China-And, Not China-Minus

Everyone wants to go global and de-risk. Fewer companies know what that actually takes. And many still do not know where their parts really come from.

This week I had two conversations that could have been the same conversation. Different people. Different companies. Same instinct: "We want to source globally." "We want to de-risk." "We want to expand into new markets."

Then came the same pause when I asked the next question. How? At what cost? What changes once you actually operate across borders?

Wanting to be global is not the same as knowing how to be global. That gap is wider than many leadership teams admit, and it is often where money is made or lost.

Diversification is real. Decoupling is not.

Start with the data: North American buyers are spreading their sourcing. QIMA's Q1 2026 Supply Chain Barometer showed the combined share of the top three supplier countries for North American buyers falling from 61 percent to 54 percent in a single year.

On paper, that looks like decoupling. In practice, it is often rerouting.

The components did not necessarily leave China. They changed passports. A part stamped Vietnam, Malaysia, India, or Mexico may still carry a bill of materials that runs back to Chinese sub-tier suppliers: tooling, raw materials, electronics, motors, magnets, castings, forgings, controls, and engineered subassemblies.

The country of origin on the box is not always the origin of the supply chain. I have watched teams celebrate "moving out of China" without realizing that most of their inputs, and a large share of their subassemblies, never moved at all.

That is why the right phrase is not China-minus. It is China-and. China-and Vietnam. China-and India. China-and Mexico. China-and Canada. China-and Europe. In many categories, diversification is being built on top of a China base, not in place of one.

China still holds leverage where it matters

China still controls pieces of the supply chain that matter deeply to advanced manufacturing. Rare earths and permanent magnets are one example. Recent export controls and pressure around magnet supply are a reminder that China has not lost leverage. In some categories, it is deciding deliberately where that leverage applies.

That does not mean companies should remain dependent. It means they should be realistic. If your product depends on motors, sensors, electronics, batteries, controls, precision machining, magnets, castings, tooling, or specialty materials, your China exposure may be much deeper than your first-tier supplier list suggests.

You may have moved the final assembly. You may have moved the invoice. You may have moved the country of origin.

But did you move the capability?

That is the question.

Freight is moving against you

Global freight is no longer a static assumption. Drewry's World Container Index moved above $4,000 per 40-foot container in late June, supported by increases on transpacific routes. Landed cost is not a spreadsheet constant right now. It is a moving number, and it can move quickly.

When freight moves, the business case moves. A sourcing strategy that looked smart at last year's rates may look very different once ocean freight, airfreight, expedite cost, inventory carrying cost, and working capital are recalculated.

That is why total landed cost has to be a live model, not a one-time worksheet. Unit price is only one line. The real number includes freight, duty, tariffs, payment terms, inventory, scrap, inspection, quality risk, expediting, line-stoppage risk, and the cash tied up in a longer pipeline. That is where global sourcing decisions become real.

Policy is a live wire

Trade policy is not background noise anymore. Some tariff mechanisms may change, be challenged, or be revised. But other tools have firmer footing and real operating consequences: Section 301, Section 232, steel and aluminum content, country of origin, USMCA qualification, HTS classification, drawback, and broker discipline.

These are not clerical details. They are commercial levers. On many complex machines or systems, the question is not simply "what is the duty on the entered value?" It is whether specific duties apply to the steel or aluminum content, how the product is classified, what the origin is, what documentation supports it, and whether the broker is treating it correctly.

Read it wrong and you can overpay materially. Read it correctly and you may protect margin, win work, and preserve delivery. This is not about gaming the system. It is about understanding the rules and using them legally, deliberately, and professionally.

Full disclosure: I am a free trader. I do not like protectionist trade policy, anywhere, no matter who is using it. But I am also a realist. The barriers are real. So you learn them cold, model them honestly, and manage them before they manage you.

Global is not a purchase order

Here is the part the announcements usually miss. Building a global supply chain is not a purchase order. It is people, culture, time zones, communication, quality systems, freight, customs, engineering support, supplier development, local language, trust, and escalation paths.

It is knowing who picks up the phone at 2 a.m. It is understanding that a supplier's "yes" does not mean the same thing in every country. It is the difference between having a factory somewhere and running an operation everywhere.

