Based on the interaction between regional and industrial characteristics, this paper studies the factors that affect labor income share in manufacturing industry both from the theoretical and empirical aspects,. Results show that: the capital deepening and technological progress in manufacturing sector, along with more intensive human capital investment, can lead to an increase in labor income share; market-oriented reform tends to reduce labor income share in the short term because it tends to weaken the commitment to the social accountabilities of state-owned enterprises; local governmental competition over FDI is not conducive to increasing labor income share because it tends to reduce the power of the workers vs. the capital; trade expansion will increase the labor income share due to more investment in knowledge.