Global Journal of Management and Business Research, A: Administration and Management, Volume 22 Issue 9

A Study on the Complex Dynamic Factors Influencing Foreign Entrepreneurs in China: A GTMA Perspective Beverlley Madzikanda (MSc.) α , Cai Li (Ph.D.) σ & Francis Tang Dabuo (MS.c) ρ 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 seeks to contribute towards filling this gap by examining the success o r failure of foreign nationals setting up businesses in China and identifying the critical success factors for foreigners in China, basing on transnational entrepreneurship 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. It was found that 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 giving a cross-cultural perspective of the causes and influences of foreign entrepreneurship in China, personal strategies and policy implications can be derived by foreign entrepreneurs hoping to capture the market. This study also serves as significant contribution towards immigrant entrepreneurship theory in the context of 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: foreignness, foreign entrepreneur, complex dynamic factors, china, government policy, GTMA. I. I ntroduction and B ackground hina’s entrepreneurship scene is one of the largest and most profitable in the world. Entrepreneurs contribute over 60% of China’s GDP and have been a major driving force behind the economy’s sustained growth (He, Lu, & Qian, 2019). They are responsible for 80% of urban employment while they contribute 50% of fiscal and tax revenues. They can foster sustained economic growth through innovation and currently tech entrepreneurs alone account for 41.49% of the total GDP (Shan, Jia, Zheng, & Xu, 2018). The Chinese government is well aware of Author α σ ρ : School of Management, Jiangsu University, 301 Xuefu Road, Jingkou district Zhenjiang, Jiangsu, China. e-mails: beverlley@icloud.com , gscaili@ujs.edu.cn , francis.dabuo@yahoo.com the efficacy of entrepreneurs such that several macro- level strategies have been implemented to support and encourage entrepreneurship at every level. Since the 12th 5-year plan (Worldwide, 2010), the government of China pledged to direct more funding and institutional changes towards the development of Strategic Emerging Industries (SEIs). These included healthcare, energy and environment, and technology. They have alleviated credit access (Wang, 2012) and provided several grants towards SEIs to ensure social development. It is clear that the Chinese government regards economic growth as a priority and has “whole heartedly” promoted and facilitated entrepreneurial thinking and practices, playing a more supportive rather than regulatory role in the entrepreneurial ecosystem. Unfortunately, the market is just as difficult to enter as it is attractive. Extensive literature spanning over 25 years maps out the difficulties that entrepreneurs in China have faced, particularly, foreign entrepreneurs. These include complex and inconsistently applied laws, national isolation that has created a closed business and social ecosystem, unique cultural context, language deficiencies and rigorous competition from domestic players and copycat products, conflicts in managerial and cultural integration, lack of access to multi-layered distribution channels and corruption in public services (W. Zhang & Zhai, 2016). The foreign entrepreneur enters the market as a stranger and often, inadequate market research leads to poor performance or failure because they cannot choose the appropriate location in the very different regional market segments (Min & Chen, 2003) and cannot fully take advantage of guanxi (D. Zhou, 2012). They experience all these while they fight for market share and brand recognition with strong incumbent firms in a brand-conscious consumer market. These problems however, do not make China’s 1.4 billion market any less appealing. In 2018 alone, there were new 60 553 new foreign enterprises registered with a cumulative 134.97 billion USD invested (MofCom, 2018). Despite the large number of foreigners and foreign enterprises in China (MofCom, 2018), there is only little literature that focuses on foreign entrepreneurs specifically (Ahlstrom, Young, Nair, & Law, 2003; Gur ă u, Dana, & Katz-Volovelsky, 2020). Though many previous studies explain the policies and theories regarding the C 9 Global Journal of Management and Business Research Volume XXII Issue IX Version I Year 2022 ( ) A © 2022 Global Journals