Document Type : Original Research

Authors

School of Management, Jiangsu University, Zhenjiang, China

Abstract

There is a huge opportunity for foreign entrepreneurs to enter the Chinese market. They have noted that the market is difficult to enter and complex to navigate. This study contributes towards filling this gap by identifying the critical success factors for foreigners in China, basing on entrepreneurial cognition and opportunity recognition theories. 128 entrepreneurs in China were surveyed through semi-structured interviews. Their responses were collated and analyzed using graph theoretic matrix approach to identify and rank the factors with the most influence on their business success. The factors with the greatest influence on the success of foreign entrepreneurs are government policies and funding. Government policies towards innovation through financing for technology companies and the demographic make-up of the consumer population provide the greatest opportunities for foreigners. By understanding the most crucial success factors and the role of cognition in opportunity recognition, entrepreneurs and managers can derive meaningful insights into strategic choices regarding doing business in China. This study addresses a grossly under-researched topic of global entrepreneurs in China. Not only is there a large number of foreigners living in China, but they also find great difficulty in adjusting to the cultural scene and this affects business outcomes. Furthermore, GTMA is a highly scientific method that the authors show is valuable in social science research, particularly entrepreneurship research

Keywords

Main Subjects

COPYRIGHTS

©2022 The author(s). This is an open access article distributed under the terms of the Creative Commons Attribution (CC BY 4.0), which permits unrestricted use, distribution, and reproduction in any medium, as long as the original authors and source are cited. No permission is required from the authors or the publishers.

Abubakar, A. M., Anasori, E., & Lasisi, T. T. (2019). Physical attractiveness and managerial favoritism in the hotel industry: The light and dark side of erotic capital. Journal of Hospitality and Tourism Management, 38, 16-26.
Agrawal, S., Singh, R. K., & Murtaza, Q. (2016). Outsourcing decisions in reverse logistics: Sustainable balanced scorecard and graph theoretic approach. Resources, Conservation and Recycling, 108, 41-53. doi:https://doi.org/10.1016/j.resconrec.2016.01.004
Ahlstrom, D., & Ding, Z. (2015). Entrepreneurshipin China: Progress and Challenges Developments in Chinese Entrepreneurship (pp. 1-32): Springer.
Ahlstrom, D., Young, M. N., Nair, A., & Law, P. (2003). Managing the institutional environment: Challenges for foreign firms in post WTO China. SAM Advanced Management Journal, 68(2), 41-49.
Alvarez, S. A., Barney, J. B., & Anderson, P. (2013). Forming and exploiting opportunities: The implications of discovery and creation processes for entrepreneurial and organizational research. Organization science, 24(1), 301-317. doi:doi/abs/10.1287/orsc.1110.0727
Anwar, S., & Sun, S. (2015). Foreign direct investment in R&D and domestic entrepreneurship in China’s manufacturing industries. Applied Economics, 47(16), 1633-1651.
Arribas, I., Hernández, P., & Vila, J. E. (2013). , performance and innovation in entrepreneurial service projects. Management Decision, 51(1), 173-183. doi:10.1108/00251741311291373
Ashourizadeh, S., Li, J., & Wickstrøm, K. A. (2020). ImmigrantsEntrepreneurial Networks and Export: A Comparative Study. International Entrepreneurship and Management Journal, 1-28. doi:https://doi.org/10.1007/s11365-020-00665-y
Benzing, C., Chu, H. M., & Kara, O. (2009). Entrepreneurs in Turkey: A factor analysis of motivations, success factors, and problems. Journal of small business management, 47(1), 58-91.
Bick, R., Chang, M., Wang, K. W., & Yu, T. (2020). A blueprint for remote working: Lessons from China. McKinsey Digital.
Blachman, R. (2018). China-Israel Innovation Accelerator. VentureBeat.com.  Retrieved from https://www.google.com/amp/s/venturebeat.com/2018/12/01/chinas-vcs-show-new-interest-in-backing-foreign-bred-startups/amp/
Bo, J. (2019). Amid Tradewar, foreign startups may spot oppurtunity in China.   Retrieved from https://venturebeat.com/2019/03/16/amid-trade-war-foreign-startups-may-spot-opportunity-in-china/amp/
Buysse, K., & Essers, D. (2019). Cheating tiger, tech-savvy dragon: Are Western concerns about “unfair trade” and “Made in China 2025” justified? Economic Review(ii), 47-70.
