After 1980, China's private economy began to grow strongly in the cracks of the traditional planned economy system. Despite several ups and downs, it continues to grow. By the beginning of 2 1 century, China's economy has been divided into three parts: state-owned, foreign-funded and private. With China's entry into WTO, China enterprises are facing the impact of global economic integration, and private enterprises are no exception. Compared with foreign enterprises, many domestic private enterprises still have very irregular business practices, which lead to the disadvantages of low quality, low productivity and unstable efficiency. How to build an efficient incentive system will be the future of enterprise's survival and development. In view of this, this paper systematically discusses the importance of establishing the incentive mechanism of private enterprises and the specific measures to build the incentive mechanism of private enterprises.