Some 76 per cent of foreign respondents and 70 per cent of Chinese respondents surveyed are planning to enter into a partnership - joint venture or alliance - in China. A significant majority describe the prospects of a partnership in China as “good” or “excellent”. Such business partnerships rely on the sharing of resources and are therefore less risky and costly than wholly foreign-owned enterprises. Sometimes they are the only viable option, the report said.

Courting China Inc.: Expectations, pitfalls and success factors of Sino-foreign business partnerships in China is based on views of 300 senior executives from China and eight other geographies, across 20 industries.

Western banks have shown mixed behaviour in terms of their desire to enter, remain in, or leave, JVs recently. For example, UBS recently increased its stake in its Chinese securities unit to nearly 25 per cent. Performance of Western banks' joint ventures in China have been uneven. In May, Russell Investments withdrew from its partnership with Chinese insurer Ping An.

In the past, reports on JVs have raised issues such as the duration of such arrangements and ways of protecting intellectual property rights – at times a sensitive issue for Western firms fearful of losing IP to Chinese partners.

The PwC/EIU report said a clear objective for any JV must be set down from the start.

"It is essential that the partners’ strategic objectives for the JV are aligned from the outset,” Katy Spooner, transaction services leader for PwC Southern China. “An appropriate management structure, clear contributions from the partners and the full support of both boards will maximise the likelihood of a successful venture,” Spooner said.

The growing importance of compatibility in areas such as market responsiveness is one of the major findings of the report. It has displaced "guanxi", or relationship-building capabilities, as the key focus for foreign partners. Instead, they are looking for compatible brands and organisational cultures, it said.

However, the costs involved and the growing complexity of setting up a JV are still an important issue for both foreign and Chinese partners. The report also finds that foreign investors are more concerned about JV failure than their Chinese counterparts, who tend to be more focussed on whether the JV will effectively deliver access to technology and R&D capabilities.

"The benefits of sharing resources and skills in a joint venture or strategic alliance can help counter-balance the perceived risks," Kevin Plumberg, senior editor of the EIU, said.

Survey respondents cite poor financial performance as the top reason for terminating a JV early.