Abstract:Product defined by market means market demand leads technological innovation. World market is not flat, which manifests itself especially in the differences among countries. Big market or small market and lead market or follower market are two main aspects which determine the importance of a country’s market.China’s market is becoming a big market rapidly and a lead market increasingly. On account of this, one can say that the era of products-defined-by-China’s-market is coming. Domestic market supports Chinese firms in technological catching-up, improving competitive edge, and scrambling for industrial dominance. Established in domestic market, Chinese firms need to implement open innovation strategy worldwide, the premise of which is to build basic capabilities including but not limited to technological absorptive capacity.