11 Jul 2025 Common Mistakes by Importing Companies That May Doom Nearshoring
Written By Jeffrey Cartwright, Managing Partner – 5 min read
As companies exit China and explore nearshoring solutions, many unknowingly make critical errors that undermine their efforts. These mistakes, while appearing logical on the surface, often doom the transition process and lead to costly setbacks.
Below, we outline the most common pitfalls and misconceptions—and how companies can avoid them to ensure a successful nearshoring initiative.
Initial Product Choice: A Key Factor in Nearshoring Success
Companies often approach nearshoring with a “plug-and-play” mindset, expecting to replicate their existing Chinese supply chain without re-evaluating their strategy. Many fail to consider that their Chinese operations evolved over years of decisions—some of which might not make sense to replicate today. Two key product-related errors frequently derail re-sourcing efforts:
Failure to Rationalize the Product Line
Many companies maintain a broad but shallow assortment of products, often including low-performing items that were originally launched with high expectations. Over time, these products may have proven unprofitable but remain in the mix due to emotional attachment, historical significance, or reluctance to drop items for fear of opening a market opportunity for competitors.
Pareto’s Law holds true: 20% of products typically generate 80% of profits, while the bottom 20% often result in significant losses. Rationalizing the product portfolio before initiating nearshoring frees up capital for profitable products and prevents unnecessary investments in tooling and machinery for underperforming items.
Sourcing Solely Based on the Opening Price Point
Many companies prioritize their opening price point products, which are typically high-volume and low-margin, as the focal point for competitive sourcing. While this approach may seem logical to protect against competitive entry, it creates an almost impossible profitability challenge for new factories, especially if higher-margin items in the product mix are excluded.
To avoid this mistake, companies must evaluate a representative range of products—from opening price points to mid-tier and premium offerings. This ensures a balanced assessment of the overall profitability for both the manufacturer and the customer.
Relying on Existing Resources with Significant China Expertise
Another common issue is over-reliance on supply chain teams experienced exclusively in sourcing from China. While these professionals are adept at managing existing relationships and processes, sourcing from Latin America—particularly Mexico—requires fundamentally different skills and approaches.
Misaligned Expectations and Relationships
In China, sourcing managers often rely on established relationships with vertically integrated factories that can rapidly produce complete bills of materials (BOMs). In Mexico, supply chains are less mature for many product categories. Factory managers may lack the relationships or infrastructure to manage complex supply chains, requiring sourcing teams to identify, qualify, and competitively bid out components—a far more time-intensive process.
Lack of Focus on Re-Sourcing Projects
Sourcing teams responsible for daily operations in China may not have the bandwidth or resources to dedicate to nearshoring projects. Without a singular focus, re-sourcing becomes a secondary priority, increasing the likelihood of delays and failure. For urgent transitions, dedicated teams or external experts are essential to ensure success.
Documentation Challenges
Chinese factories often develop proprietary drawings and specifications for customer products but withhold them during transitions, citing intellectual property concerns. In contrast, factories in Mexico require complete documentation to begin production. Companies must prepare to invest in internal engineering resources or third-party firms to recreate the necessary drawings before engaging new suppliers.
Moving Too Slowly: The Risks of Piecemeal Transitions
Companies with long-standing relationships in China often assume they can execute a gradual transition over time. This approach underestimates the risks, particularly when dealing with Chinese factory owners who prioritize their survival and profitability over long-term customer relationships.
Once a factory becomes aware of a transition, attention shifts to retaining other customers and reducing reliance on the departing client. Deliberate delays, technical setbacks, and even sabotage of tooling or intellectual property are not uncommon.
To mitigate these risks, companies should adopt an “all-or-nothing” strategy, relocating all operations at once. This approach minimizes opportunities for interference and ensures the transition occurs under the company’s control. Sending engineers to inspect and oversee the secure shipment of tooling is an added safeguard.
Nearshoring Success Requires Strategic Planning
The decision to transition manufacturing from China to Mexico presents an opportunity to improve profitability, simplify operations, and enhance supply chain resilience. However, success depends on avoiding the common pitfalls outlined above:
- Rationalize the Product Portfolio: Focus on the most profitable items and defer less critical products to a later stage.
- Use Dedicated and Experienced Resources: Ensure your team has the skills, time, and focus to navigate the complexities of re-sourcing in Mexico.
- Adopt a Unified Transition Approach: Execute the relocation in a single, deliberate effort to reduce risks and ensure a smooth transfer.
Shoreview Management Advisors: A Proven Partner for Nearshoring Success
Re-sourcing to Mexico offers transformative benefits, but it also presents unique challenges. Shoreview Management Advisors provides the expertise, resources, and strategic guidance needed to navigate this complex process. With over 25 years of hands-on experience in Mexican manufacturing and sourcing, we help U.S. companies identify reliable partners, competitively bid final products and components, and secure seamless transitions.
Our track record includes successful nearshoring projects completed long before the Trump Tariffs and trade war with China heightened the urgency of these efforts. Partnering with Shoreview ensures not only the right connections but also a comprehensive approach that mitigates risks and maximizes profitability.
If you’ve struggled with nearshoring in the past or are ready to initiate your transition, contact us today. Success starts with the right plan and the right partner.