The primary principle behind LCCS is to obtain sourcing efficiencies through identifying and exploiting opportunities of price reduction between geographies.
Only those countries with relatively stable political and economic environment, modern infrastructure and acceptably compatible legal system are considered to be ideal for sourcing.
Examples and most popular regions are China, Indonesia,[3] Thailand, Vietnam,[3] Malaysia, Ethiopia, India, Ukraine, Romania, Bulgaria, Albania,[4] Mexico, Bolivia, Cambodia, Hungary and Czech Republic.
Other countries apart from China are beginning to provide raw materials at a lower cost, leaving manufacturers with more choices as regards their suppliers.
[7] Even before the Chinese economy started to turn down, there were concerns that it was facing a middle income trap, widely identified by economists as showing the danger of a Lewis Turning Point, a phenomenon observed in history of Japan, which showed that rapid urbanization led to a growth in manufacturing.
[7] Although there are 320 million laborers still in agriculture, only 20 million have the potential to migrate to cities, pushing the country to a point at which "the excess labor in the subsistence sector is fully absorbed into the modern sector, and where further capital accumulation begins to increase wages" - pointing to a Lewis scenario.
[needs update] "Rising wages are most significant to primary producers and services industries, as labor takes the major share of total costs in these sectors,".