ABSTRACT

The strong economic growth in China has provided a range of opportunities for SMEs, particularly due to the increases in the middle class numbers in China and increased urbanisation. The book uses data collected from 35 SMEs operating in China, representing a range of industries including construction, manufacturing, agricultural, finance and services. It identified both the effect and process of motivation, institutional forces, innovation, human resources, social and business networks, liabilities, business resources and capabilities and entrepreneurship on the SME’s internationalisation and management of their business in China. The limited literature on SME internationalisation and the difference between the business conditions in China and the countries from which most of the extant SME internationalisation data has been collected provides an opportunity for the findings in all these research areas to make a significant contribution to literature. This chapter introduces the chapters in the book and provides descriptive information about the data collected and its analysis.

Internationalising SMEs face a number of barriers due to their size, foreignness and lack of cultural understanding. The liabilities most frequently identified by the participants were understanding local culture and language, adapting to local conditions, achieving credibility, developing relationships and meeting expectations and regulation requirements. These findings confirmed the validity of liability theory for the identification and analysis of factors affecting the internationalisation of SMEs. Liability of foreignness (LOF) and liability of smallness (LOS) were found to be the most commonly identified liabilities for the participants. Lack of credibility was the cause of liability identified frequently by the participants, however, participants with special advantages due to their foreignness, such as those whose background was from a more secure financial institution system, found that they actually had greater credibility than local companies in the same industry. The participants also indicated that their Australian background provided them with credibility in the Chinese market, possibly due to the trade relationship between Australia and China. Foundations for trust were also found to be a potential liability for some of the participants, however, the participants also indicated that a lack of trust in their Chinese customers and partners was also a cause of liability. Interestingly, the perspective of foreign trust of the local market is rarely considered in the literature.