Chapter 16 How Do SMEs Face Institutional Challenges in China?

This chapter examines how small- and medium-sized enterprises (SMEs) can deal with institutional challenges in the Chinese market. The authors use institutional theory to characterize the political and cultural context in China. The empirical study is based on interviews conducted with managers of the industrial SME Mixel Agitators at the French headquarters and the Chinese subsidiary, and with experts on Franco–Chinese relationships. The findings show that foreign SMEs can address institutional challenges by investing time and resources in their local subsidiaries, learning about how to operate in the Chinese market, and recruiting local managers with guanxi networks. The study contributes to a better understanding of how Western SMEs can succeed in the Chinese context.