The past two years have underscored China’s resilience and dynamism. Its economy has been booming against a backdrop of global stagnation. China’s business environment, in particular, has been changing fast, with new regulatory policies and a rising cost of doing business affecting the playing field for multinationals (see sidebar “Cautious sentiments”).

But the real story, in our view, isn’t China’s continued, rapid evolution. It’s the fact that, in far too many cases, executives still aren’t making China as central as it should be to their global strategy. In sectors ranging from auto parts to consumer electronics, semiconductors, aviation, and electricity transmission equipment, China is fast becoming the competitive battlefield on which global winners are determined. Even when companies are not competing in China, their Chinese and foreign rivals may soon be exploiting advantages earned there to compete in global markets.