Investing in Diversity: PE Sponsors Reimagine China-plus-one Supply Chain Strategy

As the world proliferates with interesting investment opportunities, the time-honed China-plus-one supply chain strategy seems increasingly archaic. Traditionally, this strategy allowed businesses to maintain most of their production in China while diversifying a fraction of it for geopolitical risk management, possibly to lower-cost or lower-risk countries. But are Private Equity (PE) sponsors sticking with tradition or are they seeking out new, diversified opportunities? It appears that the latter is the trend.

The global economic landscape has evolved drastically. Caveats that weren’t imaginable at the introduction of the China-plus-one strategy now pervade investing decisions. Add to that the diverse, fast-paced innovation around the globe and it becomes clear why PE sponsors are expanding their foothold beyond China. The search for diversified and sustainable supply chain options drives their decisions.

As these sponsors evolve, they set the pace for a new era of investing based on a broader perspective of global opportunities. This approach not only mitigates risks but also unveils untapped market potentials. Indeed, as the adage goes, variety is the spice of life - and apparently, the spice of successful investing too.