As President Donald Trump’s 2026 visit to China brought together political leaders, senior policymakers, and executives from some of the world’s largest technology companies, business leaders around the world are paying close attention.
The headlines may focus on trade negotiations, economic cooperation, tariffs, technology competition, and diplomatic relations. However, for most businesses, the more important takeaway is much simpler.
If some of the world’s most valuable companies still view China as strategically important while simultaneously expanding elsewhere, what does it mean for other businesses? Beyond the tech giants, should SMEs be planning a complete exit for more obviously developing and less competitive markets?
Increasingly, the answer appears to be no.
Instead, many organizations are adopting a strategy that balances engagement with diversification. Rather than choosing between China and alternative markets, they are building operations that can benefit from both. This approach, commonly known as the China+1 strategy, is rapidly becoming one of the most important global expansion models of the decade.
What Happened During Trump’s Visit and Why US Business Leaders (Particularly in Tech) Went Too
President Trump’s state visit to China in May 2026 was notable not only for the diplomatic discussions between Washington and Beijing, but also for the unusually large delegation of American business leaders that accompanied him. More than a dozen senior executives from major US companies joined the visit, reflecting the continuing importance of the Chinese market for global business.
Among the most prominent attendees were Tesla CEO Elon Musk, Apple CEO Tim Cook, and Nvidia CEO Jensen Huang, alongside executives from financial institutions, technology companies, payment providers, and industrial firms. Reports also indicated participation from companies including BlackRock, Meta, Mastercard, Visa, Citigroup, Goldman Sachs, Boeing, and others with significant commercial interests in China.
The reasons these executives traveled to China were highly practical. Many were seeking improved market access, regulatory approvals, stronger commercial relationships, or progress on specific business issues affecting their operations. For example, technology companies continue to navigate restrictions related to artificial intelligence, semiconductors, data management, and export controls. At the same time, financial institutions are continually pursuing new opportunities in one of the world’s largest financial markets, while manufacturers and industrial firms remain deeply connected to Chinese supply chains and customers, aiming to survive fluctuating tariffs among a host of global issues affecting trade and business.
Tesla‘s presence in particular highlighted China’s continuing importance to the global electric vehicle industry, both as a manufacturing base and as one of the world’s largest EV markets. Nvidia‘s participation reflected the growing importance of artificial intelligence and advanced semiconductor policy in US-China relations. Apple‘s involvement underscored the reality that China remains both a critical production hub and a major consumer market for global technology companies.
The composition of the delegation revealed an important trend. Despite years of discussion surrounding a slowing Chinese economy, supply chain diversification, nearshoring, and geopolitical risk, many of America’s most valuable companies continue to view China as strategically important. Despite growing diversity in supply chains, for example, China alone continues to account for around 30% of global manufacturing value, and FDI in China totaled $124 billion announced by Chinese firms in 2025, demonstrating continued interest and investment.
At the same time, many of these businesses are investing heavily in additional operations across Southeast Asia, India, the Middle East, Europe, and the Americas. ASEAN apparently attracted approximately US$230 billion in foreign direct investment in 2024, and Mexico became the largest trading partner of the United States in recent years, with bilateral trade exceeding US$840 billion annually.
This apparent contradiction is precisely why the China+1 strategy has gained so much momentum. Rather than choosing between China and alternative markets, companies are increasingly pursuing both. They continue to engage with China because of its scale, infrastructure, talent base, and consumer market, while simultaneously developing operations elsewhere to improve resilience and reduce concentration risk.
The presence of so many senior executives in Beijing, therefore, sent a clear message. For many global businesses, the future is not about leaving China. It is about securing and maintaining access to China while building options beyond it.
The Lesson Behind the Headlines
Despite years of discussion about supply chain diversification, nearshoring, reshoring, and reducing dependence on China, many of the world’s largest corporations continue to invest significant time, resources, and attention into their China strategies.
The significance of Trump’s visit is not that businesses should increase or decrease their exposure to China.
The significance is that China remains important enough that some of the world’s largest companies continue to pursue both options at once, engaging in China at the highest levels while simultaneously investing in operations across Southeast Asia, India, the Middle East, Europe, and the Americas.
However, that raises an important question for SMEs and mid-sized businesses without the same levels of resources or high-level connections.
For most businesses, the challenge is not choosing one location over another, but determining how much dependence on any single country makes sense in today’s business environment, and how best to balance multiple options in an increasingly unknowable environment.
Why China Continues to Matter
Predictions of a mass corporate exodus from China have been circulating for years, with more than half of the companies asked saying they were planning relocation strategies. Yet despite ongoing diversification efforts, planning is not the same as doing, and China remains central to many global business strategies.
