Thriving in the era of China Plus One: opportunities for Hong Kong businesses

The global business landscape is shifting significantly as more organizations adopt the China Plus One (also known simply as Plus One or C+1) strategy. This approach involves diversifying operations and supply chains beyond China, driven by factors such as geopolitical tensions, rising costs in China, and recent supply chain disruptions. Businesses are now strategically expanding their operations to other countries, creating a more balanced and resilient supply chain network. This diversification strategy helps mitigate risks, reduce over-reliance on a single market, and enhance competitiveness in the global economy.

For Hong Kong businesses, the China Plus One strategy presents both challenges and opportunities, offering a chance to enhance resilience, tap into new markets, and strengthen their competitive edge. In this blog, we'll explore how Hong Kong businesses can position themselves for continued success by embracing the China Plus One strategy and how DHL Express can support this journey with comprehensive shipping solutions and global logistics expertise.

Sector-specific implications of China Plus One for Hong Kong

Let's explore how the China Plus One strategy impacts key industries in Hong Kong:

Electronics

According to reports by Statista, Hong Kong's electronics industry is projected to reach US$575.20 million in 2025 and grow at an annual rate (CAGR 2025-2029) of 2.83%, resulting in a projected market volume of US$643.10 million by 2029¹.

As one of the major contributors to its economy, this industry can benefit significantly from diversifying manufacturing and sourcing to other countries in the region. This can help alleviate risks associated with over-reliance on China and potentially reduce costs by tapping into lower labor costs and favorable trade agreements in emerging markets. Furthermore, diversifying production locations can enhance supply chain resilience, ensuring continuity despite changing dynamics.

Finance

Hong Kong's financial sector is an integral part of its economy, accounting for 24.9% of Hong Kong’s GDP² and establishing the city as one of the world's leading financial centers.

As businesses expand their operations under the China Plus One strategy, Hong Kong's financial sector can play a crucial role in enabling cross-border investments, providing financial services, and managing risks associated with international expansion. This presents an opportunity for Hong Kong's financial institutions to strengthen their position as regional leaders in providing innovative financial solutions and supporting businesses venturing into new markets. 

Consequently, this growth and diversification in the financial sector can also have a positive ripple effect on other sectors, such as manufacturing and logistics, as businesses seek solutions for their expansion into new markets.

Logistics

The China Plus One strategy necessitates efficient and reliable logistics to support the movement of goods across borders. Hong Kong's well-established logistics infrastructure and expertise position it as a key player in facilitating this shift.

As businesses diversify their supply chains, the demand for international shipping, customs brokerage, and end-to-end supply chain visibility will increase, creating new opportunities for Hong Kong's top international logistics providers, such as DHL Express.

ASEAN and beyond: new horizons for Hong Kong Businesses

Within the China Plus One framework, ASEAN countries like Vietnam, Thailand, and Malaysia are emerging as promising destinations for Hong Kong businesses. These countries offer several advantages:

Lower labor costs

Compared to China, these countries often have lower labor costs, making them attractive for manufacturing and sourcing. For example, to boost Hong Kong's electronics sector, which is one of the biggest, Vietnam can be sourced for manufacturing as their average wage is US$342 per month, reflecting competitive labor costs³. This can help local businesses reduce production costs and improve their profit margins.

Growing consumer markets

ASEAN countries boast rapidly growing consumer markets with increasing purchasing power. Recent reports suggest that ASEAN is poised for remarkable economic growth, projected to become the world's fourth-largest economy in the coming decade⁴, with 70% of its population joining the middle class and a consumer market worth US$4 trillion⁵. As these economies continue to flourish, the demand for goods and services will rise, creating a lucrative market for Hong Kong exporters.

Favorable Trade Agreements

Many ASEAN countries have free trade agreements with Hong Kong, facilitating smoother trade flows and reducing barriers to entry. This makes it easier and more cost-effective for businesses to export their products and services to this region.

For example, the ASEAN-Hong Kong Free Trade Agreement (AHKFTA) provides preferential access to key markets in the region. These agreements eliminate or reduce tariffs on a wide range of goods, streamline customs procedures, and promote investment flows, creating favorable conditions for Hong Kong businesses to expand their import or export operations in ASEAN.

Logistics as a cornerstone of China Plus One's success

Efficient and reliable logistics is essential for Hong Kong businesses implementing the China Plus One strategy. By investing in robust cross-border logistics solutions, local businesses can streamline their operations, reduce costs, and enhance their competitiveness in the China Plus One era. Here are the key competencies for achieving seamless and cost-effective operations:

Effective cross-border logistics solutions

Businesses need reliable logistics partners that can navigate the complexities of cross-border logistics, including customs regulations, documentation requirements, and international transportation challenges. A strong logistics partner can help streamline the movement of goods across borders, ensuring timely delivery and minimizing disruptions.

Optimized customs brokerage

Expertise in customs brokerage is vital for ensuring goods move across borders smoothly. A knowledgeable customs broker in Hong Kong can help businesses navigate complex regulations, minimize delays, and optimize costs. This expertise is particularly crucial in the China Plus One era, as businesses may be dealing with customs procedures in multiple countries.

Efficient end-to-end supply chain management

Visibility and control over the entire supply chain are essential for managing risks and ensuring efficient operations. By having a clear view of their supply chain, businesses can identify potential bottlenecks, optimize inventory levels, and respond quickly to disruptions. Key components of end-to-end supply chain management that should be implemented are real-time tracking, inventory management, and proactive communication.

DHL Express: empowering Hong Kong Businesses in the China Plus One era

DHL Express is a trusted partner for Hong Kong businesses seeking to leverage the China Plus One strategy. Our comprehensive suite of services and expertise can help you navigate the challenges and complexities of international logistics to expand your reach.

We offer a range of expedited shipping services to ensure your goods reach their destination quickly and reliably, even during peak seasons. Additionally, our team of customs experts provides comprehensive brokerage services and in-depth knowledge of local markets and regulations, ensuring smooth and compliant customs clearance for your shipments. This expertise can help you avoid costly delays and penalties, ensuring your goods move seamlessly across borders. We also offer integrated e-commerce fulfilment solutions, including warehousing, order processing, and last-mile delivery, to support your online business growth. 

By partnering with DHL Express, you gain access to a reliable and efficient logistics network, expert guidance, and innovative solutions that can help you thrive in new markets. Open a DHL Express account today to start shipping with DHL Express and experience the difference a global logistics leader can make for your business.