In barely two decades, China has become a robust, market-driven economy. The pace of change is astonishing: By the 2030s, the size of China’s economy could surpass that of the United States.

Of course, any executive—particularly those in the supply chain field—knows that rapid growth is challenging. It’s hard on a country’s social fabric. It’s hard on governmental and regulatory structures. And despite the opportunities, it’s difficult for businesses to expand their coverage without sacrificing quality, service, or profitability.

To help understand how domestic Chinese and multinational companies are dealing with China’s growth opportunities and challenges, Accenture recently conducted a global survey. Participants included 238 senior European and North American executives, and another 100+ China-based executives contacted in cooperation with the China Supply Chain Council. The results were eye-opening, especially the conclusion that high performance in China is marked by unique challenges including acquiring and retaining skilled employees, identifying the right partners with which to work, and coping with supply chain inefficiencies. Following are some insights and observations about the findings.

One reason is that manufacturing lies at the heart of China’s explosive growth, and that supply chain acumen generally underpins manufacturing success. Consider the movement of production components and the subsequent (post-production) transportation and distribution of finished goods: Moving freight in China costs up to three times more than in developed countries. Rail transport is limited, and road transport is frequently unreliable. Trucks are regularly loaded (and overloaded) by hand. Aside from gleaming superhighways connecting China’s major East Coast commercial centers, road conditions and infrastructure are poor.

In addition, most multinational investments have (until recently) been in China’s coastal zones, especially around Shanghai, Jiangsu, and Zhejiang. There is evidence of business migration toward inland, Tier Two cities. However, even this is a double-edged sword, since wages, property prices, and, consequently, supply chain costs are rising quickly in those areas.

The net effect is that, for most China-focused companies, supply chain mastery is among the toughest challenges and most potent competitive weapons. Per the survey findings noted earlier, here’s a brief look at how people, partners, and third parties tip the scales.

The number of college graduates in China has been increasing sharply. However, foreign companies still find it hard to find and keep talent. Generally speaking, China lacks a well-established pool of mid- and top-level leaders. Specific industry skills may be widely available, but these tend to be acquired on the job. What’s missing—and most needed—are deep analytical skills, particularly for supply chain roles.

Exacerbating the people problem are escalating salary levels, rising turnover, and a sense among China’s best and brightest that the strongest opportunities exist in more developed parts of the world. Domestic and multinational companies often respond by importing skilled managers. However, the key to a solid skills base in China is developing and retaining home-grown talent.

Finding the right local partners to help drive business in China is doubly tough. On the one hand, the demand for qualified business partners far outstrips the supply. Continued problems with red tape also add cost and block progress in ways that are unfamiliar to multinationals from the United States and Western Europe.

Credit risks are a further impediment. Fortunately, the bureaucratic burdens are easing. During the 1990s, foreign companies could only establish a business in China if they formed a partnership with a local entity. Now, under World Trade Organization stipulations, business registration is simpler; non-Chinese companies can set up wholly owned operations in China. However, working with local partners to carve sales/marketing inroads and leverage existing relationships is way easier than going it alone.

The value of third party logistics providers (3PLs) is undeniable. According to the aforementioned survey, nearly a third of multinationals distribute their products to customers using in-house capabilities while another 30 percent use third-party distributors or wholesalers.

However, a significant shift toward outsourced logistics networks is imminent (see chart on previous page). Companies such as Wal-Mart and Caterpillar already use 3PLs to manage their distribution processes and navigate China’s maze of infrastructure and regulatory requirements. In the near future, far more companies will leverage third parties to help enter attractive markets and develop the scale to serve those markets efficiently.

According to Accenture’s ongoing research, companies that achieve high performance excel at creating and exploiting distinctive capabilities that help them quickly penetrate new markets and seize new opportunities. To stay on top of a rapidly changing China, supply chain people, partners, and third parties are key to the attainment of those capabilities.