According to the WSJ, the first project is called Tapas, which is being described as “a smartphone operating system” that is tailored for Chinese users, but is largely based on Android. The OS localizes Android for China by detecting what cities incoming calls are from, or syncing contact lists with popular Chinese social networks. A music player also will detect what song a user is listening to and will display the lyrics, like karaoke. Tapas is expected to launch in the next few weeks through manufacturing relationships with Sharp, Haier and Tianyu, a Chinese handset maker that specializes in made-for-China features.

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The second project is called Wonderpod, a free media application that launched two months ago for Android devices. Like Tapas, the app is localized for Chinese users, who can use it to download video clips from Chinese streaming-video sites Youku.com and Tudou.com.

In all, Innovation Works has invested in 12 companies in the past year or so with the goal of proving that Chinese companies can be innovative, too. The projects receive support from Lee, including help finding executive or engineering talents. Lee also provides the opportunity for the entrepreneurs to listen to inspirational speakers, like Yahoo’s co-founder Jerry Yang. Innovation Works claims an undisclosed stake in each project.