From internationalization to localization, Merck shares its journey and strategy

Editor’s note: This article is produced in cooperation with Merck Holding (China). We believe in transparency in our publishing and monetization model. Read more here.

International business groups, for the most part, reflect their development histories, strength in capital accumulation, and ability to take a global perspective of the industrial landscape. They are the best in their field, and often the symbol of their industries. However, not all international business groups can retain leadership, especially in the face of new developments.

From new retail sales to mobile payments, across big data and artificial intelligence, China has become a competitive market for international business groups and companies alike as an emerging location for innovation. Learning how to adapt to the new environment in China, to achieve greater success, has become a challenge that traditional leaders are required to re-examine. In response to this problem, the Merck Group shared its approach at TechCrunch Shenzhen 2018.

On Nov. 19, Merck China Accelerator, along with TechNode, launched the TechCrunch Startup Competition Merck Stage – HealthTech. More than 100 projects from all over the world signed up to be part of this competition. It mainly focused on three major areas—healthtech, performance materials, and life science; and five directions—artificial intelligence, big data, biosensor technologies, liquid biopsy technology, and the Internet of Things.

After many screening rounds, 12 projects eventually presented on the final stage. Alongside the competition prizes, the top three teams will also be given the opportunity to communicate directly with Merck China Accelerator.

This communication channel not only affords the recipient a better chance of joining Merck China Accelerator, they will also have greater means to connect to Merck China departments, which will enable them to better contribute to China’s healthtech ecosystem.

“Merck is the oldest pharmaceutical and chemical enterprise in the world and has a 350-year history,” said Jerry Li, director of cross-sector innovation collaboration, Merck China Innovation Hub. “Merck has been able to do this for so long because we’ve always stay curious, and we’ve always followed the latest trends in technology,” Li added.

Li shared how the Merck Group had maintained its winning credentials at the round-table discussion on the topic “International corporates in China: Finding the right path,” at TechCrunch Shenzhen 2018’s main stage forum on Nov. 20.

In talking about how to make full use of this power in China’s opportunity-filled environment to achieve the next success, Li said: “We have started the Merck China Innovation Hub based on such a spirit. We will now make innovation the fourth pillar of Merck. Therefore, we’re opening accelerators in Shanghai and Guangzhou next year. We hope to recruit start-ups and forge partnerships with them.”

However, the advent of opportunities is often accompanied by the emergence of challenges. As a foreign enterprise, apart from pursuing win-win situations, the advancement of its own transformation and promotion is also essential. Li pointed out that doing business in China requires one to be very spontaneous. For example, a company’s innovation business model must make adjustments according to the market and the customs law, it also must respond to Chinese competitors because the market in China is very competitive.

“Taking an incubator in the United States as an example, they are willing to help startups, with the aim that they might own 5% of the company shares. This does not apply to Chinese companies as many Chinese companies are valued at 10 times the US companies and the real value might be many times more at the same stage. The Chinese companies will not agree to it. Therefore, many international companies that are venturing into China must change their strategies to accommodate to the Chinese market,” Li said.

When it comes to how to build this innovative partnership better from a practical perspective, Li believes that local partners are crucial in life sciences and manufacturing fields. “At the moment, if you are seeking cooperation in China, it is more practical to work with local partners in developing a common IP, which is the common intellectual property. The government will also welcome you to do this, and you will have to work closely with all stakeholders, including governments, start-ups, universities, some local businesses and you must establish a very innovative model of cooperation with them.”

In addition to the startup competition and the sharing of their philosophy, Merck has also provided China’s potential partners with closer exchange opportunities in one of the world’s leading healthcare corporates. As a classic part of the TechCrunch Shenzhen 2018, the Startup Alley has always been the focus for startups. This time, Merck China Accelerator is also creating more engagement with start-ups through its close contact with the companies. Its global connectivity has been further demonstrated by the interaction between healthtech start-ups and professionals from Hong Kong, Taiwan, US, Japan, South Korea, Singapore, Israel and other countries and regions.

At present, China accounts for 10 % of Merck’s global business volume. More localization strategies and exploration of cutting-edge innovations in China gives Merck stronger impetus in the market. Through TechCrunch Shenzhen 2018, Merck has shown the Chinese market its attitude. In the maturing Chinese technology innovation ecosystem, Merck and China’s healthtech startups will create a common opportunity for development of the market.