China’s market for mass consumer goods has exploded over the past decade and will continue to grow with breathtaking speed, outpacing overall economic growth. By 2000, some 260 million people will be able to afford packaged consumer products (Exhibit 1), making China the world’s largest market in many categories such as beer and biscuits. Winning in China has therefore become a top priority for multinational corporations, many of which see the Chinese market as a once-in-a-lifetime opportunity to catapult themselves into position for global leadership.

But winning won’t be easy. China’s vast area and weak distribution infrastructure, as well as increasingly intense competition, will make market leadership an elusive prize. Many companies are already having to reconsider their approach to doing business in China, failing to translate their ambitious aspirations into clear growth trajectories; in all too many cases, early gains have turned into a serious drain on resources. It seems clear that approaches followed so far aren’t the formulas for success in the Chinese consumer market of the 21st century. Something quite different is needed.

What will market leaders look like?

One thing is certain: in coming years the market leaders of the next century will dramatically increase...