CambridgeDictionary. (Ed.) (2021).
Chandra, A., & Fealey, T. (2009). Business incubation in the United States, China and Brazil: A comparison of role of government, incubator funding and financial services. International Journal of Entrepreneurship, 13, 67.
Chang, V. K., & Pieke, F. N. (2018). Europe’s engagement with China: shifting Chinese views of the EU and the EU-China relationship. Asia Europe Journal, 16(4), 317-331.
Chang, Y., & Hu, J. (2020). Analysis on the Mode of Multinational Retail Enterprises Entering Chinese Market—Take Walmart, Carrefour and Metro as Examples. Modern Economy, 11(01), 17. doi:10.4236/me.2020.111003
Chua, R. Y. J., Ingram, P., & Morris, M. W. (2008). From the head and the heart: Locating cognition-and affect-based trust in managers' professional networks. Academy of Management journal, 51(3), 436-452.
Collinson, S., & Liu, Y. (2019). Recombination for innovation: performance outcomes from international partnerships in China. R&D Management, 49(1), 46-63. doi:https://doi.org/10.1111/radm.12293
Cui, L., & Kwon, J.-W. (2014). Types of Language Usage and Language Barrier Solutions for MNCs in China. 한국국제경영관리학회 학술발표대회 논문, 553-572.
Deloitte. (2017). Taxation and Investment in China. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-chinaguide-2017.pdf
Devi, R. M. (2020). Eco-Friendly Entrepreneur-a Beacon Light to Green India; Dream India.". Our Heritage, 68(1), 6549-6554.
Dickson, R. S., Yao, D., & Hill, I. L. (2020). A Study on the Challenges and Opportunities Faced by Foreign Entrepreneurs in China. Open Journal of Business and Management, 8(04), 1684.
Fan, Z., & Zhang, R. (2017). Financial inclusion, entry barriers, and entrepreneurship: evidence from China. Sustainability, 9(2), 203. doi:https://doi.org/10.3390/su9020203
Fang, T., Tung, R. L., Berg, L., & Nematshahi, N. (2017). Parachuting internationalization: a study of four Scandinavian firms entering China. Cross Cultural & Strategic Management.
Farrell, D., Gersch, U. A., & Stephenson, E. (2006). The value of China's emerging middle class. McKinsey Quarterly, 2(I), 60.
Froese, F. J., Sutherland, D., Lee, J. Y., Liu, Y., & Pan, Y. (2019). Challenges for foreign companies in China: implications for research and practice. Asian Business & Management, 18(4), 249-262. doi:https://doi.org/10.1057/s41291-019-00084-0
Goodman, D. (2008). The new rich in China: Future rulers, present lives: Routledge.
Grover, S., Agrawal, V., & Khan, I. (2004). A digraph approach to TQM evaluation of an industry. International Journal of Production Research, 42(19), 4031-4053. doi:https://doi.org/10.1080/00207540410001704032
Gupta, T. K., & Singh, V. (2015). A systematic approach to evaluate supply chain management environment index using graph theoretic approach. International Journal of Logistics Systems and Management, 21(1), 1-45.
Gurău, C., Dana, L.-P., & Katz-Volovelsky, E. (2020). Spanning transnational boundaries in industrial markets: A study of Israeli entrepreneurs in China. Industrial Marketing Management, 89, 389-401.
Gurumurthy, A., Mazumdar, P., & Muthusubramanian, S. (2013). Graph theoretic approach for analysing the readiness of an organisation for adapting lean thinking: A case study. International Journal of Organizational Analysis, 21(3), 396-427. doi:10.1108/IJOA-04-2013-0652
Hamizah, A. H. (2020). Challenges experienced by immigrant entrepreneurs in a developing non-Western country: Malaysia. Entrepreneurial Business and Economics Review, 8(3), 7-25.
