Purpose: The purpose of this study is to investigate how and to what degree Swedish multinational companies (MNCs) adapt to local conditions when they establish subsidiaries in China, and if cultural differences play an important role in their operations.

Background: The major challenge for MNCs establishing abroad is the configuration and integration of their country subsidiaries (Galbraith, 2000). Therefore, it is vital to understand how activities within an organization, such as structures, processes, reward systems, and people practices, should be designed in order for the company to be as efficient as possible (Weiss, 2007; Kesler & Kates, 2011). Swedish direct investments in China have increased significantly in the late 2000s, especially in the eastern regions, where a majority of about 650 Swedish companies in China are located (Swedish Trade Council, 2012a). Establishing across borders is a step towards future growth, but it is important to note that a cross-border expansion comes with many challenges (Galbraith, 2000).

Method: This study uses a qualitative research method by investigating the experiences and practices of two Swedish multinational companies with operations in Shanghai, China. Information has been collected from eight respondents in the form of interviews and open-ended questionnaires.

Conclusion: Swedish MNCs standardize their organization to a large extent when they establish subsidiaries in China, and culture has a slight influence on the practices of Swedish MNCs but does not play a major role for the business as a whole.