This research-in-progress paper aims to delve into the challenges confronted by small and medium-sized enterprises (SMEs) operating within a small equipment manufacturing town in China during their digital transformation journey. While a considerable body of literature exists on digital transformation and SMEs, there is a notable absence of insights at the manufacturing town level, which is a significant and yet understudied phenomenon. Our study is situated in a well-known manufacturing town within a city, employing an in-depth qualitative approach. By scrutinizing the underlying causes of challenges that have led to delayed or aborted digital transformations, this research seeks to offer a more profound understanding of digital transformation within the manufacturing industry, with a specific focus on SMEs. Additionally, our findings are expected to provide valuable policy insights and references for the manufacturing town's ongoing digital transformation efforts.