply chains raises costs for consumers and reduces the global economy’s productive capacity. The result is stagflationary: higher prices with lower growth.
BASE CASE: A gradual diversification over 5-10 years. China’s manufacturing share declines from 26% to 22-23% by 2030, with the lost share going to Vietnam, India, and Mexico. China compensates by dominating high-value manufacturing (EVs, batteries, semiconductors, robotics). The global supply chain becomes more resilient but also more expensive.
WHAT TO WATCH: Q2 2026 FDI data for Vietnam, India, and Mexico; Chinese manufacturing PMI trends; any new tariff actions that accelerate or decelerate reshoring; and the progress of Chinese overseas factory investments (BYD Hungary, CATL Morocco).
CII Analysis
The reshoring trend is the most significant structural shift in global manufacturing since China’s WTO accession. But the narrative of “decoupling from China” is oversimplified. The reality is more nuanced: companies are diversifying, not decoupling. They are adding manufacturing capacity in Vietnam, India, and Mexico while maintaining — and in many cases expanding — their China operations. The reason is simple: China’s manufacturing ecosystem is unmatched in scale, efficiency, and sophistication. No other country can produce an iPhone, an EV battery, or a solar panel at the scale and cost that China can. The reshoring trend is real, but it is a 10-year process, not a 2-year one. For investors, the opportunity is in the enabling infrastructure: logistics companies, industrial equipment makers, and the countries (Vietnam, India, Mexico) that are building the factories of the future.
Related reading:
Sources
- Thomson Reuters — 2026 Supply Chain Challenge
- CEPR — Geopolitical risk and supply chain diversification
- WTO — Global Trade Statistics 2025
- Al Jazeera — World leaders visiting China 2026
- McKinsey — Supply chain reshoring analysis 2026
