With the real estate boom and rising labor cost in coastal metropolis Shanghai, some companies are transferring their operations to more affordable regions. They are not necessarily moving to inland provinces, as Shanghai's neighboring coastal provinces still offer cost-reduction potential, while providing logistical convenience and a skilled labor pool that interior regions lack.

Shanghai Bestway Plastics Industry Co. Ltd. is one of them. The export-oriented manufacturer of inflatable plastic leisure goods is expanding its production base in Rugao, Jiangsu province, and just launched a 20,000-square-meter injection molding shop. The company plans to increase the number of injection molding presses from 41 to 80, according to local news reports.

Bestway also plans to move its headquarters from Shanghai to Rugao within the next five years, company executive Zhang Yong was quoted as saying.

In a similar case, precision molder Shanghai Cepreh Electronic Co. Ltd. opened its new 30,000-square-meter facility in Huai'an, Jiangsu province, on January 1. The company announced plans to move its current manufacturing operation in Shanghai to Huai'an after the Chinese New Year.

Cepreh supplies electronic connectors to major brands such as Sony, Panasonic and Haier. It estimates that the annual sales of the Huai'an operation will reach 350 million yuan.

In addition to lower wages and land cost, local governments in less developed regions could also offer discounted utilities, tax breaks and other benefits to attract investment and grow local economy and employment.