Like just about everything else in China these days, how outsiders and locals conduct business is changing. In an eye-opening presentation during last month's China Pack conference in Chicago, Michael Shen, president of Los Angeles-based American Rising Dragon Consultants, detailed how the now well-established kinds of joint ventures in China are falling out of favor. The three-day event, organized by Intertech-Pira and sponsored by Converting andPackaging Digest, brought together converting suppliers, package printers and consumer-goods companies for an update on doing business in Chinese packaging markets.

Traditional JVs used to mean valuable contributions from both sides. The US partner provided state-of-the-art technology, management know-how, internationally known brand names and "deep pockets," Shen says. The Chinese partner added access to suppliers/markets, good government relationships, connections to local banks and the leverage of a "local face."

But now, Shen says, be it an "equity" or "cooperative" arrangement, these JVs are more often running into problems. The wrong kinds of partners can have different expectations. If set up in the wrong location, a lack of infrastructure and support creates supply and leadtime disasters. Cultural conflicts and poor human-resources control lead to nasty infighting.

So now, the trend is shifting toward corporate independence in China by outsiders instead setting up a wholly foreign-owned entity or WFOE. As the name implies, it's 100%-owned with full control by the US company. There are no Chinese partners or JV board to worry about (or to help you). You accept full profits (as well as deal completely with any losses). And WFOEs usually take less time to set up than a JV's typical two years. One recent example is Germany's SMS Plastics Technology Group acquiring full ownership of its Chinese extrusion-equipment JV. The business has been renamed Battenfeld Extrusion Systems, Ltd.

Another reason for the growing popularity of WFOEs in China, Shen says, is that with better laws in place, and an economy growing at 9 percent a year for the foreseeable future, China is not as interested in (or in need of) JVs as in the past. One last suggestion: If you don't have a globally known brand, then it's better to name your WFOE after something local.

Thinking about establishing a converting or package-printing operation in China? It might be time to take the training wheels off, and "go it alone."