The fierce battle for top talent in China rages on. Multinational companies are well known for producing some of the country’s strongest business leaders, backed by the prestige and reputation of their professional management training programs.

However, as local companies grow in size and prominence, they are increasingly able to compete against their global competitors to win the next generation of Chinese leaders. According to a new Bain & Company analysis of LinkedIn China’s proprietary database, many executives are more willing to forego a predictable career path at a multinational company in favour of the steep learning curves and career trajectories that local companies provide.

In the past five years, only 10 percent of leaders in multinational companies have come from local firms, but almost one-third of leaders at local firms were employed at multinational companies within the same time frame.  The companies that understand the impact of this unbalanced exit are rethinking their structure, roles, value proposition and ways of working to reverse the flow.

China’s economy and business landscape has changed over the last 20 years. During the period, thousands of Chinese nationals have been learning and refining their management skills in local and multinational companies. Locally owned companies have also matured and upped their game in the internal talent development programs, creating new opportunities for local talent.

Meanwhile, the slowing growth rate in the industrial sector has given way to increased demand for service sector expertise, which presents a completely new management challenge in hiring and retaining top talent.

“Just a short time ago, multinational companies were considered the best place to build a career in China, due to leadership development opportunities, access to global best practices, attractive compensation packages, and culture, which won over many business leaders,” said James Root, a Bain partner and co-author of the report.

“Recently, however, locally owned companies have upped their game in terms of experience, salary, and employee training and development they provide, in an effort to woo talent away from their multinational competitors. Further, their fast-growing operations present opportunities for China’s homegrown talent to rapidly take on leadership roles.  As a result, multinationals can’t take for granted their ability to attract the best and brightest. They have to rethink their talent strategies, ensure that top Chinese talents see an opportunity for global advancement and work harder to appeal to this next generation of business leaders.”

As the quality of the opportunities in China have changed, so too has the face of China’s talent.  Bain analyzed 25,000 LinkedIn China members, representing 220 major corporations across 18 industries.  The research uncovered some key similarities and differences between the characteristics of those working at multinational companies and those employed at local companies:

They are highly educated:  More than 60 percent of Chinese business leaders at the director level and above have advanced degrees. Leaders in multinational companies are twice as likely to hold MBA degrees vs. local firms.

They are globally minded: Almost one in five Chinese business leaders have overseas work experience, but more than three in five leaders work for a multinational company with a major presence in China.

They are young: The average age of business leaders in the study is 39 years old, likely reflective of LinkedIn’s younger user profile.  It also reflects the accelerated growth in business activity and leadership opportunities in China over the past two decades. Local firms have more leaders under age 35 than multinational companies.

They are very mobile: More than 40 percent of leaders have changed companies in the past five years, with more than half of those job-hoppers also entering completely new industries.

“The competition for talent cuts across industries in China. Business leaders are able to position their skills and experience to advance their careers in new industries, and they are often comparing options in different industries,” said Stephen Shih, one of the report’s co-authors and a partner at Bain.

“HR leaders need to benchmark their employer brand attractiveness against best-in-class companies, regardless of industry. HR leaders also need to ensure they are searching for candidates broadly, and not just fishing within the same set of competitors in their sector.  This is especially critical as new competencies—such as digital– can be more important than traditional industry experience for future success.”

They are, increasingly, women:  Women leaders are present in every industry in China. Overall, 40 percent of the leaders in the study were female, and among leaders under age 35, the study found an almost equal number of female and male leaders.

Bain anticipates homegrown talent will soon take over the management and leadership positions in China previously held by foreigners.  The “glass ceiling” at multinational companies for Chinese nationals seems to be breaking as more locals take on roles at the director level within foreign firms.

Further, the global roles available at many multinational companies may continue to attract many of China’s globally minded and ambitious leaders. Within multinational companies in China, nearly 6 out of 10 regional roles are held by Chinese nationals.

“The make-up of China’s workforce is clearly changing, along with the expectations for their careers,” said David Yu, vice president of LinkedIn China.

“Today’s talent pool mirrors that of many developed economies – young, mobile, global, which gives this generation a literal ‘world’ of options to start or continue their professional growth.  Yet, many choose to stay in China – a testament to the wealth of opportunities they see here.”

Chinese firms, which are gaining more maturity and sophistication, are developing leaders that will likely take on more leadership responsibility locally and nationally. Bain found that within multinational companies in China, nearly 6 out of 10 regional roles are held by Chinese nationals, and nearly 9 out of 10 regional roles in local firms are held by Chinese nationals.

Additional trends that emerged from the research include the role of women leaders.  It is unclear whether the younger generation of women will stay in the workforce longer than their older peers, or whether in 20 years the presence of female leaders will continue to drop off after age 35 as it does now.

The research also shows that digital leadership roles in e-commerce, big data or online marketing are quickly emerging and expected to grow in line with the rapid adoption of digitization across many industries.

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