| Small & medium enterprises (SMEs) are developing quickly in China. They are contributing more and more to our national economy. At the same time they also confront many problems when developing. Technological innovation has become an important way for these enterprises to get a further development. This paper attempts to set up a scientific evaluation system to point out the way for SMEs to improve it's technological innovation capability, also aims to provide factual basis for government to formulate the policies, laws and regulations to encourage SMEs' technological innovation, and aims to provide basis for venture capital to SMEs.On the basis of analyzing and summarizing the research results from the domestic and international scholars, firstly the author defines enterprise's technological innovation ability in terms of course, analyzes the composition key elements and characteristic of technological innovation ability, and researches the innovative characteristic of SMEs. Based on these two points, the author gives an evaluation indexes system and evaluation criterion of the technological innovation capability of SMEs . After the index system of the technological innovation ability of SMEs is set up, the author analysis comparatively the evaluation methods and models used at present, and choose the fuzzy hierarchy comprehensive evaluation method, which is combined with the fuzzy comprehensive evaluation and the analytichierarchy process, to evaluate the technological innovation ability of SMEs. Because of having concentrated the advantages of two kinds of methods, the fuzzy hierarchy comprehensive evaluation method is more practical and effective than other methods. In order to use this kind of method effectively, the author explains the operation step and calculation model of method in detail. Lastly, this paper gives a factual case to prove the scientific nature and feasibility of the evaluation system of the technological innovation ability of SMEs constructed by the author.
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