The China Plus One strategy is a business approach where companies keep part of their manufacturing in China while expanding into another country to balance cost, risk, and resilience.
This shift gained speed as global brands faced rising Chinese labor costs, tariffs, and pandemic-era logistics disruptions that exposed single-country dependence.
For many direct-to-consumer (DTC) brands, Vietnam has become the strongest “Plus One” destination in 2025. According to DHL, Vietnam benefits from its proximity to China, improving infrastructure, and increasing manufacturing sophistication.
Vietnam’s rise is not about leaving China but about building regional balance. The smartest brands are creating dual ecosystems that use China’s depth and Vietnam’s flexibility to strengthen their global supply chains.
In July 2025, the United States and Vietnam announced a trade agreement that reshaped tariff policy on Vietnamese exports. The deal, effective August 7, 2025, introduced a two-tier tariff system under Executive Order 14326, as covered in our analysis of 2025 China tariffs and de minimis laws.
“Transshipment” refers to products manufactured elsewhere but rerouted through Vietnam with minimal processing. This rule effectively closes the loophole of Chinese goods passing through Vietnamese ports without meaningful transformation.
The new tariff structure makes origin verification a commercial priority, not just a compliance checkbox.
To qualify as Vietnamese origin, products must meet one or both of the following tests under the new framework of the 2025 U.S.–Vietnam trade deal, as summarized by Vietnam Briefing.
RVC = [(Ex-works price – Non-originating materials cost) / Ex-works price] × 100%
DTC brands should maintain accurate bills of materials, process records, and certificates of origin. Digital traceability tools now automate much of this documentation, easing compliance for growing brands.
Before diving into cost implications, review what landed costs include and how to calculate them.
Chinese goods currently face Section 301 tariffs of 7.5–25% across thousands of product categories. By shifting even 30% of production to Vietnam, a mid-sized DTC brand can significantly reduce effective duty exposure and build long-term supply stability.
To manage higher landed costs, leading DTC brands are responding in three ways:
The goal isn’t to abandon China but to balance. Brands that adapt fastest protect both margins and cash flow.
Portless recommends a structured roadmap for diversification into Vietnam.
Identify qualified manufacturing partners with export experience and proper documentation systems. Start with pilot runs of 100–500 units to evaluate quality and compliance before scaling.
Factory checklist:
Key resource: Learn how backup suppliers can strengthen your sourcing resilience.
Validate product quality through pre-production samples and measurable standards. Implement in-line inspections during manufacturing instead of relying only on final checks. Use AQL (Acceptable Quality Level) sampling to balance inspection cost and consistency.
Brief quality framework (see our full guide):
Standardize documentation and connect production data with ecommerce platforms for transparency. Integrate factory systems with fulfillment technology to enable shipping from fulfillment centers and faster customs clearance.
This integration shortens lead times and reduces inventory risk.
Even under a 20% tariff, Vietnam remains the most balanced “Plus One” option for DTC brands.
Early movers gain priority access to factory capacity and more flexible pricing.
Vietnam’s manufacturing ecosystem aligns best with several high-growth DTC sectors, according to Vietnam Briefing’s 2024 report on top export industries.
Global brands are already expanding here. Nike and Adidas are among those increasing manufacturing in Vietnam to diversify supply chains and reduce exposure to Chinese tariffs.
Manufacturing diversification alone is not enough. The fulfillment model determines how fast cash returns.
Factory → Warehouse → Customer (60–90 days)
Factory → Fulfillment Center → Customer (~6 days)
For DTC brands, direct fulfillment means:
Explore how direct fulfillment helps DTC brands save time and money.
Portless enables compliant, direct fulfillment from fulfillment centers across Asia, fully integrated with Shopify, WooCommerce, and operations in 55+ countries.
How do I prove Vietnamese origin to avoid 40% tariffs?
Maintain documentation showing an HS code change or 35–40% Vietnamese value added, including materials and labor.
How long does it take to set up manufacturing in Vietnam?
Electronics setups typically require 3–6 months. Textile and apparel production takes 6–12 months to reach export-ready quality.
Should I keep some production in China?
Yes. Most brands retain 20–30% capacity in China to leverage its component ecosystem and domestic demand.
Do I need a local entity to manufacture in Vietnam?
No. Many DTC brands work directly with manufacturers or partner platforms that manage compliance and logistics on their behalf.
The most successful DTC brands aren’t leaving China behind. They’re building regional resilience through smart diversification.
China continues to lead in complex manufacturing and component production, while Vietnam offers cost, speed, and trade advantages.
This isn’t about duplicating supply chains but about creating complementary networks.
Learn how Portless helps DTC brands implement direct fulfillment from fulfillment centers in Vietnam and beyond.
