Years of rapid economic growth and exposure to global competition are redrawing the boundaries of China’s business landscape. In the past, most companies there fell into one of three categories: state-owned enterprises, joint ventures between Chinese and foreign concerns, or wholly owned foreign operations. The new world of Chinese business calls for new ways to describe the playing field.

As in the past, some giant state-owned enterprises, protected from competition by a thicket of government regulations, continue to dominate their industries. But other companies in that category, now fully exposed to global competition, vie for business against hundreds of domestic and foreign companies targeting the same customers.

Other categories have emerged in recent years. Globalizing companies are stepping beyond China’s borders to build substantial businesses overseas, organically or through acquisitions. The “restless adolescents” are operating beneath the radar of most global players but quietly and methodically building the capabilities needed to go global. And the innovators and entrepreneurs are blazing trails inside China by developing new technologies or pioneering new ways of doing business. Multinationals should awaken to the existence of—and the coming competition from—both the restless adolescents and the innovators.

To be sure, the lines demarcating these categories are...