This is the process of moving part of a company's own production process to another country, e.g. building a new factory in China, where wage rates are lower.
Especially to SEZs in Asian countries.
It reduces costs as wage rates are lower, tax rates are lower, proximity to raw materials reduces transport costs, less environmental regulation.
However, some firms are vertically integrated, carrying all stages of the production process out themselves, e.g. Royal Dutch Shell.