This article originally appeared on the World Economic Forum Global Agenda.

In the past decade, Chinese companies have been steadily taking market share from foreign companies in the country’s consumer markets. The numbers tell it all. Local players in fast-moving consumer goods (FMCG) saw their share jump from 66% to 72% from 2012 to 2016, while domestic automotive companies’ market share rose from 31% to 39% and mobile/smartphone companies from 42% to 66% in the same period.

What’s behind these big share gains by domestic companies? For starters, Chinese companies have made great strides in accelerating innovation and speed to market. China overtook the US in 2011 in the number of patents filed, and it has continued to lead the world in patent applications since then.

As per the World Economic Forum’s Insight Report on the Future of Consumption in Fast-Growth Consumer Markets: China, China is the trendsetter in developing technology applications and new business models, such as the social e-commerce platform WeChat, offline-to-online (O2O) services and the booming sharing economy applications. Chinese companies are aggressively investing in artificial intelligence, the Internet of Things, robotics and other emerging technologies.

A lack of legacy systems has helped China advance at such a fast pace; for example, the scarcity of credit cards in China smoothed the path for developing methods for cashless and cardless payments.

Another big factor: Chinese companies are customer-centric and have focused on the ‘good-enough’ segment, while also participating in premiumisation—the move towards more expensive luxury goods—within many categories.

Wedged between the low end and high end of all product categories is the good-enough segment: reliable-enough products at low-enough prices. This segment appeals to a wide swathe of Chinese consumers who place an equal value on price and quality. Local companies that focus on the good-enough segment understand local consumers better, and offer products or services with the right balance of the two essentials: price and quality.

For example, the success of local carmakers can be largely attributed to the success of their SUV lines, sold at prices 30% lower than similar offerings from multinational corporations (MNCs). The same can be said about Vivo, Oppo and Huawei, the leaders of China’s highly demanding smartphone market. By prioritising good-enough products, leading Chinese players have managed to increase scale and challenge their foreign competitors.

Chinese companies have also boosted their ability to attract the best talent. The war for talent has been daunting for domestic companies—but they appear to have reached a tipping point, with more business leaders now moving from foreign companies to Chinese companies than the other way round.

A LinkedIn study of 25,000 members shows that the percentage of business leaders moving from foreign to Chinese companies reached 31% in the past five years, while only about 10% moved from local to foreign companies. Many domestic companies seek out leaders with experience at foreign multinationals because MNCs’ training programs have a reputation for developing strong technical and managerial skills.

At the same time, successful local companies are increasingly offering more authority and control to managers. Local companies are becoming more attractive employers because, besides providing opportunities for strategic change, they afford greater career development options. But despite gains by larger Chinese companies, talent acquisition remains a challenge for smaller Chinese companies. Acquiring and retaining the right talent will continue to be a major priority for any company hoping to succeed in China over the next 10 years.

Finally, and perhaps the most important reason for the big share gains by domestic companies: fully 90% of the top 100 non-state-owned companies in China are still founder-led (that is, led by their founders or the second generation). Most combine the benefits of a well understood single-country focus, family ownership and an agile organisation that can quickly adapt to meet changing consumer demands. As such, they have the principles of what management consultancy Bain & Company has termed a ‘founder’s mentality’ rooted in their organisation and culture.

These principles include an ownership mindset that focuses on cost and results delivery; an insurgent spirit that enables the company to respond to market changes faster than the competition; a frontline obsession that empowers customer-facing employees; and a relatively flat organisational structure that allows for speedy decisions.

As a result, in many ways the battle between Chinese and multinational companies in China is a battle between these principles and the challenges that burden many global companies, such as hierarchical organisations and slower decision-making processes.

The points discussed above all raise the question of how foreign companies can regain ground in China. Our advice is to:

1. Start by treating China as a second home market, and recognise that China already leads the world in many innovations. That requires resilience and persistence—but it is worth the effort, because China is and will continue to be the best consumer story in the world. In the coming decade, consumption in China is expected to grow by an average 6% annually and will almost double in the next decade, rising from RMB 29 trillion ($4.3 trillion) in 2016 to RMB 56 trillion ($8.2 trillion) in 2027.
2. Be agile and flexible enough to change business models multiple times, as needed. This will require empowering local teams a lot more and allowing them to act like entrepreneurs, too.
3. Move quickly to instil a ‘founder’s mentality’ into the business and culture.
4. Integrate into Chinese society, focusing on a long-term vision instead of just short-term profits. Localise and act as a Chinese company, which could involve partnering with local winners. In that way, foreign and Chinese companies can grow together in China and beyond.

This blog draws from the World Economic Forum’s latest report on Future of Consumption in Fast Growth Consumer Markets: China.

Zara Ingilizian is the head of Consumer Industries and a member of the executive committee at the World Economic Forum. Bruno Lannes is a partner with Bain's Consumer Products practice. He is based in Shanghai.