The impat of Guanxi on the internationalizing process of foreign SMEs

Since launching its open-door policy in 1979 the rapidly growing Chinese economy has presented foreign investors with both business opportunities and challenges. In spite of the global economic downturn in 2008 China responded swiftly with a series of coordinated monetary fiscal and bank-lending measures in order to maintain a high growth rate. The current Five-Year Plan (13th) of China is aimed to increase the consumption activity which provides new opportunities for foreign companies. However China still remains a formidable challenge to most foreign companies. Many companies failed because they ignored essential factors such as cultural differences or the lack of sensitivity to the changes in the Chinese market. Especially the Chinese cultural factors “mianzi” and “guanxi” played a major role in the success of a business.