AMERICAN ENTERPRISE INSTITUTE
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How to “Friendshore”
May 2023
The 2022 word of the year in the English language was,
depending on the dictionary consulted, “goblin mode”
(which should technically be labeled a phrase), gaslight-
ing, woman, or “permacrisis.”
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It could just as well have
been “friendshoring”—the act of moving parts of man-
ufacturing from geopolitically risky countries to friend-
lier ones. At the beginning of the year, the term barely
existed; to the extent it was mentioned, it was in a few
quiet discussions among business leaders. By the end
of the year, with Russia’s war against Ukraine continu-
ing and the confrontation between China and the West
accelerating, friendshoring had become not just a buzz-
word but a matter of urgency for Western businesses.
What’s less clear, though, is how friendshoring is to
be executed. What are the details involved in moving
crucial parts of a manufacturing chain from one coun-
try to one, two, three, or more replacement countries?
This report analyzes the challenges and presents steps
for companies and destination countries.
Background
Offshoring was the defining feature of business in the
1990s. Between 1993 and 2011, the number of US work-
ers employed in manufacturing plummeted from nearly
16 million to just over 10 million.
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So dramatic was the
manufacturing exodus that when George W. Bush vis-
ited China in 2005, David Letterman announced that
“President Bush is on an eight-day tour of Asia. He’s vis-
iting American jobs.”
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Europe-based companies offshored, too, first to the
countries that had previously been behind the Iron
Curtain and then to China. Yes, China, which offered
not just a massive population moving to middle-class
Elisabeth Braw
Key Points
• “Friendshoring”—the relocation of manufacturing, supply chains, or both away from China and
other geopolitically risky countries to friendlier ones—has become a much-desired objective for
Western companies.
• Since countries that could benefit from friendshoring will not be able to replicate China’s advan-
tages, they should team up with one or more neighbors to offer prospective friendshorers
combined solutions.
• The solutions should include convenient logistics (including across borders); easy-to-handle
taxation and tariff rules, including for components crossing borders several times; and the
removal of red tape.
• Friendshoring companies should clearly communicate their plans, as Western customers and
the wider public are likely to strongly support such moves. They should also seek advice from
manufacturers that have moved production from China in recent years (for practical rather than
geopolitical reasons).
