Guanxi plays an important role in Chinese entrepreneurial networking activities, especially for micro entrepreneurial firms in China. Due to limited information and resources available to micro firms, micro firms are more dependent on entrepreneurs’ guanxi networks to get access to the necessary resources. Previous literatures have particularly discussed the impacts of guanxi networks for foreigners successfully doing business in China. Nevertheless, there are scant literatures that study on the role of the guanxi in Chinese entrepreneurship. The purpose of this study is to provide a better understanding of the role of guanxi in Chinese entrepreneurship. This study employs the relevant guanxi concepts, Western social capital theory, and network-based entrepreneurship as the main conceptual framework to examine how Chinese entrepreneurs utilize their guanxi networks during the development of micro firms. Furthermore, this study is based on ten case studies in China. Empirical Data are collected from semi-structured interviews with ten Chinese entrepreneurs in micro firms. The results show that guanxi networks are highly important for Chinese entrepreneurs to develop their business. Firstly, Chinese entrepreneurs make use of different guanxi governance mechanisms--qinqing, renqing and jiaoqing to acquire different information and resources for the development of their firms. The obtained information and resources constitute the social capital, which can be used to complement insufficient capital within the firms. Secondly, Chinese entrepreneurs intentionally enlarge their guanxi network size to obtain more resources. Moreover, Chinese entrepreneurs benefit from strong guanxi ties and closure network structures to obtain the cohesive social capital. While Chinese entrepreneurs gain greater benefits from weak guanxi ties and spare network structures for acquiring additional information, resources and business opportunities. Thirdly, guanxi-networking activities are different from Western social networking activities, as guanxi-networking activities put more emphasize on keeping harmony and mutual reciprocity. Furthermore, Chinese entrepreneurs are proactive to build and maintain guanxi networks through various approaches for their business development. Lastly, even though guanxi networks play important roles in the development of micro entrepreneurial firms, they cannot be sustainable competitive advantage in the long term. Indeed, the core competences such as high quality of products and services, advanced technologies and marketing channels could be sustainable competitive advantages for the entrepreneurial firms in today’s increasingly fierce competitive market.