While multinational corporations continue to expand in China, Chinese companies are going overseas: they are making acquisitions and forming alliances to win access to raw materials, technology, and consumer brands, as well as new markets that could help them realize their growth aspirations.

So far, the quest to acquire foreign mining, oil, and gas assets has dominated the buying spree. Chinese companies have picked up a wide range of assets, though often at sizable premiums, and run them successfully, particularly in emerging markets. But Western markets have been harder to crack. Some Chinese bids to take over raw-material assets and consumer goods companies have failed, partly because of opposition from Western stakeholders. By contrast, China Mobile Communication's last-minute exit, after months of negotiations, from a deal to purchase Millicom International Cellular highlights the difficulties Western companies face in making deals with their Chinese counterparts. In some of the deals that have gone through, Chinese acquirers are clearly struggling—though it is still early—to turn around the sometimes loss-making assets or second-tier brands they have bought. The Chinese home electronics company TCL, for instance, attributed its net loss of 320 million renminbi ($40 million) in 2005 to acquisitions in France during the...