A year after shifting production and sourcing out of China to avoid higher U.S. tariffs, some companies are learning that replicating the country’s factory ecosystem is not so easy and are bringing manufacturing back.

Last year, ​as President Donald Trump’s tariffs set off a global rush to diversify supply chains, Heather Kuang’s China-based metal casting company lost business when a major U.S. customer shifted ‌some orders to India.

The customer has since returned with new orders after running into problems there, said Kuang, vice president of family-owned Dawang Metals, based in the northeastern Chinese city of Dandong. She declined to identify the agricultural machinery company.

Dawang also explored moving some production offshore before abandoning the plan.
“China’s supply-chain advantage is still too great, and it is difficult to replicate domestic production elsewhere,” Kuang said.

Companies continue to invest in Southeast Asia’s manufacturing hubs, but the “China plus one” push, under ​which firms hedged China exposure with operations in other lower-tariff countries, has proved harder to execute.

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