Western multinationals have been accustomed to entering Asia's high-growth, emerging markets through partnerships or alliances with local companies. They offer capital, technology, and management skills in exchange for regional know-how and, often, political connections. But many find this approach no longer works as well as it did, and are struggling to establish themselves in Asian markets.

There are three reasons why. First, host countries now demand more in the way of technology transfer, local content, and skill development, and are less accommodating about market access and the price they want for natural resources. China, for example, increasingly requires access to proprietary technology in return for business, leaving companies such as GM and McDonnell Douglas wondering whether the technology transfers they made to clinch deals will come back to haunt them. Some day, they know, the Chinese will have the technology and skills to compete with them not only in China, but in other markets too.

The second reason is that western MNCs, which generally approach emerg-ing markets on a project-by-project basis, have discovered that each venture takes an enormous amount of time and energy to establish, yet represents only a fraction of the region's market. Each project is a...