Foreign businesses won't necessarily fail - I think what is primarily necessary for a foreign company to be successful in China is for it to cede a significant portion of control and operation to Chinese co-owners / managers of the company. Essentially, to people who understand and are willing to work with the current system.
Successful examples would include Starbucks, KFC, Pizza Hut.
Indeed these business are quite successful (especially KFC and McDonalds) but I believe they're mostly joint ventures which in itself has a whole bunch of pitfalls.
More importantly they're in an exceptional business segment (that of selling western fast food) which local Chinese companies are unable to play almost by definition. I suppose Intel is another example, but that's really only due to the fact that it's also not practical to have a local competitor to it. They would if they could.
I'm sure you could find other companies where there's an exception, so my statements and that of the OP's article should only be taken as generalities. But I believe they're true much more often than not.
Successful examples would include Starbucks, KFC, Pizza Hut.