Many traditional industries have matured and declined. However, some companies have changed their business system and have survived for a long time. This paper investigates the business system and innovation of traditional industry. We specifically focus on the Knife industry. This industry has grown up based on traditional production system, which has made by wholesalers. In these days, they face big challenges for survival. However, some companies which have entrepreneurship for unique strategy and have made new cooperative organization or new business system have grown up and survived for a long time. We conducted a case study of two areas of knife industry, which have unique strategy for competitive advantage. It is need to have entrepreneurship to make innovation and new business system for a long survival.