This study examines how the "design-driven innovation" model operates and can be applied to transform traditional manufacturing industries. With focuses on the art paper sector, the research explores how traditional enterprises can transition from a state of technological catch-up to one of value leadership by incorporating design resources and establishing collaborative ecosystems. This study employs a longitudinal single-case design. With Zhejiang LBY PAPER as the subject, the study follows its development over thirty years, from 1994 to 2024. It uses in-depth interviews, analysis of internal documents, and historical data to examine the company's shift from an import agency and independent production model to a collaborative design approach. It demonstrates how LBY established a "production-design-service" ecosystem and leveraged design skills to drive core innovation momentum. The findings show that design-driven innovation is a strong strategy for traditional manufacturing companies to achieve high-quality development. By placing design early and embedding it into the industrial chain, LBY led import substitution and value repositioning for premium art papers. It also pioneered cross-sector uses in culture, home, and fashion. Its key was shifting from "supplier" to "ecosystem builder", creating a mutually beneficial innovation network. This case offers a useful example for other traditional manufacturers seeking transformation through design and industry integration.