Foreign knowledge and technology enhance the technological capability of local firms. Foreign direct investment (FDI) and Multinational enterprises (MNEs) are key channels through which foreign knowledge flows and is transferred. This chapter reviews different types of foreign knowledge sources and the factors that ensure success in the adaption of foreign know-how to the local context. The results show that formal firms tend to have higher local technological capability are more likely to adopt and adapt foreign knowledge and technologies. Interaction with foreign firms through imports and collaboration are important sources of knowledge. The managerial localisation strategies in Chinese firms is also identified in our case study to offer an essential learning potential for local firms.