After opening of China‟s borders to foreign trade and investment, over the last decades, a growing number of foreign company‟s attention has been drawn to China due to the immense market potential, and a huge source of cheap labor. Swedish industry, however, is not an exception from this tremendous trend in the world, as their recent acquisitions have given access to production facilities in China. This transfer of product/production from Sweden to China has emerged two major concerns including Design and Manufacturing (DM) interaction between geographically distant settings, in conjunction with inter-cultural considerations.

Lately, the concept of interaction between DM has been growing in the scholar thoughts. Typically, different challenges such as different personalities and cultural differences exist towards having an enhanced collaboration during the development process. This study uses a framework for integration mechanisms which comprises number of approaches such as DfX, CE, cross-functional teams, and modern quality management.

Second, this study by carrying out 6 interviews within the Chinese plants in four Swedish-Chinese based companies identifies the main challenges of interaction of design in Sweden and manufacturing in China (2 pilot companies and 2 target companies). The most frequent challenges are spotted as cultural clashes, ineffective collaboration, frustrating verification process, inadequate management system, and lack of technical knowledge. By including cultural attributes, a literature based classification is adopted to classify the determined challenges.

Eventually, this study comes up with suggestions for managing challenges associated with geographical distance. More face-to-face interactions instead of electronic communications in order to have a better insight to the cultural differences (such as trust, lose face, and direct/indirect confrontation), cross-functional integrations, localizing the verification process, facilitating the early involvement of suppliers, rotation of the expertise across projects, use of DfA index, and function-wise motivation system, are stated in our recommendations to cope with these challenges. Besides, the influence of reward system on challenges of dispersed settings, is proposed to be investigated for further studies.