Still, International Business Machines Corp. says in a study that although China-based foreign companies have acknowledged the need to move inland, they haven't acted swiftly enough. IBM surveyed more than 200 foreign companies with operations in China.

Commonly known as third-tier and lower cities, average salaries there are at least 30% lower than on the coast, IBM says.

Still, inland cities can be rich pickings. Accounting for 18% of China's 1.3 billion people, tertiary cities generated 43% of the nation's gross domestic product in 2004. By contrast, only 9% of Chinese live in first- and second-tier cities, generating 34% of GDP in 2004.

Many of the little-visited locales have populations of more than one million.

Geographic barriers have also come down for foreigners since China joined the World Trade Organization.

The tertiary cities are also expanding faster than the developed ones. One reason: During the next 10 years, some 150 million people are expected to migrate to those cities from remote rural areas. Foreign companies that move inland will be able to tap this robust consumer base, the IBM study said.

According to a white paper the American Chamber of Commerce in China produced last year, anxiety about local corruption and confusing laws still discourage many foreign businesses from going local.

Moreover, according to IBM, China-based executives who appreciate the potential of inland cities won't necessarily get support from headquarters, whose idea of China may comprise Beijing, Shanghai and not much else.

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