China lures many international companies, who enter the market with enthusiasm and ambition to conquer. However, many fail miserably in trying to catch up with China’s rapidly evolving economy. Innovation is key to survival but many large companies stumble when trying to implement new ideas and apply new technologies, according to a group of industry leaders and academics sitting on a panel on Thursday.

At the Emerge by TechNode conference in Shanghai, Ben Hassing, SVP global cross border trade at Walmart, Peter Riedl, VP of BMW Group Tech Office in China, Dr. Shameen Prashantham, an associate professor at China Europe International Business School (CEIBS), and Paul Wong, vice president of innovation at Explorium discussed the values and challenges of working with Chinese startups.

Large international corporations seek entry into China’s startup ecosystem because they struggle to make inroads in the market, said Prashantham. Not only tech goliaths like Microsoft and Amazon have looked to startups for inspiration and entry into the local market, but companies in the traditional sector that strive to innovate started working with Chinese tech startups around five years ago.

Retail giant Walmart, which has been operating in China for the past two decades, is working closely with Chinese entrepreneurs and startups through its Omega 8 initiative. Hassing from Walmart said that even though the company has partnered with internet giant Tencent and online grocery delivery company Dada-JD Daojia, there were still unfulfilled gaps. “We needed to figure out how to solve the pain points in our global retail operation and do so at a very low cost of experimentation,” he said. This need was behind Walmart China’s startup initiative, Omega 8.

One of the challenges that corporations face in China is that the entrepreneurial ecosystem is still immature, Prashantham said. Unlike startups from Israel or Silicon Valley, many startups in China are run by inexperienced entrepreneurs. The flip side of that is the sheer appetite and ambition from its entrepreneurs, he explained.

Paul Wong from Explorium, supply chain giant Li & Fung’s incubator program, said leveraging and learning from Chinese tech startups’ new applications and technology in solving retail and sourcing pain points is why the company is actively trying to build an ecosystem.

Establishing partnerships with startups in China has been a crucial part of BMW’s localization strategy, said Riedl. “There are so many startups, and finding the right ones that will last, that will make a difference is the tricky part,” he added.

Prashantham gave an example of how to source good startups. Walmart’s Omega 8 program works with Microsoft’s accelerator and in doing so it is creating a win-win situation involving multiple big companies, he said. “It is in Microsoft’s interest to get their graduates the opportunity to work with marquee clients,” he explained.

Large corporations need to think about what they want to compensate for and what they can leverage from working with startups. “Patience is not a virtue in the entrepreneurial ecosystem in China,” Prashantham said.

Nicole Jao is a reporter based in Beijing. She’s passionate about emerging trends, news, and stories of human interest within the world of technology. Connect with her on Twitter or via email:

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