There has been a modularization trend in manufacturing industry since 1990s. Modular network is a simpler and more effective way to form complex product system. The information processing in modular network includes information assimilation and information encapsulation. The competitive advantages of modular network lie in Network Externality, back-to-back competition, innovation and anti-risk abilities. The emergence of modular network leads to the change of industrial organization. Adjustments should be made to enterprises’ competition strategies.