China has under three decades experienced rapid economic progress and transformed from being a backward economy to one of the world’s fastest growing economy. China is facing changes in business and social environment as a result of its exposure to foreign technologies, lifestyles and cultures. Even though, the traditional way of doing business has changed, it has still not completely disappeared. Therefore, it is important for foreign firms to know how to cope with the change of Chinese culture when sourcing in China. The awareness of cultural differences is crucial for firms willing to establish and manage cross-cultural business relationships with Chinese companies. The purpose of this dissertation is to study how cultural differences influence the factors of communication, trust and commitment in business relationships. Existing literature offers interesting insights into the influence of culture on some of the above mentioned factors. However, there is a limited number of studies that investigate the influence culture has on all these three factors (communication, trust and commitment) between Swedish firms and Chinese companies. A qualitative research was adopted to reach the purpose of this study. Semi-structured interviews were carried out with one fully owned subsidiary of a Swedish manufacturing company and its two Chinese suppliers. This is to obtain the different perspectives of Swedish and Chinese cultures when interacting in business relationships.

Our conclusion is that cultural differences are not the main problems in cross-cultural business relationships, but it is the neglecting of cultural differences that cause problems. The results show that both the Swedish subsidiary and its Chinese suppliers adapted to situations to solve problems. Communication was an essential factor, which had important functions in the business relationships since it could develop both trust and commitment. This study brings insight into cross-cultural business relationships between Swedish firms and Chinese companies.