Harary, F. (1959). Graph Theoretic Methods in the Management Sciences. Management Science, 5(4), 387-403. doi:10.1287/mnsc.5.4.387
He, C., Lu, J., & Qian, H. (2019). Entrepreneurship in China. Small Business Economics, 52(3), 563-572.
Hennessy, K. (2012). Cultural heritage on the web: Applied digital visual anthropology and local cultural property rights discourse. IJCP, 19, 345.
Huang, Q., Liu, X., & Li, J. (2016). Entrepreneurship in China. Entrepreneurship & Regional Development: Special Issue, 28(9-10), 817-819 doi:https://doi.org/10.1080/08985626.2017.1251140
Ikegami, J. J., Maznevski, M., & Ota, M. (2017). Creating the asset of foreignness: Schrödinger’s cat and lessons from the Nissan revival. Cross Cultural & Strategic Management.
Jayaraman, K. (2010). Doing business in China: A risk analysis. Journal of Emerging Knowledge on Emerging Markets, 1(1), 7. doi:https://doi.org/10.7885/1946-651X.1006
Ji-yun, H. (2002). The Analysis on the Recent-year Reforms of China's Foreign Currency Control System. South China Financial Research.
Jiang, L., & Shan, J. (2016). Counterfeits or Shanzhai? The role of face and brand consciousness in luxury copycat consumption. Psychological Reports, 119(1), 181-199.
Kaplan, S. N., & Stromberg, P. (2009). Leveraged buyouts and private equity. Journal of economic perspectives, 23(1), 121-146. doi:10.1257/jep.23.1.121
Karadal, H., Shneikat, B. H. T., Abubakar, A. M., & Bhatti, O. K. (2020). Immigrant Entrepreneurship: the Case of Turkish Entrepreneurs in the United States. Journal of the Knowledge Economy, 1-20.
Karakaya, F., & Stahl, M. J. (1989). Barriers to entry and market entry decisions in consumer and industrial goods markets. Journal of marketing, 53(2), 80-91.
Kloosterman, R. C. (2010). Matching opportunities with resources: A framework for analysing (migrant) entrepreneurship from a mixed embeddedness perspective. Entrepreneurship and Regional Development, 22(1), 25-45.
Lee, M. (2003). Franchising in China: Legal Challenges When First Entering the Chinese Market. American. University. Int'l Law. Review., 19, 949.
Lerner, J., & Schoar, A. (2005). Does legal enforcement affect financial transactions? The contractual channel in private equity. The Quarterly Journal of Economics, 120(1), 223-246. doi:https://doi.org/10.1162/0033553053327443
Li, K., Zhang, Y., Wang, W., Jiang, Y., & Zhang, H. (2021). Spatial location of new foreign firms in Shanghai under the transformation of urban development. Bulletin of Economic Research, n/a(n/a). doi:https://doi.org/10.1111/boer.12300
Li, M., He, L., & Zhao, Y. (2020). The triple helix system and regional entrepreneurship in China. Entrepreneurship & Regional Development, 32(7-8), 508-530. doi:10.1080/08985626.2019.1666168
Lightfoot, W. S., & Almeida, J. (2007). Leveraging knowledge in China: the experience of a foreign entrepreneur. Journal of Technology Management in China.
Liu, K., Al Asady, A., & Fu, K. (2020). How do foreign entrepreneurs adapt to local corruption norms in the Middle East? Institutional multiplicities and individual adaptation. International Small Business Journal, 38(7), 629-653. doi:10.1177/0266242620918823
Lukes, M., & Stephan, U. (2012). Nonprofit leaders and for-profit entrepreneurs: Similar people with different motivation. Ceskoslovenska psychologie, 56(1), 41-55.
Luo, X., & Lemański, M. K. (2016). FDI strategies of Chinese companies in the electronics industry: Motives, locations, and entry mode choices The challenge of bric multinationals: Emerald Group Publishing Limited.
Min, H., & Chen, G. (2003). Challenges and opportunities for entering the Chinese logistics market. Paper presented at the Supply Chain Forum: An International Journal.
Mitchell, J. R., Mitchell, R. K., & Randolph-Seng, B. (2014). Handbook of Entrepreneurial Cognition: Edward Elgar Publishing.
