Purpose:　The　paper　aimed　to　summarize　innovative　rules　of　Chinese　manufacturing　enterprises,　and　put　forward　some　insights　in　optimal　allocation　of　innovation　resources　and　enhancing　the　capability　of　indigenous　innovation,　so　as　to　overcome　the　innovation　dilemma.　Design/methodology/approach:　Having　diagnosed　the　current　research　of　innovation　flows,　the　authors　defined　the　concept　and　stated　characteristics　of　mainstream　and　new-stream　innovation.　Innovation　life　cycle　theory　and　technology　trajectory　theory　were　used　to　map　two　evolution　patterns　of　mainstream　and　new-stream　innovation.　It　took　weeks　to　stay　in　firms　to　obtain　original　data　and　interview　managers,　engineers,　and　mechanists.　From　the　case　study　the　authors　proposed　the　improvement　projects　and　opportunities　for　firms　to　overcome　the　＂innovation　dilemma＂.　Findings:　In　the　indigenous　innovation　process,　enterprises　should　breed　new-stream　innovation　as　they　strengthen　the　mainstream　innovation,　view　the　new-stream　technology　as　the　innovation　direction,　and　fulfill　the　constant　innovation　in　the　convergent　innovation　and　replace　evolution　process.　Meanwhile,　enterprises　should　take　precautions　both　to　expand　and　develop,　and　fulfill　technology　transition　and　innovation　upgrade　through　convergent　innovation.　Furthermore,　firms＇　convergent　innovation,　which　will　finally　achieve　the　＂projects-talents-products-markets＂　collaborative　innovation,　should　be　clear　about　target　market　and　project-oriented,　take　the　product　as　the　carrier,　and　be　committed　to　cultivate　creative　talents　and　innovative　teams.　Originality/value:　This　paper　enriches　the　existing　theory　on　indigenous　innovation　by　introducing　the　new　concept　of　mainstream　and　new-stream　innovation.　The　findings　would　help　firms　to　jump　out　from　the　innovation　morass.　©　Emerald　Group　Publishing　Limited.