China’s market for fast-moving consumer goods has exploded over the past decade. And as millions of households cross the income threshold for packaged goods consumption, the market is likely to continue to outpace growth in the overall economy. By 2000, some 260 million people will already be able to afford packaged consumer products, making China the world’s largest market in many mass consumer goods categories such as beer and biscuits. Not surprisingly, winning in China has become a top priority for ambitious multinational corporations (MNCs), many of whom see China as a once-in-a-lifetime opportunity to catapult themselves into position for global leadership.

But what will it take to win in China? By 2000, the leaders will have achieved category market share of at least 20 to 25 percent nationwide—probably more if they are considered clear winners. For mass market categories such as food, beverages or personal care, this implies sales in excess of $1 billion—10 times more than the average company in a McKinsey survey of 13 leading MNCs in 1995—and rapid expansion of salesforces, representative offices and joint ventures. But market leadership will be increasingly difficult to achieve.

For one, the competition is rapidly escalating. In most categories,...