This paper conducts a case study of Red-Flag Software Co.Ltd. In the case study,the authors analyze that: first,the Red-Flag Co.Ltd is funded by the cooperation of research institute and industry;the interaction between Red-Flag Co.Ltd and universities in second;and finally,the government leverages towards Red-Flag Co.Ltd and its Linux products.The evidences show that the Industry-University-research Institute Strategic cooperation model is the pivot factor in China's Linux enterprises and industry.In addition,the case of Red-Flag Co.Ltd is the reference site for the development of high-tech enterprises and industries in developing countries.