I flew from Sydney to Chicago where I had dinner with the CEO of a company that manufactures parts for electric motors. What keeps him up at night, I asked?

He moved a significant share of his manufacturing to China five years ago, but worries that as costs escalate there, he is going to be forced to move his plant -- either to Vietnam or farther inland in China. He's learned that a China location no longer guarantees competitive cost.

The great rush to locate production in China is driving up prices in literally every segment of the value chain, from real estate and construction to labor and transportation. Combine that with all the shifting around that the Chinese government is planning to do to make the country look good during the Olympics -- like, according to my friend, forcing a closure and relocation of hundreds of plants to clean up air pollution -- and we could see costs rise there for some time. If it weren't for its own runaway inflation and stock market troubles, Vietnam might look pretty good right now.