There are lots of management crisises in chinese enterprises with development of chinas economy. There exists a bottle neck in the transition from middle-level to intational level group for Chinese companies. While the general principles behind wise competition policy are well understood, their application in particular industries and particular cases calls for careful analytical thinking. That thinking often includes economics. Innovation competition policy can be analyzed using the same general principles as other parts of competition policy. It is important to understand innovation competition policy, because several kinds of innovation are important in the mod economy.How could such industries as software, semiconductors, and computers have been so innovative despite historically weak patent protection? We argue that if innovation is both sequential and complementary-as it certainly has been in those industries-competition can increase firms future profits thus offsetting short-term dissipation of rents. A simple model also shows that in such a dynamic industry, patent protection may reduce overall innovation and social welfare. Standard arguments would predict that R&D intensity and productivity should have increased among patenting firms.