Entrepreneurial activities enacted by teams play a significant role in China’s economic development and prosperity (GEM, 2006; Ahlstrom & Bruton, 2002; Peng, 2001; Lau & Busenitz, 2001; Tan, 1996). The heterogeneity of functional background could improve team human capital and develop new ideas, which are the competitive resource to acquire strategy advantage (Ucbasaran et al., 2003). However it may also lead to a number of conflicts, which make team management cost add up (Ensley and Pearson, 2005; Zacharakis and Meyer, 2000). Therefore a debate exists as to how best to manage and create current theory about team entrepreneurship. In this study, we examine China’s management practice of guanxi and its place in team entrepreneurship and explore the practical roles of guanxi in managing team heterogeneity and conflicts.