Today, the Peoples Republic of China (PRC) is a fast growing economy, which is still in a developing phase. According to this fact, many Western companies are expanding and establishing in China nowadays. When expanding to foreign markets and foreign cultures, adapting to the local values is something which needs to be considered by foreign managers. A vital aspect is how to motivate the employees. The way employees want to be motivated may differ a lot from one country to another due to cultural differences. Since not much research has been performed on Swedish companies established in China and how they motivate their Chinese employees, this dissertation tries to fill that gap.The purpose of this dissertation is to explore the gap between Western management practices and motivation of Eastern employees. To find out if there are different needs and wants of employees in developing countries as opposed to developed ones. A deductive research approach is used in this dissertation.A two perspective study has been performed, qualitative case studies and a quantitative survey. On one side, Western managers views on how to motivate their Eastern employees as case studies. On the other side, a survey performed on a Chinese population and their view of important motivation factors. Some concepts were tested in order to investigate if the Western managers and the Chinese population have the same views on motivation and how to overcome cultural differences. First, results have shown that the “third culture” as a management tool will have an influence on employee motivation. Second, clear goals and rules will have an influence on employee motivation. However, the use of cooperative goals for Eastern employees was not confirmed to be useful, according to the results of this study. As a conclusion, the findings from this study indicate that there is a gap between Western managers and Eastern employees’ beliefs regarding motivation. However, to overcome cultural differences when operating in cross-cultural settings it is necessary to create a “third culture”. This study has strengthened the theory of the “third culture”.Analysis and conclusions from this dissertation may be of some value for Swedish managers. The value in this dissertation lies in that it can give a “hint” regarding motivation to managers of companies which operate in China. Some theories studied in this dissertation have not been confirmed. Therefore, managers should consider theories, but also try to adjust them in order to make them fit to their specific business.