Private Family Enterprise Evoluting Modern Corporate System

With the progress of China's reform and opening up and the market economy system, we can see the increasing market activities of China's private family enterprise Family governance model has its reasonable aspect, that is, the commissioned cost has been greatly reduced due to the direct control of the family business; it is conducive to reduce the coordination costs that owners who lies at the core of family businesses set up interpersonal networks based on blood and affinity. In view of the comparative advantage of these family enterprises, the family system model is recognized and reli- shed by some family business owners. However, it is a pre- condition that the existing family system model is decided by the specific conditions of the market economy, in other words, family enterprises are facing a confidence crisis prevailing in our society, the sluggish financing channels and the imperfection of professional managers market and so on. With the development of enterprises and the intensifa- tion of market competition, a structural defect of the family business has increasingly become the obstacle of its own growth. Highly concentrated property rights of family enter- prises leads to lack of access to the proceeds derived from capital and management division, the property rights of family enterprises is actually maneuvered by some family members, on the other hand, their capacity to manage property poses a threat to meet most of the requirements of enterprise mana- gement; the general poor credit awareness of family business and lower transparency of financial information make it di- fficult to obtain exogenous financing; the decision-making of family business is prone to be irrational, then, the closed and distorted human resource allocation comes forth. All of the above problems has resulted in the short-term of family business.This article holds that the governance model of the family enterprise system should be innovated in a reasonable way, and the family enterprises should prudently achieve the evo- lution of the modem corporate system, an internal optimized corporate governance structure should be established in the family enterprises, and establish rules and regulations to support the operation of an enterprise to so as to guide enterprises gradually to make progress in orbit under the rule of law. Only in this way, can family businesses say farewell to the "prospering means its strength, declining also means its instant" short weird lifecycle.