Article at a glance:

Restructuring alliances in China

Although alliances may once have been a necessary first step for foreign companies investing in China, wholly owned businesses and contractual joint ventures now receive more than 50 percent of new foreign direct investment there. Meanwhile, many existing alliances have become unstable and are being restructured. What must executives bear in mind as they structure and restructure alliances while markets, partners, and competitors evolve?

The take-away

When a multinational strikes alliances with Chinese day-to-day partners, it must understand not only their technical capabilities but also their business aspirations, partnership track records, and organizational depth. The best negotiations are prepared well in advance—even during the initial structuring of the deal—since in China the process can last several years.