Global companies have been sourcing from China for decades. From the last decade, however, a new wave of China sourcing, focusing on buying components from China or outsourcing production altogether to Chinese companies, has been catching on.

Today, high value-added parts and products such as telecommunications equipment and automotive parts are replacing the traditional made-in-China garments and footwear as some of the fastest growing export segments.

Lured by the potential savings, global firms have been rushing to China to set up sourcing offices to take advantage of this low-cost supply base.

This wave of "China sourcing" has driven Chinese exports to grow at three times the rate of its red-hot economy ever since China entered the World Trade Organization (WTO) in 2001.

Much has been said about the benefits China sourcing brings to global companies. But let's turn our focus to the Chinese supply base to see how much Chinese firms have benefited from the phenomenon.

Findings from a recent Boston Consulting Group study on global companies with China sourcing offices indicated that home-grown Chinese companies are not always benefiting from the surge of China sourcing as much as expected, especially in highly competitive industry segments.

For many, dealings with local companies are not only difficult because of different cultural and business norms, but there are numerous other concerns involved, such as quality, reliability, service and management capabilities.

As a result, global players are often reluctant to source from local companies and would rather work with non-mainland companies operating in China.

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