8 September 2025

China for China, Europe for Europe, US for US: the impact of localization on global supply chains

Local for Local, China for China – it sounds simple: manufacture in China, for the Chinese market. But behind this strategy lies a fundamental shift in how global supply chains are designed. More and more multinationals are moving away from a single global network toward local or regional supply chains, and that change has significant implications for cost, quality, and delivery performance.

What is China for China exactly?

China for China means that production, sourcing, distribution, and often product development, are organized locally in China, exclusively for the Chinese market. Exports to other regions are reduced, and companies build parallel supply chains for different regions, such as Europe for Europe or US for US.

The main drivers behind this shift:

• Market focus – Some local and regional markets are huge and continue to grow, especially in expanding industries.
• Geopolitics and trade – Trade conflicts, export restrictions, and import tariffs make local production more attractive.
• Risk management – By separating supply chains, companies reduce the impact of pandemics, logistics disruptions, or political tensions.

Europe for Europe and US for US

China is not the only region where localization strategies are gaining ground. We also see the rise of Europe for Europe and US for US. These Local for Local models follow the same principle: organizing production, sourcing, and distribution within a region to serve that specific market.

The drivers are similar – supply chain resilience, cost stability, and reduced geopolitical exposure – but the challenges vary. In Europe, higher energy costs and stricter sustainability regulations demand efficient, compliant operations. In the US, labor costs and domestic sourcing limitations play a bigger role.

For multinationals, this often leads to three parallel supply chains: one in Asia, one in Europe, and one in the US. While this approach increases regional agility, it also fragments global operations and reduces economies of scale. That’s why integrated supplier management, consistent compliance frameworks, and advanced inventory solutions are essential to keep all regions aligned and efficient.

Statistical impact of localization

Research confirms that localization can be highly effective – if applied in moderation. A 2024 PwC study found that companies with a balanced localization strategy, 82% report reimproved resilience, 77% report cost reductions, 76% report faster responses to market changes, 65% report better quality control,  and 59% report sustainability benefits (PwC, 2024).

Yet, the same study shows that when localization goes too far – with more than 75% of operations fully local – the benefits start to decline. Companies see 6% less cost reduction and 13% lower sustainability improvements. Also, the study states that over-localization can work against a company’s overall efficiency by creating isolated operational structures that may not leverage global knowledge and innovation (PwC, 2024).

At the same time, modelling studies highlight the risks of distant sourcing. Between 2018 and 2024, analyses showed that shifting production further away can add an average of 21 extra days to lead times and increase prices by around 1.8%, partly due to delays and tariffs (Arxiv, 2024).

What does this mean for supply chains?

Local or regional supply chains can bring advantages, but they also create challenges:

1. Reduced economies of scale – Splitting volumes per region lowers purchasing power.
2. Need for new local suppliers – In China, suppliers must meet the same strict quality and compliance standards as elsewhere.
3. More complex coordination – Parallel supply chains require separate inventory management, planning, and data flows.
4. Compliance remains critical – Documentation and audits are just as important with new local partners.

The impact for MAG45 clients

For high-tech, med-tech, and industrial equipment manufacturers, Local for Local basically results in a more fragmented supply chain. Without the right structure and coordination, this can lead to higher costs, less transparency, and a greater risk of quality or delivery issues.

MAG45 helps companies manage this transition strategically:

• Local supplier management – selecting, auditing, and managing suppliers to global standards.
• Vendor Managed Inventory (VMI) – ensuring critical parts are always available without excessive stock.
• Kitting – delivering complete, tailor-made kits for production or maintenance.
• Compliance handling – managing all documentation and certification requirements, also with local suppliers.

Conclusion

China for China, Europe for Europe, and US for US mark a structural shift that is reshaping global supply chains. But as always, it’s an act of balance. Done right, localization can deliver resilience, agility, and even cost reductions. But if pushed too far, it risks eroding economies of scale, driving up complexity, and undermining efficiency.

For manufacturers in high-tech, med-tech, and industrial sectors, the challenge is finding the right balance. At MAG45, we help companies achieve that balance by integrating sourcing, inventory management, and compliance into one seamless model. That way, local or regional supply chains don’t become isolated or inefficient, but instead evolve into a source of long-term strength and competitive advantage.