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This work presents a highly practical framework that can be used to develop new mechatronics products in a network-centric environment for small and medium-size enterprises (SMEs). The network-centric environment is developed using a Web server as technology transfer center where SMEs can enter it to seek what they need and search for partners. The particular R&D problems or needs put by the SMEs are transferred to research centers and universities where the problems are solved through collaboration work. The SMEs' participation with the research center and universities is thus linked through Internet. The engineering software tools like GAD-CAE, CAPP, PDM are used to model and analyze a particular product. Java, v-conference, netmeeting, Web-based 3D collaborative software are used for product information sharing. The framework is applied to the development of an air impact wrench to make effective and efficient collaborative designs.