For one, the local government was increasingly frowning upon polluting industries like theirs, Yip [Red Board Chief Executive] said.  The electricity and water supply is also very tight. We've been suffering a lot. Still today, we have to pay a premium for a guaranteed electricity supply," he said.

Yip and his colleagues searched far and wide for a suitable location and settled on Ji'an, which falls about halfway between Guangdong and Shanghai, because it offered the right combination of low costs, convenient location and good transport links.

"The infrastructure that we are being provided is among the best that we saw. Things are ready. They need companies to come and use it," Yip said.

He estimated that both power and water, which a factory like his consumes in vast amounts, cost about a fifth less in Ji'an than Dongguan -- and the local government could promise an uninterrupted supply.

Japanese electronics maker Uniden Corporation was one of the first foreign firms to set up a factory in Ji'an, back in 2002.  Jun Sakamaki, head of Uniden's Jiangxi operations, estimates wage costs in Ji'an at 25% less than in Shenzhen, where Uniden has a big plant making cordless phones.  New highways that now "criss-cross Jiangxi have made shipping much easier for Uniden now than when it first came to Ji'an:"

"Before we had the expressway, it could take two or three days to go one way to Shenzhen during the rainy season," he said. "We don't have this kind of problem any more."

Finding skilled managerial staff for Ji'an operations is difficult.  Avinash Datta, president of Mahindra (China) Tractor Co., a joint venture between India's Mahindra & Mahindra and a local industrial group in the provincial capital, Nanchang, discussed these difficulties:

"You can't ask a Shanghai guy to come -- he won't necessarily agree to come to live in Jiangxi, because clearly for him the opportunities are different in other places," Datta said.

And then there is the pollution:

Back in Ji'an, the dark side of the boom was evident.

One factory in an outlying district dumped black, untreated waste water into a local river that gave off a smell somewhere between burnt plastic and burning brake pads. That stream feeds into the Gan River, which in turn is a tributary of the Yangtze.

"Five years ago you could swim in the river without any problem," said one local man. "The local government doesn't do anything about it because they're only interested in tax money."

For more on China's interior as the "next China," check out my earlier post,  "China Is The Next China, Now; Vietnam May Be The Next China Someday."