This study investigates how domestic entrepreneurial firms (EFs) in the emerging economy of China strategize partnerships with established firms in response to technologically advanced foreign firm entry. While such partnerships are key for EFs to acquire market power and complementary knowledge assets, there are risks of potential misappropriation of EFs’ knowledge assets by established firms (or corporate “sharks”). We examine how domestic EFs can effectively partner with established corporate sharks in response to technologically advanced foreign entrants, particularly through corporate venture capital (CVC) investments. Using the context of Tesla’s Gigafactory entry into the Chinese new energy vehicle (NEV) industry as a result of a major top-down policy change to promote foreign competition in the domestic NEV market, we find an increase in syndicated partnerships formation between entry-affected EFs and CVC investors after tech-advanced foreign firm entry. This impact is more salient when independent venture capital (IVC) is involved, EFs are distant from coastal areas, and EFs are less prominent in the entrepreneurial setting. Our study sheds light on how EFs can strategically leverage domestic partnerships in response to foreign entrants and the understudied but important role of foreign firm entry in facilitating domestic collaborations in the entrepreneurial setting.