China isn’t the golden goose it used to be. A record 30% of U.S. companies in China are either considering or actively diversifying their operations elsewhere in 2024. That’s the highest number ever reported, according to the American Chamber of Commerce (AmCham) in China, and it’s up from 24% in 2022.

Why the exodus? Two words: supply chains. Covid-19 lockdowns made it painfully clear—if you’re entirely dependent on China, you’re walking a tightrope without a net. Add rising U.S.-China tensions and a slowing Chinese economy to the mix, and the risks start outweighing the rewards. Michael Hart, president of AmCham China, put it bluntly: “I don’t see that trend slowing down.

So, where are they headed? India and Southeast Asia are the new hot spots, but here’s the kicker—18% are eyeing a move back to the U.S., up from 16% last year. While many companies are still holding on—67% say they’re staying put—that’s a 10-point drop from 2023.

And it’s not just geopolitics shaking things up. Competition from local Chinese businesses is heating up, and profitability is tanking. For three years running, over half of U.S. companies in China haven’t turned a profit. Meanwhile, the number of firms no longer considering China a top investment destination has jumped to 21%, double what it was pre-pandemic.

The takeaway? Diversification isn’t a luxury—it’s survival. Proactive companies now will be the ones winning in a world where "made in China" doesn’t mean what it used to. If businesses are not rethinking their supply chain strategy, they’re already behind.