Relationship-based financing models: experiences of chinese entrepreneurs in Brazil

Abstract

Differently of relationships that normally occur in Western country, the relationship that is quite common in China, named guanxi, is a special form of connection based on personal trust, which are involved successive exchange of favors. The Guanxi still strongly influences on the Chinese's businessman behavior. This characteristic is printed in informal financing models, which is one of the key factors responsible for Small and Medium Enterprises [SMEs] growth in China. The objective of the article is to analyze empirically guanxi-based model of financing in Brazil. For this purpose, the exploratory method was applied, a sample of interviews with Chinese SME's entrepreneurs in Brazil. The evidences suggests that: i) the entrepreneurs uses guanxi to have accesses to financing and to reduce cost of financing; ii) the commercial credits and direct loan are heavily used by Chinese entrepreneurs and the bank short term loans are avoided; iii) the Brazilian institutional environment influences the models; iv) the entrepreneurs often participate of socials events to keep getting guanxi.

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