Chinese are Coming! : The Development of Sales offices and Distribution Cluster by Chinese SMEs in Europe

Abstract: Nowadays, China is one of the most focused countries in the world since it has a very high potential to overwhelm the world market. As a result, we can find lots of articles and discussion about the activities of internationalization and relocation of many inter-national firms (both MNEs and SMEs) in China. Those firms moved to China in order to either serve the huge Chinese domestic market or enjoy the cheap production costs to supply the global market. However, there is one phenomenon that is not new and seldom has researches discussing about it. This is the fact that there are also a lot of Chinese entrepreneurs who moved out of China and located in other countries. In this re-search, we study about some Chinese firms which set up their sales agencies in the sales offices and distribution clusters in four European countries which are Poland, Spain, Portugal and Italy. We focus our study on the internationalization process of those Chi-nese firms, the rationales and factors influencing the location-decision and clustering and the rationales of choosing the specific countries in Europe. However, we have our latent objective, which is to stimulate more discussion and research on this interesting phenomenon since there are few researches on it. In our research, we find that there are similar patterns of internationalization process and location-decision of Chinese firms nevertheless the differences in background and types of business they have. They have some common rationales to undertake interna-tionalization, like to avoid fierce competition in the previous market, or to find new business opportunities and so on. Most of Chinese firms are still in the initial step of in-ternationalization process, and a very common way to fulfil their internationalization is by either the Chinese owners immigrating or registering a new firm in the host countries. The help from their friends and relatives who are often earlier arrivals in the host coun-tries and the strong connection with the suppliers in China are their competitive advan-tages. However, they have encountered some common problems, such as cultural issues, like language barriers and communication problems; lack of knowledge about local market and political issues. For localization or the way they choose their locations, we find some common locational factors, like market size, degree of competition, government policy (mainly on immigration policy), connectivity, safety, transaction costs and ethnic contacts. For the last section of our study, cluster, we find that the formation of cluster are based mainly on potential benefits of cluster, such as ability to attract more customers(market size), benefits from collaboration and information sharing, availabil-ity of specialized services and supporting firms. At last, we find a lot of interesting top-ics for future research.