"If you don't know anyone nothing will work." How do Icelandic firms approach doing business with China?

This thesis is about Icelandic managers doing business with China. China has a huge market potential and many Icelandic firms have started having an interest in operating in China. However, the Chinese market is vastly different from the Icelandic one, and therefore the goal of this thesis was to understand how Icelandic managers approach doing business with China and how it has changed their firm’s strategy. In order to answer this question, this thesis focused on a theoretical part and a practical part in which six managers of Icelandic firms were interviewed. In the theoretical section it became clear that there are certain aspects managers need to have in order to do business abroad and specifically in China. Because of this, cultural training is recommended. What came to light through the interviews was that personal relationships and finding a good business partner was deemed the absolute most important aspect of doing business in China. This relationship is referred to as Guanxi and comes in many forms such as giving gifts. Besides fostering these relationships, it was also deemed important to take politics in China seriously and to make use of the embassy, either Icelandic or Chinese. Although most of the firm’s strategies remained the same for China, several relied heavily on a trial-error strategy in which one strategy was tested to see what would ultimately work. The main conclusion that could be drawn from both the qualitative and theoretical research was that Guanxi- or personal relationships in China were the absolute most important aspect. However, the firm’s strategies usually did not change drastically except for one firm who had to change their business plan to suit China