Apple Inc, the California-based electronics giant, has moved its Mac personal computer product lines back to the US from various locations abroad.

Companies such as K'Nex Industries Inc, the toy manufacturer Trellis Earth Products Inc, a maker of bioplastic goods, and bra maker Handful Inc have announced plans to shift production from China to the US, according to British newspaper the Financial Times.

Lower-end businesses are also bypassing China and pouring into neighboring states such as Vietnam and Cambodia because labor costs are cheaper.

As the price of labor in China continues to increase, China is facing a similar problem to those developed economies encountered decades ago. "The challenge of any developed manufacturing environment is how to get repeatable quality and productivity. It is not simply about cheap labor," said Grindstaff.

The nation is making the same kind of transition as others: trying to raise automatiion and reduce labor costs, he said.

"A similar thing has happened in Germany and the US, where they are automating their way out of high labor costs. I think China will do the same thing."

Grindstaff said he believes China is "way too smart" to ride only on the shoulders of cheap labor. And the trick is to let the talented in China to look at the world and look at the opportunities and begin to innovate a little bit more.

Analysts said the economically developed part of China is ready for such changes because the regions have fully embraced market competition rules.

Shoe making

It is not possible for China to adopt the PLM concept nationwide, said Holmes from IDC. Some developed coastal areas and multinational enterprises are already starting to deploy PLM software while the adoption rate in less developed inland regions remains slow.

Local companies such as automaker China FAW Group Corp, steel maker Baosteel Group Co Ltd and home appliance makers Changhong Electric Co Ltd and Haier Group were Siemens PLM's major customers in China.

New technology is more important for Chinese consumer product makers such as shoe plants, said John Johnson, senior global director at Siemens PLM, who heads consumer products and retail industries.

Although China produces about 90 percent of shoes sold globally, the nation is losing the key to the footwear kingdom because of increasing competition from other Asian countries.

Johnson estimated India and Vietnam will produce about 3.5 billion shoes by 2016 while China will make fewer than 7 billion.

"India and Vietnam are the new sleeping giants in the footwear industry," he said.

As an increasing number of higher-end manufacturers in China start to adopt PLM, smaller companies are set to join the trend in the coming years, said Grindstaff.

"The change is happening now. The rest of China can learn from industry leaders," he said. "The adoption of a PLM system does not necessarily occur in a typical Chinese way - everybody at the same time. It will happen based on market demand."

He added PLM software will be a perfect tool for companies who are creating "world-class innovations" and China could be the biggest "greenhouse" for such innovations.

The company is investing not only in our own products and people. It is also making sure that Siemens PLM is working with educational institutions to make sure that the right tools and training of people are produced, said Grindstaff.

"We don't want just to let people know how to operate. We want them to think and use tools in a creative fashion," he said.