Concerning on the current vague definition of industrial design in China, this paper indicates that industrial design and engine design are compound concept. In the first place, it introduces the definition and theory of industrial design. Then, by analyzing design development and industry development relationship, it regards modern industrial design as a heritage and a production from the development of traditional handcraft design. Finally, it proposes that in order to regulate a modern design theory with Chinese characteristics. We must learn the advanced industrial design theory from the west. At the same time, we must fully excavate the essence of traditional Chinese handicraft culture. Also we should integrate Chinese traditional handicraft design theory into the west modern industrial design theory.