The purpose is to describe and explain the internationalization processes of Chinese firms in Europe, studying the on-going increase in the international business activities by firms from the P.R.C. This is a consequence of the rapid growth of emerging country markets and their integration into the world economy, implying a third wave of globalization of firms from emerging markets like China. The following major aspects are taken up:i) The establishment of Chinese firms in Europe and the development of their business in this area. ii) The internationalization process of these firms, especially focusing on adaptations to local markets in the EU.iii) Major impact on the internationalization process by the changing institutional conditions of the various country markets, where the foreign firms operate, and from where they originate.The study is based on research on firms from the P.R.C. and their internationalization as well as relevant research on differences between European and overseas Chinese firms. The more common Chinese investments in manufacturing industry will be compared with the more recent investments in service industries, mainly in retailing. The research strategy is abductive, using a broad case-study approach. Collecting primary data from interviews and observations is the main source of information. Research on the Chinese international firms is mainly qualitative, and based on case studies of selected companies as well as EU countries. The study is founded on the institutional network approach to internationalization processes, which are seen to be knowledge-based, and governed by institutional developments in markets. A Five/Five stages model is established that consist of a number of relationship development stages and a number of internationalization stages. New stages are established with the firm extending its business from one major type of market to another major type or from one type of foreign environment to another. Since these foreign country market contexts are defined as institutional settings, the internationalization process is determined by the institutional distance between country markets. Establishment points in foreign market networks are defined as entry nodes.