ABSTRACT
In this chapter, the authors introduce the objects studied in their research, namely the emerging local innovative firms and the incumbents of domestic market before the policy transition and give a comprehensive comparison of performance between them. They present the behavior differences between these two groups of firms in terms of product and technological development and depicts the market change associated with the emergence of local innovative firms. The local innovative firms had been insistently promoting the striking expansion of the Chinese car market since 2001. In the car sector, before the 2005 policy transition, there were no systemic product or complex technology that had been developed locally and industrialized by incumbent firms. In the telecom-equipment sector, the product development of the two groups of firms was clearly distinguishable. The comparison in the telecom equipment sector is even more conspicuous.
