Background: With the appearance of the fourth industrial revolution a lot of industries had to change and adapt to computer integrated manufacturing, the ‘Internet of things’, cloud computing, machine to machine communication, additive manufacturing and ‘big data’. Overall, this industrial transformation is driven by digitalization. The Swedish dental laboratory industry is of special interest for our research due to the lack of adaption to the new technological changes, decreasing market share in Sweden and the threats from cheap Chinese production. Purpose: The purpose of this thesis is to understand the current situation the Swedish small and medium sized dental laboratories are facing because of the threats from the Chinese competition. Therefore, we analyze the Swedish dental laboratory industry and map the situation. Moreover, we show what the laboratories are currently doing to defend their market position in a highly competitive environment. Method: The data was gathered from semi structured and open interviews of dental technicians, dentists and industry experts. This empirical data was analyzed in an abductive thematic approach. Additionally, this theory driven approach combines the research question and the propositions with the empirical findings to create a precise research report. Conclusion: Up to recently, China was a big threat for the domestic dental laboratories but this threat is decreasing nowadays. Due to the demand of high quality products with precise services, dentists require a close collaboration with the dental laboratories. In order to survive as an SME in the Swedish dental industry, collaborating in networks among local competitors can help to lift investments for new equipment in the transforming environment. With state of the art technology and shared competences Swedish dental laboratories can sustain their competitive advantage in global competition.