That is also why the reshoring story is thinner than many press releases suggest. Output can return without the same headcount returning. S&P Global's US Manufacturing PMI reached 55.7 in June, with production and new orders strengthening while manufacturing employment fell sharply. That is a critical signal.

"Manufacturing is coming back" and "manufacturing jobs are coming back" are now two different sentences. The plants that get built are increasingly automated, capital-intensive, and engineering-heavy. They are not staffed like the old factories. Announcing capacity is easy. Standing it up, staffing the technical roles, running the automation, qualifying suppliers, protecting margin, and hitting delivery is the hard part.

Feet on the street still matter

This is also why I believe so strongly in having feet on the street. I used this model at Kyosay, the company I co-founded and ran for years. We did not treat global sourcing as a remote purchasing exercise. We built relationships in country. We visited factories. We checked quality. We understood who actually owned the process, who controlled the tooling, who could recover when something went wrong, and who would answer the phone when the shipment or the production schedule was at risk.

That is the same model I am bringing forward through Operis Global.

A spreadsheet can tell you the quoted price. It cannot tell you whether a line is actually running. It cannot tell you whether a supplier's "yes" means "confirmed," "maybe," or "I do not want to disappoint you." It cannot tell you whether a shipment is real, whether the quality system is working, or whether the sub-tier supplier is already the bottleneck.

That takes presence. It takes people who can go to the plant, look at the work, talk to the supplier, check the shipment, understand the local context, and communicate clearly back to the leadership team.

That is what global really requires. Not just a purchase order overseas. An operating model that reaches the supplier floor.

Done right, global is still a real advantage

None of this argues for staying home, going all-in on China, or pretending risk is manageable through slogans. The point is clarity.

Done right, global sourcing is a real advantage. It gives you optionality that a domestic-only competitor may not have. When tariffs move, you have alternatives. When freight shifts, you have choices. When a supplier misses, you have another path. When a customer needs product, you have options.

But that flexibility is earned. It comes from unglamorous work: close supplier relationships built over time, freight forwarders and customs brokers who actually pick up the phone, quality people on the ground in the plant and at the supplier, lead times you plan around instead of react to, net landed cost modeled honestly rather than the unit price on the quote, a bill of materials understood two and three tiers deep, and a real view of where risk lives.

That is the work. Not the buy. The build.

Ready, aim, fire

Too many companies treat global sourcing as shoot, ready, aim. They sign the supplier first, then discover the freight problem, the tariff issue, the quality gap, the sub-tier dependency, the documentation weakness, or the real lead time. That is backwards.

It should be ready, aim, fire. Know the true origin of the BOM. Model landed cost with today's freight and today's tariffs. Understand the supplier's process capability. Validate the broker's classification logic. Know which parts are China-dependent, even when the final assembly is not. Decide what global actually requires of your people, systems, partners, and operating cadence before you sign anything.

The bottom line

The winning model is not China-only. It is not China-minus. It is China-and. China-and the regions that genuinely add resilience, cost advantage, speed, customer proximity, or technical capability.

Global can be great. But only if it is built deliberately. The companies that win will be the ones that know their real supply chain, model the real cost, manage the real policy exposure, and build the real operating relationships on the ground.

At Operis Global, this is the work we help companies do: get to the real cost, the real origin, and the real operating plan. On the ground, in the countries companies actually buy from, with the suppliers, freight partners, brokers, and operating teams who determine whether strategy turns into execution.

Clarity. Focus. Execution. Value.

Sources

QIMA Q1 2026 Supply Chain Barometer: sourcing diversification and the decline in top-three supplier-country concentration among North American buyers.
S&P Global US Manufacturing PMI, June 2026: reading of 55.7, with production and new orders strengthening and manufacturing employment declining.
Drewry World Container Index: container rates above $4,000 per 40-foot container in late June 2026.
CSIS: analysis of China's rare-earth and permanent-magnet export-control leverage.
USTR and US Customs and Border Protection: Section 301 and Section 232 administration, steel and aluminum measures, classification, origin, and compliance.

Frank J. Lazowski III Managing Director | Operis Global Executive advisory for global operations, supply chain, sourcing, and manufacturing transformation

E: Frank.Lazowski@operisglobal.com W: operisglobal.com LinkedIn: linkedin.com/in/franklazowski