How to wrestle the Dragon to overcome the Great Wall : A case study on how Swedish SME’s handle institutional barriers in China

During the past decade there have been a large increase of Swedish companies entering the Chinese market. It has been explained that entering the Chinese market can be the biggest challenge a firm will face. It has therefore been of great interest to study this problem. We have in this thesis chosen to study Swedish SME’s established in China, and how they have used their business network to overcome institutional barriers. This study also has the objectives of giving a description of the general procedures of setting up a business in China, and to prepare other firms that have plans on entering the Chinese on what the most common obstacles there are when setting up a business in China. To be able to fulfill our objectives a qualitative research method and an abductive research approach must be applied. The empirical findings will consist of primary data and that is collected through semi-structured interviews in both Sweden and China. The theoretical framework consists of theories regarding Institution theory, Business Network theory, and the concept of guanxi. In our analysis we have combined our empirical data with our theoretical framework to be able to analyze and answer to what extent a business network can be used to overcome institutional barriers when setting up a business in China. Through our analysis we have drawn the conclusion that through the business network’s knowledge, experience and guanxi it has made it possible for firms to set-up in China. Keywords Institutional Barriers, Legitimacy, Business Network, Experiential Knowledge, Guanxi, China