How does a multinational company take advantage of opportunities in China without getting burned? One of the biggest hurdles is coming to terms with the real China, a land of great geographical, social, political, and industrial diversity. As a starting point, it's essential to cut through the thicket of misunderstandings and misinformation about doing business there. Clearing them up won't guarantee the success of investments, but it will at least increase the chances of getting the foundations right, particularly at a time when fears that the country's economy is overheated are further complicating decision making.

China lends itself to sweeping statements. Here are a few making the rounds: China will be the next economic superpower; its economy is still state run; foreigners don't make money there; relationships count, so a partner is needed. These provocative claims can start a conversation, but they are hyperbolic, misleading, out-of-date, or just not true.

An economic superpower?

Let's look more closely at the observation that China will become the next economic superpower. The country does have a gross domestic product of $1 trillion and will probably continue to grow quickly. But it will remain a midsize economic power for the next decade. China now...