Intercultural Communication in Supply Chain Management : A Study of Communication Frictions and Solutions between Swedish & Chinese Companies

China provides the rest of the world vast opportunities thanks to its low cost labour with ample manpower and gradually increasing expertise. It also has a huge potential in its size and market. With the increasing trade between China and Sweden at a rapid pace, the need for a research into intercultural communication, which helps to gener-ate an efficient and effective supply chain, is also growing at an accelerative speed.The purpose of this thesis is to look for possible problems and identify the frictions that may arise from the cause of cultural differences existing in the communication between Swedish and Chinese companies. This research is carried out from a Swedish perspective through the eyes of Swedish companies. However, the way they perceive the communica-tion between Sweden and China and the methods they have used to adjust to the cultural differences can be good examples to those who are interested in Chinese market.In the frame of references, a number of theories and literature related to intercultural communication were used to identify factors that influence communication between cul-tures, which formed the basis of the framework the authors used for the collection of pri-mary data. This thesis was conducted through an interpretive point of view and a qualita-tive method was used for the collection of empirical data. The primary data consisted of in-terviews and the secondary data was collected through literature reviews. Thus, the empiri-cal result was derived from the companies which have business relationship and experience of dealing with Chinese companies. Data was gathered from seven different Swedish com-panies located in Jonkoping County: Waggeryd Cell AB, Scandinavian Eyewear AB, Kapsch TraficCom AB, Kongsberg Automotive, Hestra-Handsken AB, Arlemark Glas AB and Falks Broker AB.The main conclusions of this study are namely that there are a number of cultural differ-ences existing in the communication between Swedish and Chinese companies. In most cases, Swedish companies initially tend to make the most effort to adapt to the situation and bridge these cultural differences by applying diverse solutions. Furthermore, two criti-cal key factors stand out as more important than the others in leading to successful com-munication between Swedish and Chinese companies: relationship and the concept of face. These two factors were shown to be present in all aspects of communication. Therefore, knowledge and successful incorporation of these two essential elements will be of greatest importance for Swedish companies who seek to communicate with Chinese companies