This paper is aimed at probing into the existent rationality of the Chinese family business (CFB) and revealing the path of development of CFB. After a thorough analysis of the characteristics of CFB, the difference between public corporation and CFB, and the process of arising of CFB, this paper points out that the ultimate reason of CFB arise since 1978 is that China is a faniilist society and family culture is the prevailing culture in the Chinese society. In the end, this paper holds that CFB will evolve into network organization (NO) in the future after discussing the mechanism of NO. The conclusion of this paper is that CFB and NO are the most favorable and competitive forms of enterprise in China.
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