China+1: How medical technology supply chains are realigning themselves
Geopolitical tensions, regulatory hurdles and new trade barriers are putting increasing pressure on medical technology companies. Since June 2025, a new EU Regulation (EU) 2025/1197 has severely restricted Chinese suppliers’ access to public contracts in the medical devices sector: Chinese companies are no longer allowed to participate in tenders worth five million euros or more. For non-Chinese bidders, the proportion of Chinese components must not exceed 50 percent of the contract value. At the same time, the United States is threatening to impose import duties on medtech products from China or Mexico.
Many US and European medtech manufacturers are therefore withdrawing completely or partially from China. The so-called “China+1 strategy” is becoming increasingly important. Instead of relying solely on China, companies are turning to additional production locations such as Vietnam, India or Mexico. However, the strategic shift presents new challenges for suppliers, quality assurance and electronics design.
Vietnam: proximity to China, but less risky
Vietnam is developing into an important production and growth location for electronic engineering and medical technology. International companies such as Stryker and B. Braun are investing in local production, while the medtech market in Vietnam is expected to grow to around USD 1.77 billion in 2025. Vietnam scores with established supply networks, competitive production costs and its geographical proximity to China. As an increasingly important partner of Western industrialized nations, the country is currently benefiting from the geopolitical pressure on China.
India: growth with government support
With ambitious growth plans and government funding initiatives such as the Production Linked Incentive (PLI) program for medical devices and newly emerging medical device parks such as the Uttar Pradesh Medical Device Park in the YEIDA region, India is fast becoming a promising location for medical technology. International companies like Siemens Healthineers and Wipro GE Healthcare have already shown interest in the Indian government’s funding program.
According to the Association of Indian Medical Device Industry (AIMED), the market volume in 2023/24 was around USD 12 billion. By 2030, the Indian market is expected to grow to USD 50 billion. India therefore already ranks among the top 20 countries in the world, with a global market share of 1.65 percent that could increase to 10 to 12 percent in the next 25 years.
Ensuring quality, guaranteeing compliance: what the change of location really means
Strategic diversification according to the China+1 principle goes far beyond a mere geographical shift. Medtech companies must ensure that they meet all regulatory requirements at new locations. Any change in the production location may require extensive re-approval procedures in markets such as the US, the EU or China. In addition, electronic designs, especially PCBs, must consistently comply with strict medical technology standards. This requires specialized suppliers with experience in medical applications and verifiable compliance.
In addition, digital tools for regulatory management are becoming increasingly important. AI-based solutions, for example, help to efficiently manage complex compliance requirements and reduce risks.
Supply chains: diversification as a strategic necessity
Southeast Asia – particularly Vietnam, Malaysia and Indonesia – is developing into a major production location. The increasing interconnectivity of supply chains, especially as a result of investments by Chinese companies in the region, is reinforcing the trend toward diversification of global production networks. This diversification is now no longer an option but a strategic necessity to safeguard production and delivery capability. Establishing regional production clusters is recommended in order to minimize dependencies and increase the flexibility of global value chains. No region today can exist in isolation. The central challenge is therefore to reconcile the opportunities of global networking with the risks of dependencies.
Strategic opportunities in a changed world
For companies actively shaping this change, there are tangible strategic advantages: from more robust delivery capability and reduced geopolitical risks to better market access. However, it is not only the change of location that is decisive but also the choice of suitable partners with regulatory know-how, technical manufacturing expertise, and resilient logistics structures. The China+1 strategy is therefore becoming a decisive lever for medical technology companies to remain competitive in an increasingly volatile global trading environment.