Mitchell, R., Randolph-Seng, B., & Mitchell, J. (2011). Socially Situated Cognition: Imagining New Opportunities for Entrepreneurship Research. Academy of management review, 36, 774-776. doi:10.5465/amr.2011.0001
Mitchell, R. K., Smith, B., Seawright, K. W., & Morse, E. A. (2000). Cross-Cultural Cognitions and the Venture Creation Decision. Academy of Management journal, 43(5), 974-993. doi:10.5465/1556422
Mitchell, R. K., Smith, J. B., Morse, E. A., Seawright, K. W., Peredo, A. M., & McKenzie, B. (2002). Are Entrepreneurial Cognitions Universal? Assessing Entrepreneurial Cognitions across Cultures. Entrepreneurship Theory and Practice, 26(4), 9-32. doi:10.1177/104225870202600402
MofCom. (2018). Foreign Investment Statistics.  Retrieved from http://english.mofcom.gov.cn/article/statistic/foreigninvestment/.
Muduli, K., Govindan, K., Barve, A., & Geng, Y. (2013). Barriers to green supply chain management in Indian mining industries: a graph theoretic approach. Journal of Cleaner Production, 47, 335-344.
Munganyi, T. (2020, 6 February 2020) Doing business in China/Interviewer: B. Madzikanda. Research, Shanghai, China.
Nazareno, J., Zhou, M., & You, T. (2019). Global dynamics of immigrant entrepreneurship: Changing trends, ethnonational variations, and reconceptualizations. International Journal of Entrepreneurial Behaviour and Research, 25(5), 780-800. doi:https://doi.org/10.1108/IJEBR-03-2018-0141
NBS. (2021). China National Bureau of Statistics. http://www.stats.gov.cn/english/
NBSC. (2010). China statistical yearbook. In N. B. o. S. o. China (Ed.): National Bureau of Statistics of China Beijing.
NBSC. (2019). China Statistical Year Book.  Retrieved from http://www.stats.gov.cn/enGliSH/.
Ng, K. S., & Fu, P. P. (2018). Factors driving foreign women entrepreneurship in China. Entrepreneurial Business and Economics Review, 6(4), 49.
Niu, Y., Dong, L. C., & Chen, R. (2012). Market entry barriers in China. Journal of Business Research, 65(1), 68-76. doi:doi.org/10.1016/j.jbusres.2011.01.018
North, D. C. (1991). Institutions. Journal of economic perspectives, 5(1), 97-112.
Park, B. I., & Xiao, S. (2021). Doing good by combating bad in the digital world: Institutional pressures, anti-corruption practices, and competitive implications of MNE foreign subsidiaries. Journal of Business Research, 137, 194-205. doi:https://doi.org/10.1016/j.jbusres.2021.08.014
Park, S. H., & Ungson, G. R. (2016). Blind spots in global strategy: applications in emerging markets. Cross Cultural & Strategic Management.
Park, S. H., Ungson, G. R., & Zhou, N. (2013). Rough diamonds: The four traits of successful breakout firms in BRIC countries: John Wiley & Sons.
Pellegrini, M. M., & Ciappei, C. (2015). Ethical judgment and radical business changes: the role of entrepreneurial perspicacity. Journal of Business Ethics, 128(4), 769-788.
Phillips, N., & Tracey, P. (2007). Opportunity recognition, entrepreneurial capabilities and bricolage: connecting institutional theory and entrepreneurship in strategic organization. Strategic organization, 5(3), 313-320. doi:10.1177/1476127007079956
Puslecki, L., Trapczynski, P., & Staszków, M. (2016). Emerging advanced topics in an advanced emerging market? International business research in Poland in the period 1990-2014. Journal of East European Management Studies, 21(2), 139-166.
Qi, F., Wu, Y., Wang, J., & Wang, Q. (2021). China's Hainan Free Trade Port: Medical Laws and Policy Reform. Frontiers in Public Health, 9(1783). doi:10.3389/fpubh.2021.764977
Qian, H. (2017). Knowledge base differentiation in urban systems of innovation and entrepreneurship. Urban Studies, 54(7), 1655-1672. doi:doi.org/10.1177/0042098016629314
Raeesi, R., Dastranj, M., Mohammadi, S., & Rasouli, E. (2013). Understanding the interactions among the barriers to entrepreneurship using interpretive structural modeling. international Journal of Business and Management, 8(13), 56.
