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This study analyzes the effects of information technology (IT) capacity with knowledge management (KM) on product design. IT capacity cannot provide competitive advantage in the market and thus the effect of KM as the mediating factor on this relationship must be examined. To test the hypotheses, data were collected through 220 questionnaires that were distributed to industrial companies in China. Results indicated that to achieve competitive advantage, companies should offer products that address customer needs through the design of identical product specifications, which are supported by KM and IT. Product design cannot succeed without knowledge of product qualities and characteristics. Moreover, KM in companies relies on IT capability, and IT capability with KM can be used to explain variations in product design. Thus, companies who want to achieve competitive advantage in the design of their products must use the capability of IT with KM in obtaining their objectives and be consistent with customer requirements to achieve consumer satisfaction. This study contributes to the literature of industrialization through the introduction of KM as a critical intermediary between IT capability and product design and elucidates the real industrial value of product design.