Part One - Survey Research

Executives around the world expect competition from Chinese companies to increase, mainly because of their low production costs, yet surprisingly few are acting to meet the threat, a McKinsey survey shows. A separate survey of executives based in China reveals widespread global ambitions and concerns about finding the talent to reach them.

Higher wages are driving up production costs in China, leading to speculation that companies there are beginning to lose one of their biggest competitive edges. But a McKinsey survey¹ of executives around the world shows that, overwhelmingly, they still see low-cost production as the primary competitive advantage of Chinese companies and expect little change on that front in the next three years.

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http://www.mckinseyquarterly.com/article_page.aspx?ar=2147&pagenum=1

Part Two: China Offshoring and Outsourcing

China currently accounts for less than 10 percent of the global market for the offshoring and outsourcing of services. Yet McKinsey research—including interviews with officials at many Chinese government agencies, executives at Chinese leading services providers, and managers at Chinese services-outsourcing parks—suggests that by implementing an aggressive strategy to develop the sector and cultivate talent, the country could capture opportunities worth $56 billion a year by 2015.

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