Abstract

Courting China Inc: Expectations, pitfalls and success factors of Sino-foreign business partnerships in China is a report commissioned by PwC and written by the Economist Intelligence Unit. 300 senior executives from nine geographies and 19 industries were surveyed on issues related to the formation and operation of joint ventures and strategic alliances in China. A series of in-depth interviews with senior executives and experts were also conducted. 

Despite China’s slowing economy, recent scrutiny of foreign companies, and rising labour costs, forming business partnerships through joint ventures remains an attractive way to do business in China. However, establishing and operating a successful business partnership is not getting easier, and the ability to anticipate, prevent and resolve challenges associated with partnerships is more important than ever. 76% of foreign respondents and 70% of Chinese respondents surveyed are planning to enter into a business partnership in China.

■54% of foreign executives state that access to the Chinese market is their key strategic driver, while 72% of Chinese partners look to improve their market position in international markets and/or to access international markets.

■41% of foreign firms stated the most important factor for partner selection was to be strategically aligned, whereas the top factor for Chinese firms at 38% concerned control and profit distribution.

■45% of foreign companies and 44% of Chinese firms cited the lack of alignment on the strategic purposes of the partnership as a top reason why partnerships fail before being formed.

■39% of the survey respondents cited poor financial performance as the top reason why partnerships in China have to be terminated earlier than expected.