With ongoing reforms, the opening-up of China, and increasing international competition, there is diminishing development prospect for traditional Chinese manufacturing enterprises, because of rapid increase in production cost in China. Therefore, transformation from a traditional manufacturing enterprise to an innovation-oriented enterprise becomes common requirement both at micro and macro levels. This paper identifies characteristics of manufacturing enterprises and innovation-oriented enterprises, and methods and policies to encourage them to transformation, which are designed and discussed on basis of analysis of cases in Zhejiang region,
