Purpose We examine how the exports and R&D investments of individual firms in China affect their value added and analyze their relationship with total factor productivity (TFP). Design/Methodology/Approach This study uses panel data from China’s industrial enterprises for the period from 2005 to 2007, and in estimating es the production function using the two-step estimation method proposed by OP (1996) and constructs total factor productivity. In addition, using the concept of first-order stochastic advantage, total factor productivity is compared according to R&D investment and export status. Findings R&D investment is found to have a positive effect on value added, and export seems to have a limited positive effect on value added. We also find a positive relationship between R&D investment and productivity, and a limited positive relationship between export and productivity. Research Implications This analysis contributes to the research in that R&D investment and export have a positive effect on value added through sophisticated production function estimation. This study is very useful in that the TFP constructed through the estimation of the production function is compared using the nonparametric method. In addition, it has implications in that the importance of R&D investment is derived from empirical analysis, which has become a hot topic in recent years, in addition to traditional export issues in productivity.