This paper explores the contributions of technology development efforts of Chinese firms in the air-conditioning industry. We conducted a qualitative study of a Chinese multinational enterprise (MNE) and explored how the firm was able to develop, both in terms of production and technology over time. While considering its own distinct characteristics, the firm involved not only specific technologies and techniques but also broader acquisition and enhancement of various capabilities. Our study contributes to the nascent literature of Chinese firms’ internationalization by conceiving the upgrading capabilities, transition into higher value added parts of the value chain, and fierce competition under a fast changing institutional environment in China.