This paper explains why some Chinese high-tech private firms survive and thrive within a system which appears to be arrayed against them.We use the mobile phone handset industry as an illustrative case.We argue that capitalizing on the advantages offered by the global fragmentation of production,Chinese non-state firms chose a pattern of copy-innovation in their search for competitive advantage as a rational response to a system characterized with high structured uncertainty.The research also suggests that Chinas practice of utilizing imitation and innovation in the mobile manufacturing industry can be partly explained by a silent alliance between firms and local government.This special type of local support ameliorates structured uncertainty and encourages specific types of innovation.Policy implications and future directions are discussed in the end.