Low Cost country Sourcing.

What is low cost country sourcing? (LCCS)

Is a strategy in which a firm sources material parts, products and services

  from countries with lower labor and production costs in order to cut operating expenses.

Is China still suitable for LCCS?

Yes, China is very suitable for LLCS As

1> there is a surplus of labor force: in China there are 1,3 billion people and china's labor force is 800,7 million people (in 2007)! Due to the fact the Party prevents formation of labour unions, the power of the labour force is low and they labor cost can still compete with new comers like Vietnam and India. Furthermore the so called migrant workers, coming from the Chinese inner land where there is a lot of unemployment, keep the wages low.

2> China logistics and transportation system is grown up and very reliable. China has now efficient shipping capabilities and a dozen of large harbours.

3> China has low costs of raw material.

4> China's factories are very flexible. (People are the most adaptable machines)

5> clustering of factories. Many factories are located in clusters and feed off one another and are near ports where they goods can be exported.