How Chinese Businesses Arrange Financing in Brazil


Hsia Hua Sheng e Wesley Mendes-Da-Silva



Research in focus: The big family: informal financing among small and medium-sized businesses through guanxi.

Most of the entrepreneurs who move from China to São Paulo avoid banks, preferring to borrow from family members or to form agreements with suppliers to extend payment periods.

Objective: To explore the existence of associations among various levels of guanxi (relationship networks) and the capacity of small and medium-sized companies to access informal financing.


• In 2011, a questionnaire was distributed to 110 Chinese entrepreneurs who were immigrants to the city of São Paulo; 26 replied.

• The questionnaires were consulted during personal interviews. Most of the respondents were males who speak both Chinese and basic Portuguese, have secondary school educations and own commercial operations (trade stalls).

• Results were statistically analyzed (descriptive statistics, frequencies and means, and nonparametric testing, such as the Mann-Whitney U test).


• Chinese entrepreneurs living in São Paulo use bank loans less frequently than informal financing mechanisms. Only young interviewees with higher education qualifications say they use bank credit as their working capital. The others were not familiar with banking procedures.

• Loans from family members and commercial credit (informal agreements between entrepreneurs and suppliers to extend payment periods) were the most relevant forms of financing for Chinese entrepreneurs based in São Paulo. While those with strong family ties use loans from family members, commercial credit is preferred by entrepreneurs with a low level of guanxi (no family ties and little participation in religious or non-religious associations).

• The relevance of informal financing extends beyond the initial phases of the business; only loans from friends decrease as a company grows.

• Despite not borrowing from banks, several entrepreneurs invest any excess cash in fixed income funds.

What's new

• This study shows how it is possible to adapt Eastern/Chinese cultural and social characteristics to suit an emerging Western/Brazilian market, thus enabling the business survival of Chinese people who have no knowledge of or access to the formal financing mechanisms of another country.

• This study reveals that forms of financing vary by the different levels of guanxi and that informal mechanisms continue even after the company is consolidated.

• Contrary to some assumptions, Chinese entrepreneurs do work to a certain degree with banks in Brazil.

Contact the author Hsia Hua Sheng.   

Learn more about the research conducted by Hsia Hua Sheng.