There are several reasons for this.
- First, China possesses one of the most developed manufacturing ecosystems in the world. In many industries, businesses benefit not only from factories but also from highly integrated networks of suppliers, component manufacturers, logistics providers, testing facilities, engineering services, and technical specialists.
- Second, China remains an enormous consumer market. Consumer spending in China has increased year-on-year (outside the pandemic) for a long time now, and for many multinational companies, China is not simply where products are made; it is also where an increasingly significant portion of products is sold.
- Third, decades of investment have created deeply embedded business relationships that cannot simply be thrown away overnight. Many companies have spent years building supplier networks, distribution channels, local expertise, and operational infrastructure. Replacing these assets is rarely simple or inexpensive. Additionally, recent changes to business regulations in China have made it both more complicated and more expensive to shut down local operations or move them overseas wholesale, adding a new challenge that businesses thinking about moving have to attend to.
Why Diversification Has Become a Priority
The fact that China remains important does not mean companies are comfortable concentrating all operations in a single location.
In particular, the disruptions experienced during recent years exposed vulnerabilities that many organizations had previously overlooked.
When production, sourcing, logistics, and distribution are concentrated within one geography, unexpected events can create widespread operational challenges. Supply chain disruptions, transportation delays, labor shortages, regulatory changes, or market fluctuations can all have an outsized impact when alternatives do not exist.
As a result, business leaders increasingly view diversification as a form of resilience.
The objective is not necessarily to reduce exposure to China itself, but to reduce concentration risk and be better prepared to react to growth wherever it occurs.
In practice, this means creating operational flexibility by developing additional manufacturing capacity, supplier relationships, talent pools, or regional headquarters in other countries.
The Rise of the China+1 Strategy
The China+1 strategy has emerged as one of the most practical responses to this challenge.
Under this model, companies maintain their existing Chinese operations while simultaneously developing capabilities elsewhere, with the name referring to new expansion and alternatives being added to a supply chain rather than becoming replacements.
For some organizations, this may involve adding a second manufacturing location in Southeast Asia. Others establish customer support teams in India, regional headquarters in the United Arab Emirates, or distribution centers in Mexico.
This strategy allows organizations to continue benefiting from China’s strengths while improving flexibility and reducing vulnerability to future disruptions.
Importantly, with the rise of remote working options and the ease of cross-border operations today, China+1 is no longer limited to large multinational corporations. Instead, an increasing number of SMEs are looking at small-scale, quick-to-adapt options for overseas operations, often beginning with relatively small investments before expanding further.
Where Companies Are Expanding Instead
Several regions have emerged as particularly attractive destinations for businesses pursuing diversification.
In Asia:
- Vietnam continues to attract manufacturers seeking competitive production costs and strong export capabilities.
- India offers both a large domestic market and an expanding industrial base.
- Thailand remains a major regional manufacturing hub, particularly for automotive and industrial sectors.
- Malaysia has become increasingly important for electronics, technology, and semiconductor-related industries.
Outside Asia:
- Mexico continues to benefit from nearshoring trends driven by access to North American markets.
- The United Arab Emirates has established itself as a strategic location for regional headquarters, logistics operations, and international business management.
What these locations have in common is not that they are replacing China. Rather, they are complementing China.
The most successful companies are often those that understand how to leverage multiple markets simultaneously rather than attempting to shift entirely from one location to another.
Best China+1 Expansion Destinations in 2026
Market | Key Advantages | Potential Challenges | Common China+1 Use Cases |
Large domestic market, growing manufacturing base, strong talent availability | Regulatory complexity, infrastructure differences between regions | Manufacturing, IT services, customer support, R&D | |
Competitive labor costs, strong export orientation, expanding industrial zones | Limited labor availability in some sectors, increasing wage pressures | Manufacturing, sourcing, electronics assembly | |
Established industrial ecosystem, strong logistics infrastructure | Competition for skilled talent in key industries | Automotive, industrial manufacturing, regional operations | |
Strong technology sector, developed business environment, multilingual workforce | Smaller labor market compared to larger regional economies | Electronics, semiconductors, shared services | |
Business-friendly environment, strategic location, regional headquarters hub | Higher employment costs for some roles | Regional management, sales, logistics, professional services | |
Access to North American markets, established manufacturing clusters | Regional compliance variations, talent competition in industrial sectors | Manufacturing, nearshoring, distribution | |
Large and growing domestic market, expanding industrial investment | Regulatory complexity and geographic fragmentation | Consumer goods, manufacturing, market expansion |
Of course, the best location depends heavily on a company’s industry, customer base, operational requirements, and long-term growth objectives.
