By bringing innovative business models to the Chinese market, foreign entrepreneurs are beginning to discover possibilities in China's booming e-commerce industry, an area that has been difficult to penetrate for some of the world's biggest information technology players.

This year, China surpassed the United States to become the world's largest Internet market with an estimated 253 million online users. At a time when many industries are concerned about negative growth because of the financial crisis, China's IT sector is forecast to grow at a healthy 20 percent this year. Analysts expect e-commerce to have a big impact in mitigating the impact of the financial crisis by creating more opportunities in China's domestic market.

''With the challenges international trade is facing, there is a sense that e-commerce could have an important role in boosting business opportunities in China and opening up the domestic market,'' says Spring Liu, director of the Shanghai E-commerce Association. ''The potential demand of this market is huge, and the government is now making an effort to help small and medium enterprises in particular to use IT to make the market more efficient.''

But foreign companies have struggled to make the most of this potential, Liu says, by blindly replicating business models that worked for them in their respective countries and not localizing enough.

Liu, who is also the deputy director of the China E-commerce Association's Policy and Law Committee, says it has been difficult for foreign firms to understand legal and policy issues. ''It is important for them to use local talent to get the right marketing strategies,'' Liu says.

In recent years foreign companies have failed to do just that, but that is now beginning to change. The success stories of two very different foreign entrepreneurs - online retailer 88 Brands and Indian IT training company NIIT - who brought innovative business models to the Chinese market reflect the immense potential China's still nascent IT sector holds for companies that get their strategies right.