The Challenges of a Swedish SME in Entering the Chinese market - A case study on the market entry process of Cibes Lift Group AB to the Chinese market
As the world has become more integrated with governments lowering trade barriers, regulations and with advancement in technologies, the internationalization of SMEs have been seen to rise. Through internationalization, SMEs are able enhance their capabilities, competencies, expand their customer base, increase their production capacity, profit and growth. With recent increase in business opportunities in emerging markets, more western organizations, including Sweden had begun to increase their expansion to these markets. Currently, among largest emerging markets, China is the biggest trading partner of Sweden in Asia. Sweden is operating across wide range of industries within China, ranging from heavy industries such as automotive to retail and consumers goods and services. Even though China provides vast business opportunities and benefits, it has become difficult to reap the advantages as there exist major challenges to enter this type of markets. Moreover, the current literature lacks the knowledge on the barriers which a SME experiences when entering an emerging market like China. In present time, SMEs use the knowledge on challenges which have been identified through study of MNCs to develop their expansion strategies, which is not a feasible option in foreign market entry processes. The following study aims to examine the barriers to entry faced by SMEs through a case study of a Swedish SME’s market entry process to the Chinese market. The study was conducted in relation to theories in SMEs, internationalization process, entry modes and emerging markets. From the finding of the study, the authors were able to identify the following challenges : Lack in investment capabilities to enter the Chinese market; Difficulty in assessing accurate market information, identifying foreign opportunities, correct marketing channel, inefficient cross-border communication, establishing strong network within the Chinese market; Need for home government assistance; Inadequate dedicated capable management team to carry out expansion strategy; Recruiting the right employees; Poor qualities of transportation system; Complex legal constrains and corruptions. In addition to that, various procedures to overcome these challenges were also identified. These facilitators were the SME’s past experience and knowledge in foreign markets, expansion strategies, international recruitment, good managerial resources and capabilities and strong networks. These knowledge about challenges and solutions, would help managers to construct feasible and efficient future expansion strategies. Also, this would fulfil the gap of knowledge within the literature world.
MSc in International Business and Trade