Coastal China is known as the preferred destination for LCC (low cost countries) from which to source.
According to an article on China Briefing though, things are changing.
They suggest to consider carefully the kind of business you are in before picking a destination.
Coastal China isn’t the only option anymore. Depending on your business being capital-intensive, low-skilled labor-intensive, knowledge-based, or resource-based you could have other alternatives to coastal China such as inland China, Vietnam, and India.
Coastal China still stands out for three reasons mainly, which are infrastructure, relative ease of doing business and economies of scale. But you have to bear in mind that labour costs are rapidly increasing in the area and the trend is expected to continue in the medium term.
On the other hand, inland China offers a more cost effective labour and foreign business is encouraged through preferential tax and aid system.
India, would make a great base for manufacturing based companies, although logistics remains the drawback.
Vietnam land and labour costs are the cheapest out of the LLC options explored in this article, however, the lack of scale in both resources and capacity offsets the savings previously made.
In the end, choosing the most appropriate destination for your business depends on your business requirements.
To make it short:
If your company’s costs is mostly affected by economies of scale, it would be financially sensible to stay in coastal China, while keeping an eye toward inland China in the near future.
If your company’s main requirement is the availability of low skilled and labour intensive workforce and in huge amount of factory space, inland China and Vietnam may both be attractive options for your business, offering low cost alternatives.
If your firm requires skilled labor, India’s massive number of yearly English-speaking college graduates creates a relatively inexpensive labor pool at a different part of the value chain.
Also, once you have an office set up, be it in China, India or Vietnam, if you need a low cost hr management solution which is easy and efficient, we recommend to have a look at this hr software vendor. It’s currently being used in China and also at a global level, and is available in both English and Chinese. As long as you have an internet browser the hr software can be accessed from anywhere, therefore saves your company admin and time money and the infrastructure set up costs.
Before choosing your destination consider every facet of the medal carefully, and have a well thought out business plan in place. For more information on this matter, check out the reference of this article here
