The Li&Fung Research Centre just published an interesting study entitled China Distribution & Trading (h/t to Max Henry).

It analyzes the recent trends observed in the sourcing industry. I am reproducing a couple of excepts below:

About the “China-plus-one strategy”:

One should not only focus on production costs when extending his sourcing network to other low-cost countries. Factors such as manufacturing capabilities, political and economic environments, availability of industrial clusters, quality of labour force, language and culture, and transportation and logistics should also be taken into account.

For example, Bangladesh offers low-cost production, but it is always overbooked. As for Southeast Asian countries such as Vietnam, Indonesia, Thailand and Cambodia, the smaller landmass and workforce, as well as the less developed infrastructure and transportation are obstacles to large scale production in spite of their lower cost of land and labour. One should also be aware of the political unrest in some of these countries, such as Thailand and Indonesia.

About sourcing opportunities in Chinese inland provinces:

According to the list of top 100 industrial clusters in China released by the Chinese Academy of Social Sciences in December 2009, many of the competitive clusters in China were located in the coastal areas. However, an increasing number of competitive industrial clusters were emerging in central and western China. In the 2007 and 2008 exercises, only 5 or 6 industrial clusters on the top 100 list were from inland provinces, but the number rose to 16 in 2009. The change was mainly attributed to the industrial relocation and the robust development of the inland market in recent years.

You can go and read the whole report here.