For most businesses, these markets are not direct replacements for China. Instead, they offer complementary opportunities that can strengthen operational flexibility and reduce concentration risk.
Why SMEs Face Different Challenges
Large technology companies have the resources to invest billions of dollars in new facilities, supply chains, and market expansion initiatives.
SMEs rarely enjoy the same level of flexibility.
A manufacturing disruption that creates inconvenience for a multinational corporation may create a significant financial challenge for a mid-sized business. Similarly, establishing legal entities in multiple countries can be costly, time-consuming, and administratively complex.
This is why smaller organizations often require more flexible expansion strategies. Instead, many begin with secondary suppliers, small regional teams, pilot manufacturing projects, or targeted market-entry initiatives. These smaller-scale investments allow businesses to test opportunities while maintaining operational stability.
The goal for SMEs is not always rapid relocation. Instead, the goal is gradual resilience and a more cautious approach to change.
Why Talent Has Become Part of the China+1 Conversation
While all this is great, unfortunately (or perhaps fortunately) supply chains are no longer the only consideration driving diversification. In 2026, talent availability is increasingly influencing expansion decisions as well.
Businesses entering new markets frequently need local sales professionals, engineers, operational managers, compliance specialists, and customer support teams. However, hiring employees internationally introduces additional complexity.
As per organizations like the ILO, Each country has unique employment laws, payroll requirements, tax obligations, benefits regulations, and HR compliance standards. As a result, workforce strategy has become an essential component of modern diversification planning,
How an Employer of Record Supports China+1 Expansion
For many organizations, the biggest obstacle to international expansion is not identifying an opportunity. It is knowing how to establish a compliant local presence quickly enough to act on that opportunity without getting bogged down in administrative processes or costs.
Creating a subsidiary the traditional way may take months and require significant investment before commercial viability has been proven.
However, an Employer of Record (EOR) offers an increasingly popular and alternative approach to setting up local operations that don’t require a long-term or particularly in-depth presence.
By partnering with an EOR, businesses can hire employees legally in a new country without immediately establishing their own local entity. Instead, the EOR legally hires workers in a jurisdiction on behalf of a client company. This allows organizations to build local teams, test market opportunities, and support expansion plans while reducing administrative complexity.
For companies pursuing a China+1 strategy, an EOR can provide the flexibility needed to enter multiple markets without committing to full-scale incorporation in every location.
The Future Is About Options
The most important lesson from Trump’s China visit may not be found in any specific announcement or business agreement.
It is the broader recognition that global business is becoming increasingly multi-regional and that cross-border operations are available to all, not just the few big ones.
The companies attracting the most attention today are not necessarily choosing between China and the rest of the world. They are building strategies that allow them to benefit from both.
For SMEs and multinational corporations alike, the future is unlikely to belong to organizations that depend entirely on a single market. It is more likely to favor businesses that create options, diversify intelligently, and build the flexibility required to adapt to changing economic conditions.
China remains one of the world’s most important markets. At the same time, opportunities elsewhere continue to grow.
The challenge for modern businesses is not deciding which market matters most.
It is learning how to succeed in several of them at once.
China EOR FAQs
In most cases, foreign companies cannot directly employ staff in China without establishing a legal presence. An Employer of Record (EOR) allows businesses to hire workers compliantly through an established local entity while avoiding the time and expense associated with creating a subsidiary.
A China EOR allows businesses to maintain or expand operations in China while preserving flexibility. Companies can hire local employees, support customers, test new markets, or build regional teams without making an immediate long-term investment in a local legal entity.
While timelines vary depending on the role and candidate availability, an EOR can typically onboard employees significantly faster than establishing a local subsidiary, which may take several months depending on regulatory and administrative requirements.
Businesses commonly use EOR solutions to hire sales representatives, business development managers, engineers, customer support professionals, operational staff, project managers, and other locally based employees.
Yes. Many organizations use an EOR to explore commercial opportunities before making larger investments. This allows companies to build a local presence, generate revenue, and assess market potential before deciding whether to establish their own legal entity.
No. While large corporations often receive the most attention, SMEs increasingly use China+1 strategies to improve resilience, access new markets, and reduce operational risk. In many cases, SMEs can implement diversification strategies gradually through local partnerships, secondary suppliers, regional teams, and EOR-supported hiring.
INS Global helps businesses hire, manage, and support employees across more than 160 countries through Employer of Record, recruitment, payroll, and HR outsourcing solutions. Whether a company is maintaining operations in China, expanding into a new market, or pursuing a broader China+1 strategy, INS Global provides the infrastructure needed to grow internationally while maintaining compliance and reducing administrative complexity.
