This paper discusses an unusual process of helping transform a traditional industry into one that can function in a totally new environment. The industry, traditional Chinese herbal pharmaceutical industry, is extremely “old” and fundamentally different from any pharmaceuticals in the western world. During the contemporary industrial and scientific development, it faces great challenges of entering the new industrial world with western-science paradigms. \ud As one of the main pillars of the Traditional Chinese Medicine (TCM), the Chinese herbal medicine has unique characteristic in that it highlights the balance and interaction of all the ingredients from herbs for each patient, who are treated as an individual with unique prescription of herbal formulation. Following an herbal formulation, the herbal medicine is a cocktail of many herbs tailored to the individual patient. It is prepared by decocting pieces of herbals: The pharmacist weighs out a day's dosage of each herb and combines them in a bag; the crude herbs are boiled in water and then the decoction is ready. This method of preparing herbal medicine has exited in China for thousands of years. However, in nowadays it was challenged by its inaccuracy and randomness as well as its unfitness to modern industrial mess production. Two main solutions appeared in China. One way is to standardize the crude herbs with modern technology and turn them into “prepared drug in pieces”, which is called YINPIAN. The other way is to make batches of herbs into pills or concentrated powdered extracts for some common herbal prescriptions. China is trying to use the western-science paradigms to standardize and industrialize the pharmaceuticals of crude herbs.\ud To limit our analysis, this study focuses on the development of the first way- traditional Chinese pharmaceuticals of YINPIAN. Based on reviewing the scenario of government’s promoting policies on YINPIAN, this paper investigates a case of university-firm collaboration in Southern China (Guangdong) in order to show how academic knowledge is transferred to industry and managed within the government, the university and the firm. Particularly, this paper traces the process of how their innovative YINPIANs are accepted by the modern market and thus the industrial development of YINPIANs is promoted. The findings suggest that incorporating with modern science and technology into a traditional and old industry can “renew” itself and help it enter the new industrial world. To do so, governments, universities and firms are all engines to promote the incorporation by collaboratively managing the knowledge transfer
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