Abstract: Chinese manufacturers have developed unique advantages by introducing advanced technologies from developed countries and carrying out secondary innovations. Manufacturers often face the situation of “exploring no man’s land”, when their technological capabilities have reached a certain level. In this context, how to deal with the rapidly changing market environment has become one of the ways for manufacturers to maintain their competitive advantages. As an innovative form of user-firm interaction, servitization increases the value of products by acquiring customer sickness information, helping traditional manufacturers transform from product providers to service providers. A typical case company, Hangyang, has transformed from selling air separation equipment to a gas service provider. In the year 2016, the revenue of gas service has surpassed the air separation equipment, becoming the company’s main income sources. Digital technologies have a profound impact on the management and operation of upstream and downstream. The application of technologies such as the Internet of Things and big data in servitization can provide innovative operational methods. For example, the Internet of Things technology has changed the way of how equipment manufactured and operated. And also, it created new service categories for manufacturers. For example, Siemens has developed product lifecycle management (PLM) software services based on such digital technologies, which helps them to maintain a world leading position in the field of industrial software systems. Servitization is a complex process that is influenced by multiple factors. The “servitization paradox” emphasizes that as business models change, servitization will face huge challenges. Servitization in the digital context is generally regarded as a type of organizational changes. Different level of digitalization will have brought a different servitization outcome. On the one hand, servitization takes a longer relationship and cooperation with customers rather than a single transaction. On the other hand, servitization in the digital context would create more ways of user-firm interaction. Therefore, manufacturers need to consider different governance mechanisms in this process. Servitization is seen as an effective way for manufacturing companies to maintain their competitive advantages. The application of digital technology in the process of servicing has changed the way of equipment operation and service for manufacturers. Servitization in the digital context not only provides new types of user-firm interaction but also changes in the relationship between enterprises and users. Therefore, it becomes particularly important to adopt different governance mechanisms in such process. Based on 308 questionnaire survey data of Chinese manufacturing enterprises, this research empirically tests the impact of servitization on innovation performance. The results of the study showed that: (1) servitization has a positive impact on innovation performance; (2) the impact of servitization under high digital level on innovation performance is significantly regulated by relational governance, and the impact of servitization under low digital level on innovation performance significantly regulated by contractual governance. The management enlightenment of this study is that managers should adopt different governance mechanisms according to the different digital situations in which companies are located. Compared with the situation of low digitalization, in the case of the high level of digitalization, manufacturers should pay more attention to the role of non-economic factors such as relational governance.