Many major apparel brands and retailers have been pursuing so-called “China+1” sourcing strategies in recent years in order to reduce their reliance on a single source of supply. Following the adoption of these strategies, certain countries have emerged as key supplier nations, notably Bangladesh and Vietnam. Global apparel brands and retailers flocked to China after the country joined the World Trade Organization (WTO), having been attracted by the country’s efficiency, economies of scale and rapid turnaround times. Since then, rising labour costs have eroded some of China’s competitive advantage. Furthermore, many brands and retailers have become overdependent on China and are looking to other countries to source from.
Another factor is that consumer and regulatory pressures have pushed brands to adopt sourcing patterns which are more ethical and sustainable. Also, brands have been forced by geopolitical risks and trade tensions - particularly between the USA and China - to shift their sourcing patterns away from China in order to mitigate potential tariffs and export restrictions.
Under the China+1 sourcing model, brands have not abandoned China entirely but now supplement their production in China with additional hubs. Bangladesh remains a top choice for high volume, low cost apparel production. Bangladesh is now the world’s second largest garment exporter after China and it has a well-developed “ecosystem” for knitwear and denim.
While wages in China have risen substantially, labour costs in Bangladesh remain among the most competitive in the world and Bangladesh has maintained its edge in terms of cost. Notably, H&M Group and Inditex have had a significant sourcing presence in Bangladesh for over two decades. Vietnam, like Bangladesh, has also emerged as a leading beneficiary of the shift to the China+1 sourcing model. Adidas and Nike, in particular, have made big bets on Vietnam, and the country is now the largest supplier of footwear for both companies. Vietnam was the largest sourcing country for adidas in 2024, having accounted for 27% of total product volume. About half of all Nike shoes and 39% of adidas shoes are made in the country.
Another factor is that consumer and regulatory pressures have pushed brands to adopt sourcing patterns which are more ethical and sustainable. Also, brands have been forced by geopolitical risks and trade tensions - particularly between the USA and China - to shift their sourcing patterns away from China in order to mitigate potential tariffs and export restrictions.
Under the China+1 sourcing model, brands have not abandoned China entirely but now supplement their production in China with additional hubs. Bangladesh remains a top choice for high volume, low cost apparel production. Bangladesh is now the world’s second largest garment exporter after China and it has a well-developed “ecosystem” for knitwear and denim.
While wages in China have risen substantially, labour costs in Bangladesh remain among the most competitive in the world and Bangladesh has maintained its edge in terms of cost. Notably, H&M Group and Inditex have had a significant sourcing presence in Bangladesh for over two decades. Vietnam, like Bangladesh, has also emerged as a leading beneficiary of the shift to the China+1 sourcing model. Adidas and Nike, in particular, have made big bets on Vietnam, and the country is now the largest supplier of footwear for both companies. Vietnam was the largest sourcing country for adidas in 2024, having accounted for 27% of total product volume. About half of all Nike shoes and 39% of adidas shoes are made in the country.
Table of Contents
INTRODUCTION- Alternative hubs
- Challenges in implementing China+1 strategies
- Advantages of Bangladesh as a sourcing location
- H&M sourcing operations in Bangladesh
- Oporajita initiative
- Zara sourcing operations in Bangladesh
- Headwinds for Bangladesh in 2025
- Advantages of Vietnam as a sourcing location
- adidas sourcing operations in Vietnam
- Nike sourcing operations in Vietnam
- H&M sourcing operations in Vietnam
