An Examination of Danish SMEs Internationalization in the Chinese Market: A Closer Look on the Performance of Clean-tech SMEs

Abstract

This thesis analyses the relationship between Danish clean-tech SMEs choice of entry strategy, motivation and performance in China. The analysis also covers the relationship between motivation, entry strategy and the actual performance of the Danish clean-tech SME’s in the Chinese market. The analysis is based on a sample of 11 Danish clean-tech SMEs within the renewable energy and environmental protection fields and the analysis is carried out using a combined theoretical framework from Kolter (1988), Dunning (1988), Johanson & Mattsson (1988), Nummela (2002), and Khanna et al. (2005). I find that Danish clean-tech SMEs are mainly motivated to internationalize due to the large market potential in China and that all of the SMEs are adapting their entry strategies as they go along with the internationalization into China. I also find that the companies are using more than one entry mode at the same time when entering China and that direct exporting is the most popular entry mode. Additionally, I find that the SMEs who already have begun expansion activities in China are satisfied with their current performance and that SMEs within the wind industry, in general, performs better, which might be a result of the matureness of the industry compared to the other industries. Lastly, I find that the choice of entry strategy has an impact on performance, but it does not paint the full picture. However, companies who are focusing and committing themselves to the Chinese market development perform better than others. Hence the more resources they allocate, the better performance will they experience. This finding might be the answer to why Danish SMEs currently only account for 8% of the total export to China. As the larger companies have more resource to commit to the market development, they will also be more likely to succeed.