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The sheer size of the market and the untapped opportunities has drawn many large foreign corporations to China. But to compete with local companies, survive, and thrive in the world’s second-largest economy is a daunting mission. Collaborating with young tech startups has become a way for these large corporations to keep up with innovation and China’s rapidly evolving landscape.
“Our business in China does not have the same amount of resources that our business, for example, in the US does. So, the startups are helping us to fill that gap, and actually be—in my opinion—in some areas, cutting-edge,” Ben Hassing, senior vice president of global cross-border trade at Walmart, told TechNode in an interview at the Emerge by TechNode conference last week in Shanghai.
Walmart is one of the few multinational corporations in China that are taking advantage of the local tech startup ecosystem, but the number is growing. The US-based retailer has been operating in China for more than two decades and started working with tech startups last year with the launch of Omega 8, its innovation platform. For Walmart, the real intent of the initiative is to reduce the cost of experimentation, Hassing explained.
The retailer invests in prominent players in the Chinese retail space like JD.com and Dada-JD Daojia, and works closely with internet giant Tencent,. These partnerships have helped the company upgrade their e-commerce, digital, and online-to-offline (O2O) businesses, Hassing said, but there were still some unfulfilled gaps and pain points. For example, the company sees an opportunity working directly with Chinese startups on last-mile delivery services, which is unique to the market. Consumers in other markets value pick-up services as a more economical option over delivery, but this is not the case in China, he noted.
Omega 8 provides a friendly environment for tech startups to test integration within Walmart’s business, Hassing said. “Omega 8 is not a separate standalone innovation center. It’s integrated into the business.”
Walmart has partnered with Microsoft as well as Plug and Play’s startup program, and is looking to collaborate with more. The retailer is aiming to work with 50 startups on proofs-of-concept (PoC) projects, according to Hassing.
“We expect over the long term what we’re doing here in China with the startups will be exported to other markets, and there’s a lot of interest and we’re just starting that journey.”
Hassing spoke about the benefits and challenges of working with Chinese startups on the panel, Corporate innovation: Harnessing China speed, at the Emerge by TechNode conference.