The main reason why manufacturers source their products or materials from low-cost countries is, not surprisingly, cheap labor. That trend in fact is accelerating; when consulting firm Eyeforprocurement asked procurement professionals to list their primary reasons for sourcing overseas in 2006, "lower labor costs" received 48% of the tally (respondents could choose more than one answer); this year, when asked the same question, that percentage was up 6% to 54%. China, again not surprisingly, was the most popular low-cost country, at 76%. The choice "other Asia" (not counting India) was second with 53%, and India was third at 33%.
54% Lower labor costs
43% Lower material costs
33% Pressure from customers to reduce prices
27% Shorter distance to final customer's markets
21% Other reasons (e.g., take advantage of time-zone differences)