China’s fast growing economy and its integration into the global economy have been a dramatic economic development. During the past decade there has been a large increase of Swedish companies entering the Chinese market. Therefore it has been of great interest to study this area. This thesis explores Swedish SME’s established in China, and how they have used their business network to overcome institutional barriers. This thesis also has the objectives of giving a description of the general procedures of setting up a business in China, and to prepare other firms that have plans on entering the Chinese on what the most common obstacles there are when setting up a business in China.