SMEs are the mainstay of China's Private Enterprises, and also it is the new group of unique Characterization. Its development is direct impact on the china’s economy competitiveness in the future. So this paper From the perspective of system innovation and take the private enterprises in Zhejinang Province for example to analysis how important the system innovation is .When the environment of the system is improved , the production and operation of small and medium-sized private enterprises will be greatly improved. Along with china’s deepening of reform and opening up, small and medium-sized private enterprises have achieved tremendous development. But on the enterprise itself, its organizational structure and industrial structure are not reasonable. In particular, in the recent years the market downturn, mechanism, lack of funds, lack of qualified personnel, related information and other factors causes the problems of SMEs structural adjustment could not be resolved. So the paper show nurturing the entrepreneurial spirit, Property rights system innovation, and improving enterprise operational mechanism, improving external system environment of operation is main content of system innovation. System Innovation is the key to the development of SMEs, can make the enterprises become an efficient economic organization. The reason of Western world’s develop is they have an efficient economic organization. It is a useful inspiration for the development of SMEs in china. Especially have actively significance for small and medium-sized private enterprise in zhejiang province.
KEYWORDS：System innovation, Market, Entrepreneurial spirit, Property Rights, Restructuring
