Outsourcing has become one of the most desired means of attaining operational advantage across industries. Within this context China's impact on this development-trend is significant. However, this paper argues that China’s economy does not only face opportunities but also a lot of challenges. The booming economy, the WTO accession and the e-commerce development have all helped to make China a desired outsourcing destination. However, China’s distribution channels are very inefficient, fragmented and costly. Moreover, its information technology infrastructure is at a developing stage, and the legal and regulatory environment do not always support the development of the logistics sector. In addition, there is a shortage of experienced supply chain professionals, a lack of know-how in leading edge technologies and inadequacy in foreign language skills, in particular, English. Identifying these barriers, understanding the impacts, and perfecting one’s supply chain management can deliver market advantages and result in enormous benefits in terms of costs and revenues. Hence, this paper shall serve as basis for managers and companies that are interested to invest in China.

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