Are Chinese firms innovative or imitative?

In recent time, many Chinese firms have not only operated quite successfully at their home front, competing with those giant multinational companies inside China, they are also moving offshore. The short internationalisation process of Chinese firms looks both sudden and unexpected, causing many to wonder the success factors for Chinese firms. A dynamic innovation that combines strategic, organisational, cost as well as technological change was believed to have contributed to the fast growing Chinese firms in the global stage. This paper reviews the literature related to these areas of innovation. It also discusses reasons for firms to innovate or imitate, using institutional perspective and resource-based view (RBV). Intertwined with these discuss ion, empirical studies of innovative performance among Chinese firms are also analysed. The results show that in fact most Chinese firms still follow an imitative strategy, but there is a clear evidence of strategic cost innovation widely practiced among Chinese firms.