PurposeThis study aims to examine the association between a number of variables pertaining to marketing strategy and business performance of small construction firms in Tianjin, China.Design/methodology/approachThe paper consists of a qualitative pilot study and a quantitative main survey.FindingsLong‐term differentiation marketing strategy, research and development (R&D) as a percentage of sales, and years in business are found to be positively associated with a small firm's business performance. Current product focus, government policy, quality and availability of services, conducting regular market research, firm's registered capital and employee number, being a supplier to a few large firms, and having a few regular suppliers are not found to be significantly associated with business performance.Research limitations/implicationsThe study has possible location and industry‐specific limitations.Practical implicationsManagerially, the findings encourage small Chinese firms to adopt a long‐term differentiation strategy, focusing on R&D and new product development. Government should disseminate this knowledge and facilitate small firms in obtaining necessary external finances to support their R&D programs. Such measures are vital for small firms to adapt to the increasingly competitive business environment in China's post‐World Trade Organization era.Originality/valueBy systematically examining relationships between marketing strategy and performance of the small Chinese firms, this study adds knowledge to the field of small firm research in China.