<p>This dissertation intends to describe how small Swedish companies experience the handling of financing in China. Which include describing how small Swedish companies have chosen to finance their establishment, and whether Myers Pecking order theory is applicable. Further more, to show the inquired companies attitude towards external equity, and if any problems are experienced, connected to reaching long-term external finance. The specifikation of the problem for this dissertation is, How do small Swedish companies established in China experience the handling of financing? And to answer the specification of the problem a quantitative approach has been used. The data was gathered through a survey sent out to a number of small Swedish companies established in China. The definition of small Swedish companies has been set to less than 100 employees, and furthermore, established in China under any of the entry modes WFOE, FICE, Joint Venture or Rep/Sales Office.</p><p>The over all conclusions for this dissertation, are that internal finance is preferred, and in general is the use of external finance insignificant among small Swedish companies established in China. What can be concluded from this is that Myers Pecking order theory is applicable. Further more, there are strong indications that the inquired companies do not experience any financial gap, or in general any imminent problems surrounding reaching external finance. Important to add to the conclusion is that just because there are no imminent problems, does this not signify that companies do not experience any problems at all reaching external finance.</p>

This dissertation intends to describe how small Swedish companies experience the handling of financing in China. Which include describing how small Swedish companies have chosen to finance their establishment, and whether Myers Pecking order theory is applicable. Further more, to show the inquired companies attitude towards external equity, and if any problems are experienced, connected to reaching long-term external finance. The specifikation of the problem for this dissertation is, How do small Swedish companies established in China experience the handling of financing? And to answer the specification of the problem a quantitative approach has been used. The data was gathered through a survey sent out to a number of small Swedish companies established in China. The definition of small Swedish companies has been set to less than 100 employees, and furthermore, established in China under any of the entry modes WFOE, FICE, Joint Venture or Rep/Sales Office. The over all conclusions for this dissertation, are that internal finance is preferred, and in general is the use of external finance insignificant among small Swedish companies established in China. What can be concluded from this is that Myers Pecking order theory is applicable. Further more, there are strong indications that the inquired companies do not experience any financial gap, or in general any imminent problems surrounding reaching external finance. Important to add to the conclusion is that just because there are no imminent problems, does this not signify that companies do not experience any problems at all reaching external finance.

The purpose of this thesis was to study how an internationalization process to China may appear for a small Swedish enterprise and to identify important factors that may be essential for the process. The focus extends from the point where the enterprise makes its first connection with China up to the point where they are well established. Their business is up and running and they have begun production. To gain a deeper understanding of the subject a gathering of existing theory and research articles was conducted. The gathering of theory yielded knowledge of different approaches and methods that can be used to implement internationalization and provided a greater understanding of cultural and regional differences in China compared to Sweden. There were two case studies in two small Swedish enterprises made where they shared their experience from their own internationalization process. Both enterprises are manufacturing companies and they have implemented internationalization in the last 10 years. The theory in combination with the empirical data collected from the two case studies led to the conclusion of how the internationalization processes had been carried out and what factors had been important during the process. Internalization is a long term investment which usually takes longer than planned. Going to China in the belief that internationalization quickly can become profitable is not recommended. From the cases studied it is possible to see that internationalization took between one and three years. It took both patience and equity to succeed. Important factors that were identified during the process included the importance of good relationships and networks. These factors were crucial for how well the internationalization went and without their good relations none of the enterprises interviewed would have been where they are today. In China there is widespread corruption. Companies seeking to internationalize themselves to the country should previously to the move have decided what they would do if they find themselves in such a situation. In addition there are major difficulties in communication with the Chinese because of their poor English. There are also issues with the fact that the Chinese do not always honor their promises. Being well prepared before facing internationalization will be of great assistance and contribute to the prevention of unexpected events.