Randolph-Seng, B., Mitchell, R. K., Vahidnia, H., Mitchell, J. R., Chen, S., & Statzer, J. (2015). The Microfoundations of Entrepreneurial Cognition Research: Toward an Integrative Approach. Foundations and Trends® in Entrepreneurship, 11(4), 207-335. doi:10.1561/0300000055
Randolph-Seng, J. S. C., & Atinc, Y. (2020). Dynamic entrepreneurial cognition: current trends and future opportunities. Management Decision, 58(7), 1237-1246.
Raza, A., Muffatto, M., & Saeed, S. (2018). Cross-country differences in innovative entrepreneurial activity: An entrepreneurial cognitive view. Management Decision.
Riege, A. M. (2003). Validity and reliability tests in case study research: a literature review with “hands‐on” applications for each research phase. Qualitative market research: An international journal.
Sanchez, J., Carballo, T., & Gutiérrez, A. (2011). The entrepreneur from a cognitive approach. Psicothema, 23, 433-438.
Sarasvathy, S., & Dew, N. (2011). Without judgment: An empirically-based entrepreneurial theory of the firm. The Review of Austrian Economics, 26. doi:10.1007/s11138-011-0170-4
Sassetti, S., Marzi, G., Cavaliere, V., & Ciappei, C. (2018). Entrepreneurial cognition and socially situated approach: a systematic and bibliometric analysis. Scientometrics, 116(3), 1675-1718.
Shan, S., Jia, Y., Zheng, X., & Xu, X. (2018). Assessing relationship and contribution of China's technological entrepreneurship to socio-economic development. Technological Forecasting and Social Change, 135, 83-90. doi:doi.org/10.1016/j.techfore.2017.12.022
Shepherd, D., & Patzelt, H. (2018). Entrepreneurial Cognition.
Si, Y., Zhang, Y., & Teng, T. (2021). R&D internationalization and innovation performance of Chinese enterprises: The mediating role of returnees and foreign professionals. Growth and Change, 52(4), 2194-2212. doi:https://doi.org/10.1111/grow.12555
St-Jean, E., & Audet, J. (2012). The role of mentoring in the learning development of the novice entrepreneur. International Entrepreneurship and Management Journal, 8(1), 119-140.
St-Jean, É., & Duhamel, M. (2020). Employee work–life balance and work satisfaction: an empirical study of entrepreneurial career transition and intention across 70 different economies. Academia Revista Latinoamericana de Administracion. doi:doi.org/10.1108/ARLA-02-2019-0054
Steinz, H. J., Van Rijnsoever, F. J., & Nauta, F. (2016). How to Green the red Dragon: A Start‐ups' Little Helper for Sustainable Development in China. Business Strategy and the Environment, 25(8), 593-608.
Stephan, U., Hart, M., & Drews, C.-C. (2015). Understanding motivations for entrepreneurship: A review of recent research evidence: Enterprise Research Centre.
Stoermer, S., Hildisch, A. K., Froese, F. J., & Tung, R. (2016). Culture matters: The influence of national culture on inclusion climate. Cross Cultural & Strategic Management.
Sydler, R., Haefliger, S., & Pruksa, R. (2014). Measuring intellectual capital with financial figures: Can we predict firm profitability? European Management Journal, 32(2), 244-259.
Trimarchi, M., Liesch, P. W., & Tamaschke, R. (2010). A study of compatibility variation across Chinese buyer‐seller relationships. European Journal of Marketing. doi:doi.org/10.1108/03090561011008628
Tung, S., & Cho, S. (2000). The impact of tax incentives on foreign direct investment in China. Journal of International Accounting, Auditing and Taxation, 9(2), 105-135.
