This paper aims to explore the relationship between geographical concentration in China's manufacturing industries and the degree of vertical disintegration.Through searching relative information and identifying industrial district resources,this paper proves that the degree of vertical disintegration within industrial clustering district is much closer than outside.Furthermore,corresponding to those unfocused industry districts,there are huge level differences in specialization degree in geographical concentrating industry.And we also found that the degree of vertical disintegration will be improved with the improvement of industrial geographic concentration,which following the increase in employ- ment in neighboring and related industries.The empirical results further demonstrated that the industry's geographic concentration can reduce the cost of transactions in the market and improve the efficiency and industry vertical disintegration as well.