Problem: Researchers argue that strategic management and its implementation has be-come the main focus in SMEs because of its role in generating economic wealth. Although, there are many advantages to use strategic management, there are still many SME organizations that resist using it, since some of them may think this process is only useful for larger organizations and they did not recognize that it‟s also very helpful for SMEs as a whole. Therefore, the organization face challenges such as how to use this strategic management, and how to recognize the importance of strategic management and so on.

Purpose: Our purpose is to find out how strategic management determines / affects / in-fluence SMEs performance in South East Asia and specifically in China and In-donesia. Moreover, its purpose is to identify the crucial factors that determine survival and growth in the two countries.

Theory: The theoretical framework is divided into several major parts. We start with looking at definition of strategy and different types of strategy in organization. The chapter continues with looking at SMEs strategic Management Model (Analoui & Karami, 2003), strategic choice, strategic fit and theory of firm per-formance i.e. dynamic capabilities (core capabilities). The last part of the chap-ter combine the previous theory, i.e. strategy and firm performance. More spe-cific, we use our theoretical framework of the process, regarding the effect of strategic management on SMEs performance.

Method: We chose qualitative method as our research method. We use case study to do this research and conduct interview to collect data. Qualitative is the appropriate method for this thesis since we aim to understand the phenomenon of SMEs strategic management on different levels. In order to gain more information, we conducted interview with middle management and top management of the com-pany. This method help us to explore into deeper stages of analyzing our subject and support our research.

Conclusion: We found there is no general answer on how strategic management determine / affects / influence SMEs performance in East Asia SMEs specifically in China and Indonesia. Further, the studied companies have more common characteris-tics than different characteristics. All of them are aware of the importance of us-ing strategic management. Moreover, our research indicate that understanding the role of internal & external factors, and constantly combining the two factors into daily operation are the crucial factors for these companies survival and growth in the two countries