The importance of IT has been increasing in both developing and developed countries over the past three decades. However, almost all findings on IT productivity have been based on data collected in developed countries, while research on productivity in developing countries has been sparse. We studied the effect of IT investment on firm-level productivity in the Chinese electronics industry using a production function model. We found that the direction and size of the impact of IT investment on productivity in China were generally similar to results of studies for the United States and concluded that Chinese firms should invest more in IT. Finally, contrary to popular belief, labor is still an important factor in the production function of the Chinese electronics industry, despite its status as a high-technology industry.