Background: People’s Republic of China has attracted much FDI throughout the decades. According to the World Bank (2016), China has received approximately 20 per cent of the total FDI to developing countries the last ten years which has contributed to the country’s huge economic growth. With a record capital surplus, in combination with governmental policies such as “Going-Global”, China has transformed from being a recipient of FDI, to an investor itself. Much of the OFDI in Europe has gone to Germany and France but there is also a rising interest in the Swedish market. China’s investments in Sweden tripled between 2014 and 2015 and Chinese OFDI to Sweden amounted SEK 7.2 billion during 2016.

Problem discussion & Purpose: Cross-cultural business is not risk free and cultural differences between China and Sweden are extremely high. Measured in cultural dimensions, the Chinese culture differs from the Swedish culture in five out of six dimensions, which may impose problems when establishing on the Swedish market. The purpose of this thesis is therefore to investigate how Chinese companies internationalize towards Sweden and which aspects of cultural risk they encounter when establishing on the Swedish market. Furthermore, the paper aims to investigate how different trade/investment-facilitating organizations can help Chinese companies reduce cultural risk when establishing in Sweden.

Theoretical framework: Focus has been on internationalization theories such as the Uppsala model, the network approach and the born-globals. Focus has also been on theories in risk and risk management as well as on the importance of cultural differences which is done by comparing Chinese cultural values in contrast to Swedish cultural values.

Methodology: The empirical data is generated through a triangulation of methods. Primarily, data is collected from semi-structured interviews which were conducted with representatives from Business Sweden, PwC, Vinge, Mannheimer Swartling and Sino Agro Food. Data is also complemented with internet-mediated questionnaires to Chinese companies situated in Sweden.

Conclusions: Three aspects of the Swedish economy attract Chinese investors; innovation & technology, competence (know-how and managerial skills) and the Swedish market (strong brands and business opportunities). The internationalization mode used towards Sweden does not fit any of the previously well-known models. However, a new model is introduced- “bred global”, which might fit Chinese internationalization better. Regarding cultural difficulties, differences in norms & values and laws & regulations are found, as well as difference in mentality/work ethics and the concept of time. Prevention of these are establishing relationships, sending agents beforehand and keeping Swedish management in M&As. Trade and investment facilitating organizations in Sweden can assist Chinese companies with different aspects of psychic distance. Business Sweden may reduce market risk and political risk, assisting with market analyses and establishment processes as well as getting contact with lawyers and recruitment agencies. Vinge can reduce legal risk with expertise in business law, M&A related services and negotiations- working as a bridge in cross border transactions. PwC may reduce market risks, assisting with business set up, auditing services, tax planning and transfer pricing compliance.