Using the Transaction Cost Analysis framework applied to an original data-set, we empirically analyse the entry mode strategies of foreign firms in the Chinese market. In particular, we focus on the choice between Joint Ventures (JVs) and Wholly Owned Foreign Enterprises (WOFEs). The analysis is based on Italian firms, thus allowing for evaluating the behaviour of small-medium sized companies - usually less focused on by the literature on this issue. Moreover, the data, from a questionnaire on purpose arranged and directly administered, make available detailed firm-level information. Hence, it is possible to appropriately measure and evaluate the impact on entry modes of variables like innovation, proprietary-assets, and, new in this field, funds' combination used to finance the investment abroad. We found that the experiences of Italian companies follow the general prediction of the TCA. Nevertheless, some differences appear due to the peculiarities of Italian firms and of the Chinese market, as well as to the original variables introduced in the empirical model.