Promoting digital transformation of manufacturing enterprises is the only way to make manufacturing industry bigger and stronger and realize high-quality development of manufacturing industry. Based on the Hotelling model, an evolutionary game model of digital transformation of manufacturing enterprises is constructed,. The influence mechanism of government subsidies and market competition on the choice of digital transformation and upgrading strategy of manufacturing enterprises is analyzed. The results show that the government subsidies can effectively stimulate the digital transformation of manufacturing enterprises, but it only works when a certain threshold is reached. Fierce market competition will weaken the incentive effect of government subsidies, and the weakening effect on manufacturing enterprises with weak financial capacity is more obvious. The synergistic effect of digital transformation can effectively promote the choice of digital transformation strategies for manufacturing enterprises, but this synergistic effect is not obvious when the market competition intensity is high.