The Internationalisation Challenges of Chinese SMEs: Formation Mechanisms and Governance Pathways

Abstract

Against the backdrop of expanding foreign trade, a rising share of private enterprises and rapid growth in cross-border e-commerce, the internationalisation of Chinese SMEs shows a dual pattern: more market entry points and deeper capability constraints. Evidence from the General Administration of Customs, the Ministry of Industry and Information Technology, the World Bank, the WTO, UNCTAD, ADB and EU regulatory materials, combined with gradual internationalisation theory, global value-chain analysis and the born-global literature, indicates that the difficulties facing SMEs do not stem from a lack of overseas demand. They arise from a structural mismatch between firm capabilities and external rules. Low-price orders can lock firms into lower positions in global value chains; data-intensive compliance rules raise fixed costs; insufficient trade finance worsens cash-flow pressure; platform-based internationalisation weakens the accumulation of customer assets; and weak organisational capability prevents experience from becoming sustained competitiveness. Governance should therefore shift from entry indicators, such as export value, store numbers and trade-fair participation, to capability indicators, such as profit margins, collection cycles, compliance completeness, repurchase rates, financing coverage and after-sales response. Sectoral compliance tools, scenario-based trade finance, public services for industrial clusters and stronger internal governance can help Chinese SMEs move from 'products going global' to 'capabilities going global'.