Internationalization patterns of Chinese private-owned SMEs: Initial stages of internationalization and cluster as take-off node

Purpose – To describe and analyze the situation prior to and during the initial stages of internationalization of Chinese SMEs, as well as analyzing the role of clusters as take-off nodes for such firms. Methodology – A multiple case study is conducted based on semistructured interviews with five private-owned exporting Chinese SMEs. Also, data on Chinese industrial clusters are analyzed. Findings – The findings complement the model presented with new knowledge. In the take-off situation, Chinese SMEs deviate from assumed paths due to disadvantages in the emerging Chinese market. In the initial stages of internationalization, the focus on indirect exports hinders the building of international relationships being the key for further international expansion. Cluster localization is a take-off node for individual dedicated exporters into international markets. Research limitations – Few cases, co-location of firms in the advanced Yangtze River Delta region and issues of Chinese versus Western SME definitions limits the possibility to generalize the findings of the study. Practical implications – Chinese as well as foreign firms can gain from this paper regarding, for example, that competitiveness built up abroad can be utilized for increasing the market share in an attractive domestic market, the pitfall of indirect exports can be overcome by developing direct international relationships, and cluster localization can spur the internationalization of (individual) Chinese SMEs. Originality – Empirical contribution of internationalization patterns of Chinese private-owned SMEs as well as pinpointing the importance of the domestic market as trigger for internationalization.