FOR two decades China was a land of seemingly limitless opportunity for multinationals. Japan and South Korea had shut out foreign firms during the early phase of their economic development. By contrast, China’s leaders, after Deng Xiaoping’s reforms in the early 1990s, made them welcome. Provided firms brought world-class technologies, and agreed to joint ventures with locals in certain strategic industries, they were free to take a generous slice of China’s growing economic pie. But now a combination of factors is making life much more difficult for them.

Even foreign firms that looked like they might dominate the Chinese market are getting a rude awakening, as its economy slows and as competition from local rivals intensifies. Earlier this year Douglas McMillon, Walmart’s boss, declared that China was vital to the American retail giant’s future growth and vowed to add more than 100 new stores in the next two years to its current tally of 400-plus there. Walmart does not give much detail on how those outlets are performing. But a filing this month by its local...Continue reading