For more than two decades, China stood at the centre of global manufacturing, dominating apparel and consumer goods supply chains through unmatched scale, infrastructure, supplier ecosystems, and production efficiency. From fabrics and trims to logistics and product development, China became the backbone of the world’s sourcing network.
However, by 2026, the global sourcing landscape is undergoing one of its biggest structural shifts in decades. International buyers are increasingly adopting diversified sourcing strategies, widely known as “China+1” — to reduce dependency on a single country and build more resilient, flexible supply chains.
Several interconnected factors are accelerating this transformation. Rising labour costs in China have significantly reduced competitiveness in labour-intensive sectors such as apparel, footwear, and basic textiles. According to recent industry analyses, labour costs in China increased by nearly 38% between 2010 and 2021, gradually narrowing the cost advantage that once made the country the undisputed sourcing leader.
At the same time, geopolitical tensions, trade restrictions, tariff uncertainty, and disruptions caused by the COVID-19 pandemic, the Red Sea shipping crisis, and global energy instability exposed the vulnerabilities of excessive concentration in one sourcing destination. The sharp rise in freight costs during 2024 and 2025 further pushed brands to rethink sourcing strategies and prioritise resilience over pure cost efficiency.
The shift is already visible in global trade data. According to The State of Fashion 2025 by McKinsey & Company and Business of Fashion, China’s share of apparel and textile imports declined by 6 percentage points in the United States and 3 percentage points in the European Union between 2019 and 2023. Meanwhile, sourcing from Asian growth markets such as Bangladesh, Vietnam, Cambodia, and India continues to expand steadily.
As buyers diversify sourcing portfolios, Bangladesh continues to strengthen its position as one of the world’s leading apparel manufacturing hubs, particularly in knitwear, denim, sweaters, and large-volume basic garments. Competitive labour costs, major compliance improvements, and the country’s globally recognised green factory ecosystem remain strong advantages. Bangladesh now hosts more LEED-certified green garment factories than any other country in the world, reinforcing its image as a sustainable sourcing destination.
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Industry experts also note that Bangladesh has benefited significantly from buyers shifting volume away from China in value-driven apparel categories. More than 40% of global sourcing executives surveyed by McKinsey indicated plans to increase sourcing from Bangladesh, India, and Vietnam in the coming years.
However, Bangladesh still faces structural challenges. Buyers increasingly demand shorter lead times, flexible order quantities, digital supply chain integration, and faster product development cycles — areas where the country still lags behind some competitors. Concerns regarding energy reliability, logistics efficiency, port congestion, and limited man-made fibre capabilities also remain key issues for international brands.
Vietnam, meanwhile, has emerged as a preferred premium sourcing destination, especially for sportswear, technical garments, outerwear, and footwear. Supported by strong free trade agreements, efficient ports, stable policy support, and faster speed-to-market capabilities, Vietnam has become highly attractive for brands seeking agility and higher-value manufacturing. In several categories, Vietnam is now directly competing with China for premium sourcing programs.
India is also gaining momentum as a diversified sourcing hub due to its large raw material base, strong cotton production, vertical integration capabilities, and government-backed manufacturing incentives. Recent export data shows India’s apparel exports recording double-digit growth as buyers seek alternatives to both China and overconcentrated sourcing structures.
Despite these shifts, China remains deeply embedded in global supply chains and continues to retain major strategic advantages. Its advanced manufacturing ecosystem, massive raw material dominance, integrated infrastructure, automation capacity, and product innovation capabilities remain difficult to replicate elsewhere. Even buyers aggressively diversifying sourcing admit that China still offers unmatched efficiency, especially for complex products, rapid scaling, and integrated sourcing solutions.
Many sourcing professionals now agree that the future is not about “leaving China,” but rather about “reducing dependency on China.” Recent industry discussions show that most global buyers are pursuing balanced sourcing models — keeping China for speed, technical capability, and supplier reliability while simultaneously expanding production in Bangladesh, Vietnam, India, and other emerging hubs.
For Bangladesh’s RMG industry, this sourcing reset creates both enormous opportunity and increasing competitive pressure. Buyers are actively searching for reliable alternatives to China, particularly in knitwear and value-volume products where Bangladesh remains highly competitive. At the same time, competition from Vietnam, India, and even nearshoring regions is intensifying rapidly.
To maintain long-term competitiveness, Bangladesh must move beyond its traditional low-cost manufacturing model and accelerate transformation toward higher-value production. Investment in faster product development, digitalisation, automation, man-made fibre capabilities, finer gauge knitwear, sustainable processing, and stronger backward linkage industries will become increasingly critical.
Equally important will be improvements in logistics efficiency, energy stability, workforce upskilling, and supply chain transparency. Global buyers are no longer selecting sourcing partners based solely on price. Reliability, agility, sustainability, innovation, compliance, and risk management are now central decision-making factors.
The future global sourcing map will therefore belong not simply to the cheapest manufacturing destinations, but to the suppliers capable of combining cost competitiveness with resilience, speed, sustainability, and innovation in an increasingly uncertain global market.
