In China, alliances have been the dominant form of foreign direct investment since Beijing officially opened the country to the outside world in 1978. Twenty-five years later, however, maturing local companies, more accessible markets, and progress toward a more stable regulatory environment have removed much of the initial rationale for alliances. Indeed, more than 50 percent of new foreign direct investment in China is now in wholly owned and contractual joint ventures.

At the same time, many existing alliances have become unstable, as fundamental imbalances in partner contributions have grown. Around the world, the hallmarks of sustainable alliances are partners' complementary skills, 50-50 contributions, and the ability to evolve beyond original expectations. In China, most joint ventures are between potential competitors, 50-50 deals are in the substantial minority, and both Chinese and multinational companies face cash constraints in the enormous Chinese market. It's no surprise, then, that many of the joint ventures signed in the early 1980s are now being restructured.

In view of these circumstances, executives of even successful ventures should take a hard look at their current and prospective China alliances to assess their rationale and potential for restructuring. Even successful ventures can go wrong as markets, partners,...