Since China opened up to the outside world in 1978, a tremendous economic development took place. China is today still a fast growing economy. With a huge population that makes up for an enormous market along with relatively low labor costs, China is very attractive for foreign companies. When foreign companies expand and establish in China, many aspects must be taken into consideration. Aspects like cultural differences must be considered by the foreign managers as well as how to manage the Chinese employees in human relations. Having innovative employees are beneficial to any company. However, the way to influence employees to be innovative can differ from one culture to another. There is little research done on Swedish companies operating in China and how they influence their Chinese employees to be innovative. The aim of this thesis is to provide some insight into this matter.

The thesis takes a deductive approach, and the investigation is performed quantitatively by a survey. The survey is answered by the Chinese employees that are currently working in Swedish companies where they are to rank the presence of several Strategic Human Resource Management practices. Also, their perceptions on Chinese cultural aspects are investigated.

The results from this thesis will point out the most successful practices in influencing the Chinese employees’ innovativeness, but also the cultural factors that can obstruct innovativeness. This research may be of value for Swedish companies, as well for Swedish managers hoping to establish themselves in China.