China’s reputation as a manufacturing powerhouse is underpinned by its ability to offer quality and cost-effective production at scale. Malaysia’s favourable location and trading conditions have therefore made it a serious contender for those seeking to mitigate the risks of dependency on China without swapping one set of business risks for another.

What are the challenges and considerations of China Plus?

While any diversified supply chain strategy – including China Plus – offers significant advantages, implementing a shift in approach is not without challenges.

  • Infrastructure gaps can impact scalability and efficiency.
  • Regulatory complexity requires careful planning and strategy planning
  • Dependency on raw materials and components often locks in existing suppliers.
  • New pricing agreements risk impacting cost competitiveness.

Why has Malaysia emerged as a credible solution to China Plus?

Malaysia’s ability to address such challenges has grown, largely due to its stable political and economic environment; an environment nurtured by a government keen to promote investor-friendly policies and participate in major trade agreements.

That environment has been further enhanced by the January 2025 signing of an agreement between Malaysia and Singapore to create a Special Economic Zone. The zone is intended to enable smoother cross-border collaboration for global firms seeking to benefit from Singapore’s business prowess with Malaysia’s well-documented economic advantages, which include:

  • Infrastructure investment. Significant investments have been made nationally in technology and infrastructure to support large scale manufacturing.
  • Skilled workforce familiar with global regulatory requirements. Long-established since the 1980s, the medical device industry also offers a skilled, English-speaking workforce.
  • Cost competitiveness. Malaysia has lower average labor and operational costs compared to China.
  • Favorable trade agreements. Participation in pacts such as the Regional Comprehensive Economic Partnership make it an attractive option for businesses seeking tariff benefits.
  • Strategic location. Situated at the crossroads of major shipping routes, and with access to plentiful raw materials, Malaysia offers efficient logistics and quick access to global markets.

How to diversify offshore production successfully

Whether you are considering diversifying medical device manufacture to Malaysia or elsewhere, rigorous investigation and groundwork are advisable.

  • Conduct a comprehensive risk assessment. Evaluate regulatory, political and operational risks in potential locations. Consider legal frameworks, labor market conditions and infrastructure readiness.
  • Establish clear selection criteria. Prioritize factors like cost efficiency, market proximity, raw material availability and supply chain reliability.
  • Develop a phased transition plan. Start with non-critical operations and gradually scale up to minimize risks and maintain business continuity. Choose a partner with proven project management capability to collaborate with closely on the transition.
  • Leverage local expertise. Ensure your contract manufacturer has secure, stable long-term supply chain partnerships in place for materials and components, able to navigate regulatory landscapes, and with contingency plans in place to guarantee supply.
  • Invest in technology. Use advanced tools and analytics to optimize multi-location operations. Or work with a partner able to guarantee consistent systems and processes across sites, with full traceability.
  • Focus on sustainability. Make sure any new operations align with sustainable practices, future-proofing your business to meet growing environmental, social and governance (ESG) requirements.

SteriPack is a proven partner for global healthcare businesses looking for long term stability in offshore production. Our contract manufacturing site in Malaysia is one of three sites globally. It allows our customers to leverage the country’s strengths as a hub for medical device manufacture, and combine it with our end-to-end expertise, local knowledge, well-established supply chain relationships and adherence to consistent global standards and processes.

Get in touch to discuss how we can support your route to cost effective and resilient manufacturing.