Urban, B., Van Vuuren, J., & Barreira, J. (2008). High-growth entrepreneurs: the relevance of business knowledge and work experience on venture success. Journal of Contemporary Management, 5(1), 58-71. doi: https://hdl.handle.net/10520/EJC51032
Urbano, D., Audretsch, D., Aparicio, S., & Noguera, M. (2019). Does entrepreneurial activity matter for economic growth in developing countries? The role of the institutional environment. International Entrepreneurship and Management Journal, 1-35. doi:doi.org/10.1007/s11365-019-00621-5
Venkataraman, S. (2019). The distinctive domain of entrepreneurship research Seminal ideas for the next twenty-five years of advances: Emerald Publishing Limited.
Verot, O. (2018). Key factors of sucess for a foreign company in China.   Retrieved from MarketingtoChina.com
Wach, D., Stephan, U., & Gorgievski, M. (2016). More than money: Developing an integrative multi-factorial measure of entrepreneurial success. International Small Business Journal, 34(8), 1098-1121.
Wach, D., Stephan, U., Marjan, J. G., & Wegge, J. (2018). Entrepreneurs’ achieved success: developing a multi-faceted measure. International Entrepreneurship and Management Journal, 1-29. doi:doi.org/10.1007/s11365-018-0532-5
Wang, P., Kinnucan, H. W., & Duffy, P. A. (2019). The effects of rising labour costs on global supply chains: the case of China’s cotton yarn industry. Applied Economics, 51(33), 3608-3623.
Woetzel, J., Orr, G., Lau, A., Chen, Y., Chang, E., Seong, J., . . . Qiu, A. (2014). China’s digital transformation: The Internet’s impact on productivity and growth. McKinsey Global Institute, July, McKinsey&Company.
Worldwide, A. (2010). China’s 12th Five-Year Plan: How it actually works and what’s in store for the next five years. December, 10, 2.
Wu, C., & Burge, G. S. (2018). Competing for foreign direct investment: The case of local governments in China. Public Finance Review, 46(6), 1044-1068.
Xu, D., Pan, Y., Wu, C., & Yim, B. (2006). Performance of domestic and foreign-invested enterprises in China. Journal of World Business, 41(3), 261-274. doi:https://doi.org/10.1016/j.jwb.2005.10.002
Yang, D. T., Chen, V. W., & Monarch, R. (2010). Rising wages: Has China lost its global labor advantage? Pacific Economic Review, 15(4), 482-504.
Yang, L. (2015). Empirical study on the relationship between entrepreneurial cognitions and strategic change momentum. Management Decision, 53(5), 957-983. doi:10.1108/MD-10-2014-0602
Yau, O. H., Lee, J. S., Chow, R. P., Sin, L. Y., & Alan, C. (2000). Relationship marketing the Chinese way. Business Horizons, 43(1), 16-16. doi:doi.org/10.1016/S0007-6813(00)87383-8
Yen, D. A.-w., & Abosag, I. (2016). Localization in China: How guanxi moderates Sino–US business relationships. Journal of Business Research, 69(12), 5724-5734.
York, J. G., & Venkataraman, S. (2010). The entrepreneur–environment nexus: Uncertainty, innovation, and allocation. Journal of business venturing, 25(5), 449-463.
Zanella, G., Solano, D. B. C., Hallam, C. R., & Guda, T. (2019). The role of the organization in the entrepreneur–opportunity nexus. International Journal of Entrepreneurial Behavior & Research.
Zhang, W., & Zhai, Y. (2016). SME’s Entry Process in Emerging Markets-A case study of the Nordgröna AB entering Chinese Market. (Master's), Lund University. Retrieved from http://lup.lub.lu.se/student-papers/record/8887235  (8887235)
Zhang, Y., Zhao, W., & Ge, J. (2016). Institutional duality and political strategies of foreign-invested firms in an emerging economy. Journal of World Business, 51(3), 451-462. doi:/doi.org/10.1016/j.jwb.2015.12.004
Zheng, T., Zhao, Y., & Li, J. (2019). Rising labour cost, environmental regulation and manufacturing restructuring of Chinese cities. Journal of Cleaner Production, 214, 583-592.
Zhou, D. (2012). Chinese entrepreneurs go global. Technology Innovation Management Review, 2(2).