Background: When foreign entrepreneurs establish their own business in China, they face the ‘liability of newness’ due to the lack of cultural knowledge and limited access to relevant resources. To overcome these challenges, foreign entrepreneurs are required to develop and cultivate close guanxi network, when entering and competing in China’s dynamic market.

Problem Discussion: Literature acknowledges a lack of the guanxi phenomenon and its integration within the entrepreneurial network research domain. There are scant dynamic models, which focus on the guanxi network development of foreign entrepreneurs during the early venture creation phase embedded within a different cultural environment.

Purpose: The purpose of this thesis is to explore how the guanxi networks of foreign entrepreneurs evolve throughout the venture creation process (opportunity discovery, opportunity exploitation and resource acquisition) in China and to create an understanding of the guanxi development process from the perspective of foreign entrepreneurs.

Research Question: How do guanxi networks of foreign entrepreneurs in China evolve throughout the early stages of the venture creation process?

Theoretical Framework: The theoretical framework consists of the three stages, ‘opportunity discovery,’ ‘opportunity exploitation’ and ‘resource acquisition,’ of the venture creation process by Shane (2003), the entrepreneurial network concept (network structure, governance mechanism, network content) by Hoang & Antoncic (2003) and Chinese guanxi phenomenon by Guo & Miller (2010), Niedermeier, Wang, & Zhang (2016) and Chen & Chen (2004).

Methodology: An explorative and abductive study was conducted. The empirical data was drawn from qualitative research in terms of semi-structured interviews with ten foreign entrepreneurs, who established their business in China.

Empirical Findings/Conclusion: The ten foreign entrepreneurs’ network size varied between small, medium and large throughout the three venture creation stages and was characterized by various network ties. Strong ties referred to the core circle and provided emotional support while weak ties related to the intermediary as well as periphery circle and were approached for essential resources for the physical establishment of the venture. While the need for ‘strong’ ties decreases over time, the usage of weak ties increased throughout the venture creation process. Regarding the governance mechanisms, strong ties were built on trust and affection, whereas the weak ties were maintained by the exchange of favours (e.g. business dinners and gift-giving).

Practical Implications: Entrepreneurs need to adapt to the Chinese culture and cultivate it. Networking is everything, which implies the larger one’s network is, the higher are the chances to succeed in the long run. China provides a broad range of various business opportunities. Yet, it is critical to be locally present in China. Since NGOs are less approached by entrepreneurs, due to superficial relations, such organisations should think about revising their program for entrepreneurs.

Limitations: Biases exist due to the qualitative approach in terms of misunderstanding among interviewers and interviewees, data loss through reduction, subjective interpretations and classification of method parameters.

Future Research: Further research could be additional dimensions such guanxi networking platform, entrepreneurial networking skill-set and the guanxi evolvement in times of digital age. Thereby, a combined study of a qualitative and quantitative method could be of interest. Another suggestion is to repeat the study on different external settings such as geographical variances as well as unlike industry sectors.